Mortgage Advice During The Covid-19 Pandemic - Part 6
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.
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.
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 new build applications and the Help to Buy scheme in particular.
New build mortgages
One common question we are getting from our clients, including many in response to these articles from readers, has been whether or not it is still possible to get a mortgage on a new build property.
The good news is yes!
Mortgages for new build homes is an area we have been discussing with lenders, and in the last couple of weeks we have seen a greater number of new deals, including from some high street lenders, over the last week.
The Covid-19 lock down has meant surveyors have not generally been able to physically inspect a property. In response to this, lenders have been adapting to undertaking a greater number of automated or “desktop valuations” (where a surveyor assesses the property remotely), however they were not set up to do this for new build properties. As such, most lenders had to either stop accepting new build applications or hold these cases in a queue so they can review them when they are able to conduct a physical valuation.
Some major lenders have now evolved to use data on new build sites from previous valuations to produce desktop valuations. We have seen Nationwide, Bank of Ireland, Barclays and Santander all now start to accept new build applications again, conducting desktop valuations where possible. This has been great to see, and we have now been able to help clients to move ahead with their new build applications on this basis.
Lenders and surveyors are also in close contact with property developers to organise on-site valuations when developers return to sites, which some of the main builders have confirmed they intend to do in the next couple of weeks. This should lead to further enhancements in the mortgage options available, so we will keep you updated on this through these articles.
Help to Buy
Further good news is that the new build improvements also apply to Help to Buy. Nationwide has been accepting applications throughout this period, and we have now seen Barclays and Santander return to this space in the last two weeks.
Help to Buy has been a very popular scheme with a lot of our first-time buyer clients in particular, allowing buyers to potentially purchase a new build property with as little as a 5% deposit. The article in the link below has more detail around the scheme itself and eligibility:
We have been working closely with lenders, Homes England (the organisation that runs Help to Buy) and developers to keep our clients updated in relation to the Help to Buy scheme. I have listed below a few of the main questions and updates we have been helping with:
Is the Help to Buy scheme still open and taking new applications in the current period?
Yes. Homes England has done a great job in keeping the Help to Buy application process open, and in fact we are seeing processing timeframes resemble business as usual. Help to Buy homes are newly built and unoccupied so it is possible to still purchase during the lock down.
As we have mentioned there are lending options also still available, so we can help you to find the right solution and apply for the mortgage, as well as the Help to Buy application.
Will Help to Buy accept desktop valuations if this is what the lender is using for my mortgage application?
Again good news, yes. Homes England are accepting desktop valuations if this is what the mortgage lender used. They are also now accepting desktop valuations for Help to Buy remortgage applications, meaning clients that already own a property bought using the Help to Buy scheme can still remortgage to a new lender and potentially staircase to increase the equity share they own.
Will my Help to Buy: Equity Loan Authority to Proceed remain valid if I cannot move during the lockdown?
Several mortgage lenders have committed to extending existing mortgage offers for three months. If your main mortgage lender has agreed to this, your Authority to Proceed will remain valid for the same period also. More lenders are confirming they will allow this, you should check with your intermediary or lender if this is applicable to your application.
I’ve already reserved a property on Help to Buy but I am worried due to lock down this will not complete at the time originally agreed. Will it be ready on time?
You should speak to your developer. Some developers remained working, whilst others paused all building work for safety reasons but are returning shortly. With the adjustments to the lockdown announced by the Prime Minister this week (10th May), we may see many more developments active once again. If you’ve already exchanged contracts, then the first step would be to check if your mortgage offer can be extended.
Also your solicitor needs to request a Confirmation to Developer form from your Help to Buy agent. The completion can’t take place without this, so you’ll need to contact your solicitor to find out if this has been requested.
If you’ve exchanged contracts and are concerned about your completion date and the need to extend your mortgage offer, contact your intermediary or lender.
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:
“I have a mortgage with NatWest. Can l still take a payment holiday even though I am selling my house and just waiting for an exchange date to be arranged?”
The government made payment holidays available on all residential (and buy-to-let) mortgages, as long as you fit the criteria of being financially impacted, either directly or indirectly, by the Covid-19 situation. As such, as long as this applies to you then yes you can still apply for a payment holiday in your scenario.
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.
If you are looking to purchase a new property this could be very important so ensure you are receiving advice before you request the payment holiday.
Also, remember a payment holiday is a deferral so you will accrue the interest owed. 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 our own company and were offered a self-employed mortgage from a specialist lender. We have a decent deposit. However we have been told that there has been a freeze on lending so we have to wait for them to get back in touch with us. Will we still be able to get a mortgage being self-employed (we work with insurance companies and clean up fire, flood and decontaminate buildings, including Covid-19)? I’m worried we won’t be able to get our own home now.”
I imagine what has happened here is that your application was with one of the lenders that have paused new lending in the specialist mortgage sector. There are a few reasons for this, but primarily it is due to their funding being accessed from different sources than the main banks and building societies (who are very well capitalised), and also that they traditionally many of these lenders only lend where a physical valuation is possible.
The good news is that as we are seeing lenders adapt to the current climate the more we are seeing lenders in this space not only accept applications once more, but also some of these lenders are now looking to use automated or desktop valuations where possible.
As such it could be your original lender has now returned to the market, or that another viable alternative can be sourced. Indeed, although self-employed mortgages are typically requiring a manual assessment we are finding that lenders are very much still lending as normal where possible to clients such as yourselves.
The good news is that getting a mortgage whilst being self-employed should be nothing to worry about. We would love to see if we can assist if you wish to get in touch directly.
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.
Image: PA Images