Our mortgage brokers answer your frequently asked mortgage questions
Wednesday 8 April, 2020
This article by John Pringle, Mortgage Broker & Protection Adviser in Tottenham, North London gives you responses to all the frequently asked mortgage questions from our clients.
If you can’t find the answer to your mortgage question here please call our North London mortgage broking team for mortgage advice on 01707 872000.
‘The UK’s mortgage market has changed profoundly in the last two weeks as the full effect of the Coronavirus has started to be felt. Mortgage lenders have been told to allow mortgage repayment holidays; moving home is virtually banned leaving swathes of home-movers in limbo; thousands of mortgage products have been withdrawn and the bank base rate has been reduced to 0.1%, the lowest in history. Not surprisingly, many mortgage clients have been making contact to ask questions regarding their mortgage products. I’ve attempted to provide answers to the common questions, which I have detailed below. I hope that the mortgage information I've provided below is helpful.
Please do contact our mortgage brokers on 01707 872000 if you need assistance in these difficult times, whether it is for mortgage advice on your next home move, or you are looking to re-mortgage or want to protect your finances.’
Some common questions you may have regarding your current mortgage position
I have exchanged on a new property, but not moved in. What should I do?
The government has stated that they do not want you to move during the lockdown, unless it is in exceptional circumstances. If you can therefore delay your move, then you should. Mortgage lenders are now extending the expiry date on offers by three months to hopefully allow more time, while many solicitors are adding new clauses into contracts in case purchases don’t progress.
I have completed on a new property, but not moved in. What should I do?
As with exchanges, the government is requesting that moves don’t occur unless there is no option. If you do have to move, then take extra precautions to adhere to the social distancing rules.
Can I qualify for a repayment holiday?
All lenders are required by the government to offer borrowers the opportunity to take a three-month payment holiday. This is true for all homeowners, Buy to Let mortgages and for clients who have used the government's Help to Buy scheme. The repayment holiday is available to borrowers who are up to date on their mortgage payments and not already in arrears.
Should I take a repayment holiday?
We believe that over 1 million borrowers have already requested a holiday and if you are in a position where you will struggle to meet your monthly mortgage payments, then it is a sensible thing to do. You won’t need to go through a means test or demonstrate your reduction in income. There also isn’t a fee to pay. However, I would stress that this is not ‘free money’ and that you will need to make up the missed payments in due course. Instead at the end of the three-month holiday, you will need to agree higher repayments moving forward with your lender or extend the term of your mortgage. As such, taking a holiday will cost you more in the longer-term. My recommendation would therefore be to not take a holiday unless you really need to.
Also, if you are coming up to the end of the mortgage term on your existing mortgage deal, then be aware that taking a repayment holiday could impact on whether or not you can qualify for a re-mortgage or a new deal with your existing lender. Please therefore talk to me or one of my colleagues in the Thomas Oliver mortgage broking team first before applying.
It's important that you don’t cancel your direct debit to the lender. Simply cancelling the direct debit may cause issues later down the line when you come to the end of your payment holiday and could cause you to miss a mortgage payment in the future. A missed mortgage payment will show on your credit file.
I can’t get through to my mortgage lender. What should I do?
All of the lenders have been inundated with calls from borrowers about repayment holidays at a time when they were also trying to move significant numbers of colleagues to remote working. Many have consequently, struggled to cope, leading to long waiting times. I would therefore encourage you to wait a few days for things to quieten down and try again or alternatively look on the mortgage lenders website.
Most have detailed information on their response to COVID-19 and how to request a repayment holiday.
I am coming to the end of my current mortgage deal. Should I re-mortgage?
A significant number of products, particularly tracker mortgages and those at higher loan to value’s, have been withdrawn by the mortgage lenders in recent days. However, over 10,000 products are still available and mortgage rates remain at very competitive historic levels. Funding may become more constrained in future, so if you are within six months from the end of your current deal, please get in touch with myself or one of our other mortgage advisers and we will talk you through the available mortgage options.
My income has dropped. How will this impact on my ability to get a mortgage?
All lenders look at your current income and any expected or known changes when they assess whether you can afford a mortgage. With access to a comprehensive range of mortgage lenders from across the market, I can offer you personalised mortgage advice and help you find a mortgage that’s right for you which is affordable based on your income and expenditure.
I am looking to buy a property. Should I continue?
The number of property transactions are falling, and we expect the mortgage market to be in a state of suspended animation for at least the next two to three months. As such, even if you wanted to make a purchase you would find it difficult, unless it was a property you already knew so you didn’t need a survey and were a cash buyer. There are plenty of commentators predicting a big fall in house prices, but in reality, this is guesswork and it will be many months before it’s clear whether or not prices have been impacted. Most property purchases are made for a reason – perhaps clients need more or less space, or they are changing work location - so on that basis alone I expect the market to gradually re-start once the immediate lock-down eases.
If you require mortgage advice, whether you are re-mortgaging, a first-time buyer, moving home or you are a buy to let investor please contact the Thomas Oliver mortgage broking team on 01707 872000.
We can discuss your circumstances and recommend the best course of action. We are constantly in touch with the mortgage lenders and we are up to speed with all the new current legislation. Remember we offer a free initial mortgage advice consultation. From everyone at Thomas Oliver, please stay safe. You are all in our thoughts.
Your home may be repossessed if you do not keep up repayments on your mortgage.