by admin | Nov 13, 2020 | Mortgage News
Way back in March, when the first lockdown was announced, the government worked with the financial-services sector to soften the impact on the public. The measures announced then have technically just finished (on Halloween). Now, however, another lockdown has been announced and with it a new package of measures. Here’s what you need to know.
The rules for the first lockdown
In short, the government made it clear that it expected lenders to accommodate borrowers who were struggling due to COVID19. This edict applied pretty much across the board from overdrafts and credit cards to mortgages, including buy-to-let mortgages.
On the one hand, this accommodation wasn’t necessarily as generous as the headlines might have led you to believe. In simple terms, lenders were often obligated to allow borrowers to skip payments. They did, however, generally have the right to keep charging interest.
On the other hand, it was usually fairly easy to qualify for the support. In some cases, it was enough just to self-certify that your income had been hit by COVID19. What’s more, the government stated that taking a payment holiday for COVID19-related reasons shouldn’t be recorded on a borrower’s credit record.
What was supposed to happen next?
The package of measures introduced for the first lockdown technically ended on Halloween. After this, lenders were supposed to show forbearance to those in financial difficulty and work to find a tailored solution. In other words, it was essentially business as usual, although probably with a higher level of people needing help.
This would have meant that going forward, people would have needed to have gone through the usual assessment process before being offered any help. It would also have meant that any measures would have been reflected on their credit score.
Appropriately enough, however, Halloween was also the day the government announced the new lockdown. Fortunately, the new lockdown came with a new package of measures and it is possible that further measures will be announced.
What will happen next?
The furlough scheme has been extended at its original rate of 80% of wages. Hopefully, this in itself will be enough to help the majority of people cover their housing costs, be that rent or a mortgage. Both the government and the Financial Conduct Authority have made it clear that anyone who can continue to pay should do so.
The government has also announced that mortgage payment holidays are being extended. There is, however, a catch. Mortgage holidays were only due to last up to six months. This means that anyone who applied for one at the start of the pandemic is not guaranteed to be given one now. Their lender might agree to it but they are not obliged to do so.
Similarly, anyone who took out a mortgage payment holiday at a later stage can only extend it up to a maximum of six months. After this, as the rules currently stand, they would be treated essentially the same way as anyone else in financial difficulty.
What might happen next?
This is a huge question, but there are some key points which potentially stand out. Firstly, the new lockdown could be cancelled, or at least reduced. The lockdown has been announced by the government but not, yet, agreed by parliament.
Secondly, if the lockdown does go ahead in any form, especially its current one, it’s possible that further support measures may be offered. These could include an extension of the mortgage payment holiday and/or an extension of the Stamp Duty holiday, to make it easier for people to sell properties they could not afford to people who could.
There is also the possibility that payment holidays will be offered on other products, such as overdrafts, loans and credit cards. This might make it easier to prioritise mortgage repayments.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Oct 3, 2020 | Mortgage News
COVID19 has forced many of us to reassess the way we live and work. Over recent months, the line between life and work has become increasingly blurry for an increasing number of people. Working from home may not quite be the new standard for everyone, but it is the new normal for a lot of people and looks set to stay that way for the foreseeable future. A recent study by finder.com suggests that this may be influencing house hunter’s priorities.
The space race is on
Priorities one and two were if a property had outside space (and the size of that outside space) followed by the size of the property itself. These were cited by 33% and 28% of people respectively.
It’s hard to see this as being anything other than an understandable reaction to the lockdown. Families with children, especially young ones, will probably have a very strong wish for safe outdoor space for them. Even people without children (or pets) may feel reassured to know that they have access to safe outdoor space, especially if there is any prospect of gyms closing again.
Indoor space matters too. If you are only working from home occasionally, then a decent home office is a “nice-to-have”. If you’re working from home all the time, then it’s a whole lot more important. In principle, the need for home office space may be temporary, albeit long-term temporary. In practice, it is looking increasingly like home working is going to become much more a feature of work long into the future.
Transport still matters
Priorities three and five were parking and good transport links. These were cited by 24% and 21% of people respectively. It’s interesting that people are citing parking more than good transport links, albeit only slightly.
This could signal a growing preference for the privacy of cars rather than the potentially germ-infested environment of public transport. It could also signal that people are prepared to move further away from the main commuter links and drive to them if necessary. After all, if you’re only going to be in the office one or two days a week instead of five, then you might be perfectly happy to trade a longer commute for more space and/or lower prices.
