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Mortgage News Update

What you need to now about your mortgage now

Mortgage Update - COVID-19

Over the last few days you will have been inundated with information in relation to the constantly evolving impact of Covid-19. We feel it is right to add to your inforamtion overload (!) and provide you with a roundup of the key mortgage news to ensure you’re as up to date as possible.

Existing mortgages

Tracker rate reductions – if your mortgage is a tracker then you will see a reduction in your monthly payments following the Bank of England’s reductions totalling 0.65%.  Most lenders will pass this on from 01/04/2020.

Payment holidays – lenders have agreed to offer 3 month payment holidays to borrowers affected by the Coronavirus outbreak.  This applies to residential mortgages and BTL mortgages to ensure that landlords can work with tenants who may be having difficulties.

Please keep in mind that interest will still be added to your mortgage during this period and you will still need to make the payments in the future!

Although it has been announced that payment holidays will not affect your credit rating, this is only on the basis that you have discussed this with your lender first.  DO NOT CANCEL YOUR DIRECT DEBIT WITHOUT SPEAKING TO YOUR LENDER AS THIS WILL HAVE A SERIOUS IMPACT ON YOUR CREDIT FILE.

Some lenders may allow you to switch to interest only for a brief period, this will help reduce your monthly payments by only making interest payments for an agreed period.  This could be a better option to avoid additional interest accruing on your mortgage.

If you currently make overpayments, you could also consider reducing these for a brief period rather than taking a complete payment holiday.

If you can still afford to keep up with the payments on your mortgage then this is the best thing to do so only consider the above steps if you are unable to make your normal payments.

Product Transfers

Many of lenders have confirmed that you can still complete a product transfer even if you are taking a payment holiday. 

If you are reaching the end of a fixed rate mortgage you can revert to the Standard Variable Rate, re-mortgage to another lender or stay with the same lender but pick another 2 or 5 year fixed rate.

There is no underwriting involved in a product transfer so they can usually be done regardless of credit score, income etc. If this scenario applies to you then there are options available, so please get in touch.

New Mortgage Applications

Some lenders are ceasing to take in new applications and others are placing restrictions on product ranges in the short term

Offer extensions – due to social distancing making it very difficult to move home (and even more stressful!) many lenders have now agreed to extend mortgage offers for purchase applications by 3 months

Remortgages

Some lenders are still offering re-mortgage applications though although anything over 80% LTV is unlikely.

Valuations

With effect from 24th March there has been a suspension of all physical property inspections. Therefore, applications in progress requiring a physical valuation will be put on hold until such time as an inspection can be carried out or an alternative arrangement can be made. Some properties where a physical inspection will be still be necessary include new build, flats, higher value properties and for high loan to value cases.

Some lenders are looking at the possibility of expanding Automated Valuation Model (AVM) and desktop valuations. From our own analysis, we can also see that the majority of lenders have stopped issuing rates above 60%.

Lender Summary

To help you with finding out the latest information from lenders we've created a list with links to all their websites. Download the list here