As you might’ve seen, the coronavirus has hit the mortgage market hard. Everything is changing rapidly and sometimes it’s hard to see what’s actually going on. This is why we think that it would be best to calm things down and catch you up with the latest updates on the coronavirus and its impact on the mortgage market. Here is a short video from MoneymanTV to explain what is happening:
Before your lender accepts your mortgage application, the property will need a valuation. However, since surveyors and mortgage valuers can’t go and visit the property, lenders have put a hold on processing applications.
Some lenders use AVM’s (Automated Valuation Model) for valuations on properties. This means that lenders don’t have to rely on a surveyor or a mortgage valuer to go out and do everything there and then in the property. The problem with AVM’s is that they can only be used on restricted mortgages and on lower loan-to-values.
In recent days, we have seen that lenders have decided to decrease their maximum loan-to-value down to 60%. This means that they are still processing these applications but not necessarily ones at higher loan-to-values.
We have seen that every lender is taking their own viewpoint. The main thing is that we haven’t seen any lenders withdraw a single mortgage offer yet. We estimate that they are just waiting it out and seeing what happens. A change could happen in the coming days, weeks or even months, we can’t possibly tell.
Furthermore, lenders have extended the periods of their initial mortgage offers from six months up to nine. They are letting the economy and the mortgage market get back on track.
We talked about Mortgage Payment Holidays last week in another article but we feel like we need to clarify a few things. Firstly, they are not free money, you should only take a payment holiday if you absolutely need one. You should speak with your Mortgage Advisor in Durham who will go through all of your mortgage options and check whether you actually need to take one out before you go to your lender.
Lenders are more than likely to just extend the period of your mortgage anyway. If this is the case, it may be best to just hold off for a bit. If you are certain that you are not going to meet your monthly payments and you want to take a mortgage holiday, then you should get in touch with your lender as soon as possible. Lenders are asking for their borrowers to get in touch online rather than them phone up and this is due to the thousands of calls they are receiving every day. You are more likely to get through online too.
It’s essential that you check with your lender that taking out a mortgage payment holiday will not damage your credit rating or mark any arrears against your account. Make sure that you do not cancel your direct debit and remember that you will need to get permission from your lender to take out a mortgage payment holiday.
We know that everything is getting stressful and could becoming a little too much. That’s where we come in, your Mortgage Broker in Durham is here to help. We want this to all blow over as much as yoru do. The mortgage market will hopefully resume to how it was soon.
We can’t change any of this, so we got to get through this together. Your Mortgage Advisor in Durham is available to answer all of your mortgage questions from 8am- 10pm, 7 days a week. We can see whether you need to take out a mortgage payment holiday or just give you advice on anything mortgage that you are concerned about. We hope that you get in touch soon!
This article was originally published on 30/03/2020 and as of the 20/05/2020 the property market has now resumed and this information has become outdated. Everything was 100% accurate at the date that this article was published.