Can I get a Mortgage during Lockdown?

As we are well into the lockdown, lenders practices are evolving all the time. For mortgages we need to break it down into three sections:

1. Can I remortgage during the lockdown?

In short yes, however there are a few pitfalls for you to watch out for. Firstly if you want to borrow more than 75% of the property value you may struggle. The reason for this is that lenders may want to carry out a valuation of your property, if you are borrowing under 75% most lenders have an automated or desktop valuation system in place that means a person does not physically need to visit the property. For those of you wanting to borrow over 75% of your property value then the most sensible course of action would be to contact your existing lender to see if they have any product transfer deals that would be appropriate for you, or get a broker to do it for you.

2. Can I move house in the lockdown?

This is a bit more tricky, I have arranged mortgages during the lockdown for people who are moving house as they have been for mortgages of less than 75% of the property value (see above). I have also had clients who have moved during the lockdown, this is a bit of a grey area as far as the “rules” go. All of my clients were moving into empty properties so a short chain, presumably all social distancing measures were adhered to. 

The main issue with purchasing a property is the difficulty getting a valuation, if a surveyor cannot attend the property and the lender wants a valuation then you are snookered.

3. Can I get a mortgage if I’m furloughed?

In theory this is a yes. However as I mentioned earlier, lenders practices are constantly evolving and the longer the crisis continues then the less generous they are going to be. At the moment many high street lenders are saying they will lend to you based upon your furlough amount. Ideally your application will be accompanied by a letter from your employer stating that you will be welcomed back at work after the crisis is over. The chances are that if you were thinking of moving house you may well have put that on hold for the time being anyway. For a remortgage whilst furloughed, then again as long as you are looking at 75% or less and the mortgage is affordable on the furlough salary then you are good to go.

I hope these tips help, for more you can find me on Facebook, Linkedin, Twitter and Instagram. Happy to have a no obligation chat, all mortgages applied for during the lockdown will have no broker fees applied.

Home improvement loan vs remortgage: How to finance your renovations

Planning on extending your home or have aspirations to reconfigure your current property? While the prospect is exciting, you may be wondering if you can afford it and what financing routes might be open to you to fund the project.

If you don’t have the funds readily available, the main ways to finance your home improvements will be to secure a home improvement loan or to remortgage. Each have their benefits, and drawbacks, and what suits one project, might not suit the next. In this article, we discuss each financing method to help you understand which route you should take.

Home improvement loan vs remortgage: Which is right for me?

Remortgaging

One way to finance your home improvement project is to remortgage. That means releasing equity from your property to remodel or extend your home. However, that does means you’ll need significant equity in your property to raise the funds required to carry out the project.

For example, if your property has a value of £300,000 and you have an outstanding mortgage of £250,000, you have £50,000 of equity in the property that can be released (although it’s unlikely you’ll be able to release it all).

Usually when you remortgage, your lender will pick up some of the fees, such as the valuation fee and legal fees, so if you think you have enough equity in your home to remortgage, then it can be a really cost effective way of funding your project.

Things to consider when remortgaging

• You will need to inform your lender that you are making alternations to your property and make sure you inform your buildings insurance provider too

• You’ll still be subject to the checks required when securing an ordinary mortgage. Your lender will need to make sure that your income is sufficient and that you can keep making the repayments until the end of the contract

• Your may have to pay redemption charges to your original lender

• By remortgaging, you’ll be increasing the amount of borrowing secured against your home and therefore your monthly repayments might increase

 Home improvement loan

If remortgaging isn’t suitable, then you could finance your home improvements with a home improvement loan.

A home improvement loan works just like any other type of loan. You’ll need to pass a credit check and the lender will assess your income before determining how much you can borrow. Then, over an agreed period (usually up to 5 years) you’ll pay the loan back via monthly direct debits.

With a home improvement loan, you can usually borrow up to £50,000 – but the better interest rates usually come attached to smaller loans of between £5,000 and £25,000.

You can have your home improvement loan secured against your property or not, and although your risk is higher when securing it against your home, your interest rate will usually be better.

Things to consider when choosing a home improvement loan

• Providers can be sneaky with their advertised representative APRs. That’s because only 51% of successful applications need to get that rate for it to be representative and the rate you are offered will be dependant on your income and credit rating

• The best home improvement loan interest rates are usually reserved for borrowers making payments over three to five years. So, if you are looking to pay back your loan in a shorter period than that, your interest rate might be considerably higher

• If you secure the loan against your property, you do risk your home being repossessed if you can’t keep up with the repayments

 Which option should you choose?

The most suitable way for you to finance your home improvements will be dependant on your circumstances. While remortgaging usually comes with cheaper monthly repayments than a home improvement loan, it does require you to have enough equity already in your property.

Alternatively, while you may get an attractive interest rate with a home improvement loan, you might not be able to borrow as much as you had hoped.

In any event, the best option would be to seek the advice of a professional who can talk you through your options and assess your personal circumstances to advise which product would best suit you. You might want to consider talking to your bank, a financial advisor or a mortgage advisor.

If you’d like to talk to a mortgage advisor about raising funds for your home improvement project – why not give The Surrey Mortgage Broker a call? You can find out more about The Surrey Mortgage Broker by visiting us here or you can contact Richard Bousfield on 01252 759233 or info@thesurreymortgagebroker.co.uk.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY  MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. 

YOU MAY HAVE TO PAY AN EARlY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.