Quality of life
Four of the top ten features related directly to quality of life. These were:
#4 The property being in a nice area 22%
#6 Being closer to family/ friends 17%
#7 Being close to amenities 16%
#8 Situated in an area with a low crime rate 14%
It’s interesting that people are currently mentioning the crime rate as being a key factor in their decision-making process, albeit one which is fairly low on the list. This could be a sign that people are becoming increasingly concerned about what the future may bring and the impact it could have on their personal security and the security of their property.
Maintenance costs and looks don’t matter too much
The cost of running and maintaining the property and how the house looks were cited by 14% and 12% of people respectively. This put them on ninth and tenth place on the list. Possibly this reflects the fact that maintenance costs can often be improved.
It is interesting that only 12% of people cite how the house looks. This does rather fly in the face of conventional sales wisdom. Real estate professionals regularly tell their clients to make sure that their homes look as good as possible and give them tips on how to do this. It’s difficult to interpret this point, but one very feasible suggestion is that buyers are prepared to overlook a questionable exterior if the property meets their needs in other ways.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Sep 18, 2020 | Mortgage News
The COVID19 lockdown brought the UK’s housing market to an emergency stop. It has now started moving again but still has to keep the Coronavirus very much in mind. At present, it looks like this is going to be the case for the immediate future at least, but what does the longer-term future hold for the mortgage industry?
A move to (more) remote working
While the government has called for office workers to return to their desks, the response from business has been varied, to put it mildly. Some business leaders are clearly eager to get staff back together. Others seem to be perfectly happy to continue with home-working, at least part of the time.
For the financial services industry, including the mortgage industry, working from home permanently could raise a lot of serious challenges. In particular, it raises questions about physical security and data security. These challenges may not be insurmountable, but they may take time and effort to resolve. In other words, it may not, currently, be possible for mortgage professionals to be fully and permanently remote, even if it was what they wanted.
On the other hand, it may be very possible for mortgage professionals to interact with clients (and colleagues) remotely. The age of the client will not necessarily be a barrier to remote interaction. This was demonstrated by the equity-release sector, which has been using telephone and video calls to replace in-person advice sessions.
The benefit of this to the business would be that advisors could be based in a central location rather than needing to travel to clients. The benefit of this to the customer is that (part of) the cost-savings from this could be passed on to them. There could also be a proviso that customers who felt they really needed a face-to-face advice session could still receive a personal visit from an advisor.
Increased reliance on virtual valuations
Having a reliable system for home valuations is key to a functioning property market and hence to a functioning mortgage market. That said, however, there is a difference between “reliable” and “unchanging”. The fact that the mortgage market has been able to continue functioning without physical valuations shows that they are not always necessary. They may be desirable, but that raises the question of how much value should be placed on a want rather than a need.
This may be a question the mortgage industry has to start answering sooner rather than later. The answer may be to keep using virtual valuations for lower-value and/or standardised properties and use physical valuations for higher-value and/or unusual properties. This approach could potentially reduce costs and streamline processes without placing the lender at serious risk of either deliberate fraud or human error.
More flexibility for verifying a person’s identity
Even in the 21st century, a person’s signature can have huge legal significance. Admittedly for really important documents, like wills, a person’s signature alone may not be sufficient. There may need to be additional witnesses and/or notarisation.
This fact created a challenge for the legal profession, which had to come up with a way to allow legal documents to be signed and witnessed while maintaining social-distancing rules. The current approach is to use “window witnessing”. Essentially, the relevant person signs a document while being literally watched through a window. The person then hands over the document to the witnesses who sign it themselves, while maintaining social distancing.
Although this deals with the immediate situation, it doesn’t exactly take advantage of the capabilities of technology. Going forward, the legal and financial services industries, including the mortgage industry, may benefit from pushing for more use of digital signatures and, if necessary, video-witnessing.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Aug 21, 2020 | Mortgage News
If you’re a potential first-time buyer then you may currently be very confused by all the headlines regarding the health, or otherwise, of the property market. There’s an easy way to deal with this confusion – ignore them. Focus on the fact that homes are meant to be places where you live. The fact that they also tend to increase in value over the long term is simply a useful bonus.
With that in mind, here are some questions you should be asking yourself before deciding whether or not to aim to buy now or wait until later.
Am I 100% sure I can service a mortgage over the next 5+ years?
When it comes to mortgages (and by extension home-buying), this is the key question. Ideally, you should be confident that you can service a mortgage over the entire term (without having to sell your home). In the real world, however, the length of mortgage terms means that it’s close to impossible to know what you’ll be doing (financially or otherwise) at the latter part of them. You should, however, be totally confident about what you’re doing for the next five years and if you’re not, then you’re probably better off renting.
