How difficult is it to get a mortgage in lockdown?
Whether you’re a first-time buyer, homemover or a homeowner looking to remortgage, it’s a complicated time to navigate the mortgage market.
In the past few months, banks have been withdrawing and reinstating deals based on the Government’s regulations and their own resources.
With mortgage payment holidays, self-employed income support grant, bounce back loans and lending rules for furloughed customers adding further complexity, it’s no surprise that borrowers feel confused about their options.
Here, we explain the current state of play for people looking to take out or switch a mortgage.
If you're looking for advice regarding gaining a mortgage contact us today.
Guide to buying a property.
This guide will talk you through each of the key areas of purchasing a property from getting started, finding a property and making an offer, to completion of your purchase and collecting the keys to help you understand the structure and buying process.
Mortgage options for first time buyers.
The picture has looked bleak for first-time buyers since lenders cut the vast majority of their low-deposit deals in the wake of the coronavirus outbreak, leaving very few options for those with the smallest deposits.
Are 90% and 95% mortgage returning?
In the past few days, some banks have launched new 90% mortgages, but with most having just withdrawn 90% and 95% range, it’s a tumultuous time for low-deposit deals.
First-time buyers may even struggle to secure mortgages that are still available. HSBC offers 90% rates but is limiting the number of applications it will accept on each day.
Mortgage321 says: ‘Lenders have been overwhelmed by the level of demand following the lockdown, resulting in many needing to withdraw deals only recently relaunched in order to manage their workload. The reintroduction of more deals for clients with a 10% deposit would hopefully provide prospective purchasers with the choice they need to move forwards with buying a home. If you’re set on moving now, take advice from an us about your options."
Moving home or remortgaging?
If you’re looking to move home or remortgage in the next few months and can contribute 15% or more, you’ll have plenty of mortgage options and be in line for a good rate. At 60%, 75% and 85% loan-to-value, there are more than 100 two-year and five-year deals currently on the market, as shown in the chart below.
Can I get a mortgage if I have been furloughed?
If you’ve been furloughed during the COVID-19 outbreak, you might find your options are more limited than before. Lenders have collectively agreed that their existing customers can remortgage on the same terms, regardless of whether their income has been affected by the pandemic.
If you’re looking to borrow more when remortgaging, switch to another lender, or take out a new mortgage to move home, however, you might find that banks will only take into account your furloughed income. This means that your borrowing power might be assessed on only 80% of your usual income, potentially cutting the amount you can borrow, or preventing you from accessing a good deal.
Some banks will consider any top-ups from your employer if it provides a letter of confirmation, while smaller lenders may be more likely to assess applications on a case-by-case basis.
If you’re thinking of getting a mortgage after being furloughed, speak to one of our specialist brokers about the options available to you.
What to do if you are struggling to pay your mortgage?
If your finances have been affected by the COVID-19 outbreak, you can apply to pause your mortgage payments for three months.
If you haven’t yet applied for a payment holiday, you can do so until 31 October. If you already have a payment holiday, you can extend this by a further three months.
It’s important to note that if you defer your payments it will take you longer and cost you more to pay off your mortgage. While a payment holiday may not affect your credit score, banks could still take it into account when assessing your affordability for any future borrowing.
With this in mind, it’s worth contacting your lender to see which alternative options are available before pausing your payments.