Mortgage Advice During The Covid-19 Pandemic - Part 5
Greg Cunnington, Director of Lender Relationships and New Homes at Alexander Hall casts his expert eye over how the Covid-19 pandemic is impacting mortgages and what the latest developments mean for you.
In this fifth part to the new series, Greg looks at some of the developments in the last week and also answers some more of your questions.
There is no doubt that the mortgage market is seeing fast paced updates right now. Helping our clients is key for everyone in the industry currently, so we are keeping on top of all of these updates to help navigate the best options for your individual circumstances at this time.
Hopefully you found this series of articles useful. This week I have focused on some of the updates since last week’s article, and how these may impact you and your options, as well as focusing on some of the updated mortgage options for NHS staff and key workers.
NHS and key worker mortgages
Our NHS heroes have been the beacons of positivity during this challenging period. At Alexander Hall we work with a staff benefits provider to provide several NHS trusts with tailored mortgage advice for their staff.
As such we are familiar with the varying pay structures and the fact that additional income such as allowances and overtime are key to many of these roles.
One increasing concern from our clients who work in these roles has been that they noticed some lenders are no longer accepting income from additional income sources such as overtime or allowances, or from second jobs, and so are worried their mortgage options have decreased.
Similarly, we have many key worker clients who work on zero hour contracts or have two roles (such as in delivery driving) and have noticed similar stories.
This is something we have been in close contact with our lender partners on. The good news is that we are seeing a very sensible approach from lenders here, and a desire to help NHS staff and key workers that is being built in to criteria.
A great example would be HSBC who have specifically stated that they will continue to accept mortgage applications using overtime or other additional income for workers of the NHS in the borrowing calculations.
Similarly, for zero hour contract workers we have seen lenders such as HSBC, Halifax, Nationwide and NatWest still supporting and accepting applications for NHS bank nurses and locums, non-NHS bank nurses, care home workers and supermarket workers (including delivery drivers). This has been built into set policy by some of these lenders, and has been great to see.
Despite the current lock down we are also still seeing mortgage applications for some of the government schemes that can assist key workers to get onto the property ladder, such as Help to Buy and Shared Ownership. Some lenders are still accepting new applications here, using desktop valuations where they have visited the developments previously.
We have done some articles on these schemes recently that can be viewed using the links below that explain how these options may benefit you in more detail:
The key here is ensuring that you are dealing with an adviser that understands your income profile, and has access to the decision makers at the lenders to ensure your application is one they will be happy with. Using an intermediary will ensure you get the expert advice and support you need and ensure you have somebody on top of these options for you.
Rate switch options for clients on a mortgage payment holiday
New data from the government this week showed that 1.6 million households have now taken up a mortgage payment holiday, which is one in seven mortgage holders.
One update this week in the mortgage world has been that the government has set in stone what we had already seen from lenders in that they must ensure where you are coming to the end of your current mortgage deal period, and you are on a payment holiday, your lender will offer you a new rate option. This is positive news as it ensures increased options for applicable clients.
However, the Association of Mortgage Intermediaries (AMI) stressed caution on this move. AMI has stressed that borrowers should ‘not be led to think a product transfer is the only solution’. I would reinforce this message, as often a cheaper deal may be available with a new lender. Also, product transfers will often not give you the flexibility to release equity as part of the process or to change the mortgage term or repayment type.
As we discussed in last week’s article there are a lot of really good remortgage deals available right now. You may well be able to get a lower rate that will save you a lot of money by changing lender. Lenders are also increasingly innovating to use desktop or automated valuations for remortgage applications so that these can still be processed whilst physical property inspections are not possible.
Again this is a fast evolving piece as lenders adapt to the new realities created by the Covid-19 environment, so you should ensure you are working with an intermediary who will be able to ensure the best option for your circumstances is chosen and who will be able to offer expert advice in these challenging times.
We will also be able to assess the options your existing lender will offer, and then check with the other lenders in the market, ensuring the best option will be found.
As part of these series of articles we are hoping to answer as many of your questions as possible, as we know this is a worrying time and many of you are worried on the impact to your personal finances and mortgage.
Please ask any questions you can think of at the bottom of this article and I hope to answer as many as possible in future articles.
We received lots of questions this week so apologies we could not answer them all, but we will have more in next week’s article.
A client has asked:
“If I take a mortgage holiday am I obliged to let tenants know about this. My worry is that they will say that if your taking a mortgage holiday then I don’t need to pay you rent for those months?”
I do not believe there would be an obligation to inform your tenants, however, you should check this with your solicitor. The government made payment holidays available on all buy-to-let mortgages, as long as you fit the criteria of being financially impacted, either directly or indirectly, by the Covid-19 situation. This does not necessarily mean it has to be that your tenants have stopped paying the rent.
However, please do remember that by requesting a mortgage payment holiday, you are essentially saying you are in financial difficulty. This could then affect your ability to acquire other mortgage options during this mortgage payment holiday period.
Some lenders have stated they will not accept a remortgage application from a client currently on a payment holiday. Also, remember it is a deferral so you will accrue the interest owed – so where you can afford to do so our advice is to keep paying your mortgage as normal.
This is why it is so important that you receive advice before looking to request a mortgage payment holiday, and have ensured it is the best option for your circumstances. An intermediary will be able to guide you through your individual options.
There is some more information on mortgage payment holidays and a Q&A in this section of the website.
Another client has asked:
“We have a Right to Buy application submitted. What makes our case pressing is that we had a mortgage offer that expired and our broker is in currently in the process of getting us a similar product from the lender. The lender has temporarily not opened this product option yet, due to valuation issues etc, but we are hoping the lender open applications soon. Which leads me to the question to ask – when do you think these applications will be reviewed again? “
This is a very good question, and something we are getting asked a lot by our clients. The reality is none of us can say for certain when physical valuations can take place again, and as such when these cases can get reviewed.
What we are seeing are some lenders who have improved their desktop and automated valuation criteria go through the pipeline of cases on hold to see if any of these can be reviewed using the updated valuations. You should ask your adviser to check if your lender is doing this.
If not and the existing lender has stated they cannot progress until a physical valuation is possible, then the best option will be to look to consider applying with another lender. There are more lending options out there than people often realise. As the valuation has not taken place, if you paid for a valuation fee this will be refundable.
What we would do is look at what lenders are doing automated or desktop valuations based on the circumstances of the applications, and advice on the best mortgage options for you with those lenders based on your requirements.
This article was originally posted in What Mortgage online. You can see the original article here. Please note this will launch a new web page.
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