Mortgages & Covid-19 - FAQs
Can I still get a payment holiday?
If your finances have been affected by Covid-19, the current understanding is you will still be able to apply for a mortgage payment holiday of up to 6 months, despite plans to end this financial support on 31st October 2020. This might help alleviate any financial pressures through the often-expensive Christmas period and into 2021, however, taking a payment break will extend the life of your mortgage and the interest owed, so it is only advisable to apply for one if you feel it is necessary.
What deposit do I need?
At present, 90% mortgages are few and far between. Those that are available are either with relatively high interest rates or for houses only. Many banks are now lending at 85% but with an interest rate that is at least 1% higher than they were in June. The best rates are generally available from 80% loan to value.
Can I still get a mortgage if I’m on furlough?
It’s possible, yes. With the end of the furlough scheme in sight, you would need to show there is a ‘back to work’ scheme in place with your current employer and detail the dates and conditions of your return to work.
Is there a change in interest rates?
There is, but not necessarily in the way you would expect. With the Bank of England interest rates reduced to a historical low, most clients expected to see mortgage interest rates follow suit. Surprisingly, what we actually saw was mortgage rates go in the opposite direction. Mortgage rates, especially at the higher loan to values, are considerably more expensive now than they were before Covid-19. Banks are pricing high due to current market conditions. Over time, we expect to see interest rates reduce when we start to get back to normality, but we expect this will still be some way in the future. The good news is, interest rates are still very low compared to historical levels and lots of lenders are offering to fix these low interest rates for a long time, some even for 10 years, which can only be a positive for buyers and homeowners. It’s a great time to get onto the property ladder!
What advice would you give me?
Start preparing your deposit. If you are struggling to gather a sufficient deposit, speak to family members if you can. With the scarcity of the 90% mortgage, 85% is becoming the new norm. The larger the down payment, the lower the interest rate, and this will also allow for more flexible underwriting. With the Stamp Duty holiday continuing until the end of March 2021, there is also an opportunity to put those savings towards the deposit.
Speaking to a Mortgage Broker now is even more important than it was before, especially with the banks decreased processing abilities. Speaking to a Mortgage Broker and providing them with the necessary documentation will allow you to move forward as quickly as possible. They can help counteract processing delays to make sure your mortgage doesn’t delay buying the home you’ve always wanted!
