The pandemic has affected people’s incomes, their living arrangements and requirements, and the housing market as a whole. With that in mind, here are some common concerns for mortgage customers and possible solutions. Your personal situation is unique, and it is recommended that you speak to a professional mortgage broker for advice before acting.
COMMON CONCERNS FOR MORTGAGE SEEKERS
You may be concerned about your ability to obtain a favourable mortgage following the events of the pandemic. However, favourable options are more likely to be available to you than you think. Before we cover how to approach those options, let’s take a look at some pervading concerns.
Reductions in income
Due to furlough and other economic impacts of the pandemic, you may be concerned that your finances will be under greater scrutiny by lenders than would have been the case pre-Covid.
Some people who took up the option of a “payment holiday” for their current mortgage are worried that it will affect their future eligibility.
Stamp duty holidays are time limited
While many rushed to take advantage of the government’s stamp duty holiday, others will miss out as they come to an end. This missed saving opportunity can feel like a barrier.
Potential rise in unemployment rates
With furlough schemes coming to an end, unemployment rates are expected to rise. This causes an obvious problem for those who will become unable to afford their mortgage payments.
While some of these concerns bring material problems for mortgage customers, they should not deter you from exploring your options. The cost of staying with your current lender’s standard variable rate (SVR) rather than seeking out refinancing could be particularly large. The good news is, there are literally thousands of fixed rate deals that are still available. That includes furlough-friendly options for homeowners who are receiving support from the government’s Job Retention Scheme. Even if you are experiencing, or expecting to experience, a reduction in income, you might still find a mortgage product which saves you money in comparison to your lender’s SVR.
DON’T PANIC, DO YOUR RESEARCH
Before applying for a mortgage, check your eligibility
If you apply for a mortgage and your application is declined, a record of that may appear on your credit report and has the potential to affect future applications for a mortgage, as well as other types of credit. Each lender’s criteria surrounding eligibility will differ, but will generally look to ensure you have a good credit history and have been a UK resident for more than 3 years.
First off, check your credit report. It’s possible that there are issues such as missed payments that
you are not aware of so make sure you improve your credit score as much as possible before making an application.
There are a variety of online tools available to provide you with a rough estimate regarding mortgage eligibility. These online mortgage calculators will take a look at your general income and outgoings and calculate what kind of mortgage you should be approved for.
Speak to a broker. They can perform a soft credit check for you, which will not affect your credit report and leave any future applications untarnished. They can also help you to receive a mortgage in principle, which is a confirmation from a mortgage lender which states how much and with what terms they are willing to lend to you.
HELP FOR FIRST TIME BUYERS
There’s no need to rush
The mortgage market can seem quite difficult to understand. There are a huge variety of deals available and finding the one that fits you perfectly isn’t always an easy task. Thanks to their understanding of the mortgage world, a broker will not only help you find more deals than you can personally access, but will also help to determine which of those deals is the correct one for your situation.
Government schemes may be of use to you
There are a few support options available if you’re looking to get on the property ladder for the first time. If you find you cannot save a large enough deposit or afford a mortgage for the entirety of a home, they’re definitely worth considering.
Help to Buy Equity Loan Scheme
If you’re a first time buyer and are buying a newbuild property, this scheme is here to help you. You can borrow 20% of the purchase price, interest free for the first 5 years.
Shared Ownership Scheme
The shared ownership scheme allows you to purchase a percentage of a property while renting the remainder from the council or housing association. Later down the line you have the opportunity to buy a larger portion of the property as you find yourself in a better financial position.
Right to Buy Scheme
If you’re renting your home from the council, you may find that you qualify for the Right to Buy scheme. This means that you have the opportunity to purchase your rented property; usually with a significant discount on the property’s market value.
Help is out there, and the best way to find it is to ask for it. A mortgage broker is the best person to help you on your journey to happy homeownership, regardless of what side of a pandemic you find yourself.
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