Will mortgages be hard to get after Coronavirus?
It’s the question on everyone’s lips – will mortgages be hard to get after Coronavirus?
As we enter the ‘new normal’ of our post-lockdown world, we talk to Carl Gidman – our mortgage, equity release and protection adviser – about what’s happening right now in the mortgage market, and the differences we’re all likely to face.
Here’s what Carl has to say…
What types of mortgages are available?
The good news is all the types of mortgage we know from before are still available. The difference is that lenders are now asking for larger deposits. Only a few offer 90% or 95% loan to value.
Is it hard to get a mortgage now?
Yes, mortgages will be harder to get after Coronavirus. Lenders are looking into the effects of COVID-19 on applicants, especially if you’re self-employed or have been furloughed by your employer. This means you now need to answer more questions, and these of course have to be satisfactorily answered.
How much can I borrow now?
This is something that hasn’t changed. Borrowing limits are unaltered.
How much deposit will I need now?
Realistically, you’ll need a deposit of between 15% and 25%, but it’s becoming easier now that surveyors can access the insides of properties. That said, if local lockdowns like the one we’ve seen in Leicester occur, that will have an impact, as lenders are restricting what can happen with applications in those locations.
How much are lenders prepared to lend?
Post-lockdown, high ‘loan to value’ mortgages – those of 90 and 95% – are very scarce. The fact is lenders are coming to the market with funds, but these are being used up within days as brokers jump on these funds for their clients.
Have mortgage rates changed?
Rates haven’t changed, except for tracker rates which of course match Bank of England rate reductions. Five year fixed rate deals are at their lowest-ever levels. Also, lenders will lend more on a five year fixed rate deal.
Has Coronavirus affected property prices?
Wirral and Merseyside are hot spots in terms of property values rising. There is evidence of applicants paying more than the asking prices currently, which could be an effect of cabin fever during lockdown.
What are your clients most concerned about right now?
Other than higher deposits being asked, the concern is about property availability. Homes are being snapped up quickly. Someone I know put his property up for sale at 4pm and it sold by 9.30am the next day!
Any other big changes?
Yes, the holiday on stamp duty land tax will certainly give a boost to the market, for both residential and Buy to Let buyers. New build homes should also become more available as the backlog of sites that closed-down due to lockdown start to clear.
Has anything changed for first-time buyers?
While there are no special arrangements for first-time buyers, the same low rates and the removal of stamp duty is encouraging. While everybody thinks there are special deals for first-time buyers, it’s actually harder as they need to jump through hoops to get a mortgage and it’s likely more will have to turn to the ‘Bank of Mum and Dad’ for help.
What next if I want a mortgage?
So, in answer to the question – ‘Will mortgages be hard to get after Coronavirus’ – the answer is the same as ever. It comes down to who you talk to, with expert advice essential to getting the right mortgage rate, on the right terms, for the right property for you.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.