Remember that buying a home and being unable to keep up with your mortgage can work out a very expensive and painful experience particularly if you end up in negative equity (owing more than your house is worth). You are especially vulnerable in the first five years or so of ownership. This is not only the time when you’ll have the least equity in your home, but also the time during which you’ll still be swallowing up the purchase and moving costs.
Am I 100% sure I can commit my deposit money over the next 5+ years?
Similar comments apply here. Once you convert your cash into bricks and mortar it stays converted until you sell your home. Selling your home within the first five years of purchase can see you having to take a hit on the transaction costs, not to mention having to deal with a whole lot of upheaval. In short, if putting together a deposit would leave you very short of cash, then you might be better off renting. Even with insurance, you have to think about what would happen if you had any sort of emergency.
Do I want to stay in one place over the next 5+ years?
In principle, you have the option to buy a house, live in it for a while yourself, then let it out while you go to live elsewhere, for example, if you go to work overseas. In practice, the amount of administration and cost this can involve means that it’s probably only worth even considering in very niche situations.
For example, you’ll have to change every product associated with your house, including your mortgage and insurance, from residential-property products to investment-property products. You’ll also need to meet all your legal and compliance obligations regarding the maintenance of the property and the welfare of your tenants.
This means that these days, you should buy a property on the assumption that you’ll be living in it yourself until you’re ready to sell it. If you’re thinking of letting your property on a non-residential basis (for example allowing holiday rentals for part of the year) and/or having a lodger, then you would need to check with your mortgage lender and your insurance provider(s) to make sure that this would be acceptable to them.
For completeness, if you are thinking of using your main home as a holiday let for part of the year, then you should also check with your local council to make sure that this is permitted.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Aug 14, 2020 | Mortgage News
If you have a mortgage, then it’s likely to be a significant part of your monthly outgoings. This means that getting the very best product for your situation can make a real difference to your finances and can definitely be worth making a bit of effort to obtain it. At the same time, remortgaging is not necessarily the right decision for everyone, so it’s important to think carefully before you decide whether or not it’s right for you. Here are some points to consider.
Can you exit your current mortgage?
As always, before you consider whether or not you should, it’s advisable to check whether or not you can, or at least whether or not you can without penalty. If you got a special deal on your mortgage then you may find that there is a lock-in period during which you can only exit the product if you pay a penalty. You might still want to do your sums to see if there is a case for remortgaging, but you should be realistic about the impact such a penalty might have.
Could you get a mortgage now?
The affordability criteria have been in place for several years now, however, these are minimum standards, not targets. In other words, there’s nothing whatsoever to stop lenders from tightening up their acceptance criteria beyond the minimum requirements. It’s, therefore, a good idea to do some research on what deals are available now and who is likely to qualify for them.
You also need to be realistic about how you’ve managed your finances since you’ve had your current mortgage. If you’ve found yourself in challenging financial times and that has been reflected in your payment history, then you may find it difficult to find a lender who will take you on now. Your situation may be somewhat easier if you took an arranged payment holiday due to COVID19-related issues. It does, however, very much remain to be seen how lenders are going to deal with these over the long term.
Be aware, however, that a good mortgage broker may be able to find deals which you would never have found on your own, so don’t give up if the market looks tough.
Are you able to cope with the current practicalities of remortgaging?
When you remortgage, you basically go through the standard mortgage application process all over again. This means getting a valuation and this means getting a surveyor on-site. This means dealing with all the COVID19 protocols. Are you able to implement them? If you’re not confident about this, then it’s safer to hold off remortgaging until you are (or until COVID19 ceases to be an issue). At the end of the day, while remortgaging can save you a lot of money, nothing can compensate you (or anyone who visits you) for the damage COVID19 can do.
Can you get a better deal from your current lender?
Before you make a final decision on whether or not to go ahead with the remortgaging process, it may be worth checking in with your current lender to see if they can make you a better offer. That could give you the benefits of remortgaging without the cost and paperwork.
Are you remortgaging for the right reasons
Last, but very definitely not least, it’s important to be scrupulously honest with yourself about why you’re remortgaging. There’s a big difference between remortgaging to save money on a mortgage you’re confident you can afford and remortgaging to try to make ends meet.
If your finances are that tight, then you really need to get financial advice and look at all your options very carefully. You may find that you can keep your home, but even if you can’t, you can vastly improve your chances of selling and moving on our own term, rather than waiting for foreclosure.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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