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.
Covid 19 and Mortgages
What a week it has been! I’ve gone from seeing clients in the office two weeks ago to lockdown at home. As most of the country is experiencing such a major change in our lifestyles, hopefully for the short term, I thought I would try and collate some useful information around mortgages.
At the time of writing all of the high street lenders are struggling to process applications due to staffing levels and any mortgage that needs a physical valuation (i.e. a surveyor to look around the property) are effectively on hold as the surveyors are on lockdown.
Barclays this week started to restrict the number of applications they would accept. Refreshing their allocation at 10 am each day. I think the level of applications is going to calm down quite soon, the longer we get into the lockdown zone.
Halifax are restricting applications also, anyone wanting to borrow more than 60% of the property value cannot go to the Halifax at this time.
If you are moving house then these are the guidelines that have been set out:
Home buyers and renters should, as far as possible, delay moving to a new house while emergency measures are in place to fight coronavirus
If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus.
Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being
Another big issue is payment holidays and where you stand with those. It does vary from lender to lender but as a rule they will have set up an online process where you can apply to suspend your payments for three months. The interest will be added to your mortgage so your debt will increase, most lenders have said this will not affect your credit rating but do check with your lender.
Here are some links to some lender’s payment holiday sites:
Santander: https://mortgagesignup.santander.co.uk/onlinecredential/mortgage-holiday
Halifax: https://www.halifax.co.uk/mortgages/existing-customers/payment-holidays/request-a-holiday/
Nationwide: https://www.nationwide.co.uk/support/coronavirus/mortgage-payment-holiday
HSBC: https://www.hsbc.co.uk/help/coronavirus/financial-support/
Barclays: https://www.barclays.co.uk/coronavirus/mortgages/
If you are a buy to let customer then you can also apply to your lender for a payment holiday if your tenant is struggling to pay you.
I hope these help but in the meantime please stay safe.
I am open for business and I’m happy to do face to face meetings online, I had a Zoom meeting yesterday that worked well. So if you have any questions or want to talk about your mortgage options then I am happy to help where I can.
If I was asked a week ago “Will Coronavirus effect my mortgage?” I would have dismissed it as ridiculous. However this morning the Bank of England have announced a slash of the interest rates by 0.5% to 0.25%.
These are unusual times as one would not expect the Bank of England to be getting involved in a health crisis. The Chancellor has a lot on his plate when he announces his first budget today. It is widely expected he will announce spending plans as part of Boris Johnson’s election pledges but he also has the backdrop of an economic crisis brought on by the Coronavirus.
Firstly mortgage rates, I expect this cut to be a short term measure and would be surprised if the rate was still 0.25% in the summer. However if the rate remains at this level beyond the summer then there is a reasonable chance we could see headline mortgage rates falling a little. Do bear in mind they are very low already, with five year fixed rates being available from a staggering 1.49% (with the right amount of equity/deposit).
If you have a tracker mortgage then you can expect your rate to drop from 1st April, do check your T’s and C’s just in case your particular tracker deal has a “floor” beneath which your rate cannot fall.
In the budget later it is expected there will be big spending plans but also there is pressure to reduce the burden on small businesses. I think there might be a reduction in corporation tax and possibly a short term reduction in VAT. The worry for the chancellor must be “how can i cut tax and spend more? Where is the money going to come from ?” I guess he could put an emergency tax on toilet roll and hand gel!
I think for the majority of us the rate cut won’t have a massive effect. If the Coronavirus crisis is short lived then we can all get back to normal and live happily ever after. However if things get worse, as some quarters are predicting, then a reduction in the major household outgoings will be welcomed by the general public and will hopefully mean the UK doesn’t slip into recession.
These are unprecedented times and nobody really knows what will happen. The message I’d like to leave you with is: Wash you hands.
