When COVID-19 first arrived in the UK no one could have predicted how much life would change, not least when it comes to buying, selling or remortgaging a property.
As the pandemic continues to influence daily life, here are four things to be aware of if you’re purchasing a property or renewing your mortgage in the near future.
1. Mortgage payment holidays
At the pandemic’s peak, a national lockdown saw many people confined to their homes and businesses shuttered up for months on end. While job losses were initially hampered by the Government’s furlough scheme, businesses struggling to generate income had little choice but to make redundancies to conserve cash.
As a result, a high proportion of homeowners very quickly found themselves with reduced or no monthly income to meet their outgoings. To prevent home repossessions, in March, the Government announced a three-month mortgage holiday allowing homeowners, with agreement from their lender, to take a break from paying their mortgage.
The mortgage repayment holiday proved an extremely popular incentive with 1.8 million homeowners taking advantage. Now, as the end of this mortgage repayment holiday approaches, the responsibility will fall to lenders to decide if they can offer any more financial assistance for those still struggling.
If your mortgage payment holiday is coming to an end and you want to explore your options, now is the time to speak to a Threshold mortgage adviser. We will assess your circumstances and explain your options.
2. The Stamp duty holiday
With social distancing requirements and restrictions on movement preventing viewings on properties, the housing market effectively shut down when the nation entered lockdown. In an attempt to boost the economy and instil confidence to move again, Chancellor Rishi Sunak has temporarily suspended stamp duty payments on property purchases up to the value of £500,000.
The stamp duty holiday is currently in effect for all property purchases that complete before March March 31 2021, allowing those purchasing a property at the top end of the scale to save a whopping £15,000.
Unsurprisingly, the incentive has had the desired effect with a flood of new properties coming on the market and prices stabilising from their pre-COVID slump. As such, anyone looking to purchase a property of £125,000 or higher would do well to take advantage of the remaining window of time left to benefit from the stamp duty holiday.
If you want to see how much you could save by moving home during the stamp duty holiday speak to us at Threshold today. In just a few minutes our mortgage brokers will be able to ascertain what level of borrowing you can expect if you were to take out a new mortgage at today’s interest rates.
3. Mortgage products have halved
Pre pandemic there were over 5000 unique mortgage products on the market, giving those looking to purchase or remortgage their home a competitive choice of rates and terms. Now that figure has halved to just over 2,500 products, meaning fewer options and less flexibility to ‘shop around’ for a competitive rate.
This is especially true of high loan-to-value mortgages where the range of products is currently much reduced.
So why have so many mortgage products been withdrawn? Banks and building societies are by nature cautious and so they’ve pulled a lot of their lending because of lingering uncertainty. This affects not just first time buyers looking to get on the property ladder, but those seeking to remortgage at the end of their existing deal.
The good news is that your Threshold mortgage adviser is aware of the market changes and will help secure a mortgage for you based on your financial circumstances.
4. Lenders have tightened their criteria
Together with tightening the range of mortgage products available on the market, lenders are also being more cautious in terms of applicant criteria too, which is contributing to the difficulty many are facing in securing a mortgage offer.
Even an agreement in principle (required to make a formal offer on a property) is no guarantee that you will be successful when the full mortgage application goes through. We’re increasingly seeing mortgage offers disputed by underwriters and applicants being asked to provide extra evidence to justify their financial affairs.
What’s more, if you were put on a furlough for any length of time, it’s likely your lending potential will be impacted by the reduction you experienced to your salary whilst on the scheme. While anyone applying for a mortgage whilst on furlough may need a written guarantee from their employer to attest that their job is secure.
The self-employed, who have always found it a little more difficult to secure a mortgage, are also among those being impacted by tightening restrictions. Even those in permanent employment, who have traditionally just had to provide three months’ payslips to qualify for a mortgage, are now being asked by some lenders to demonstrate at least twelve months continuous service to secure a loan.
If you’re self-employed or recently back at work following a period of furlough, we can help you find a mortgage. Lender criteria is constantly changing so now is a good time to make use of our expertise.
Looking to secure a mortgage? We’re here for you 7 days a week.
At Threshold Mortgage Advice you’ll be able to reach an expert broker at the end of the phone or email seven days a week, so there’s no need to wait until Monday rolls around to see if you’re eligible for a mortgage.
Whether you’re looking to remortgage your existing home, purchase your first property, or get financially verified for a new build scheme, we can help.
Our specialist lending team has access to a suite of competitive mortgage products, including access to some exclusive mortgage deals.
Your home may be repossessed if you do not keep up repayments on your mortgage.