by Sam Fox www.warringtonmortgagecentre.co.uk
THERE have been a huge amount of changes to our lives recently due to the current pandemic, and that’s meant getting a mortgage as a First Time Buyer is becoming increasingly difficult.
So, if you’re looking to buy your first home, straight out of lockdown, here’s a few things to keep in mind whilst you’re preparing the next steps.
1. Lending Products
Prior to the UK being placed into a national lockdown, you typically only needed a 5% deposit towards the purchase of your first home.
Now, with a tonne of uncertainty around the housing market, lenders may require you to have anywhere between 10% and 15% as your standard deposit.
It is also worth noting that although the Bank of England base rate is at 0.1%*, the cost of mortgage borrowing is creeping up each week with many high-street lenders refreshing available products each week.
To give you an example; an 85% Loan to Value mortgage, with a 5-year fixed rate of interest in June had an initial interest rate of around 1.99%. Now, you’re heading upwards from around 2.79%!**
2. Furlough Scheme
If you are off work and paid under the furlough scheme by your employer, more lenders are now requesting that you provide a letter with written confirmation from your employer of your return to work date and salary.
In other circumstances, lenders are requesting your latest payslip to show that you’ve had 1 month back in employment.
So, if you’re planning a mortgage application and this sounds like you, make sure you request such information as early as possible.
3. Mortgage Applications
You have found the perfect property, and you’re about to hit submit on your application. Be prepared to wait much longer than you would have prior to lockdown.
Lenders are still working from home and are inundated with new applications. Initial assessments are in some cases taking up to, and over, 14 working days. It’s worth letting all parties connected with the property know that you could all be in for a bit of a wait.
4. Down Valuations
That dreaded feedback from a survey. Down Valuation.
If you’ve submitted an application and the value has come back lower than anticipated, this is because surveyors are valuing on the side of caution. If you wish to continue with the agreed purchase price, you would need to top this up from your own savings or resources.
Be mindful that if you’re making an offer that is over the asking price, there is a higher chance right now that It could be down valued.
5. Stay Ahead
There is absolutely nothing worse than finding the perfect house, for the vendor to accept an offer from someone that’s better prepared than you.
Agents are asking for a Decision in Principle to view houses, lenders are asking for a tonne of supporting documents… So, have them all ready!
Payslips, Bank Statements, ID, Proof of Savings, Return to work letter, Gift of Deposit letters…
Find out what it is your lender will ask of you and get these documents ready before you apply for a mortgage.
There you have it.
These are some essentials you should know whilst planning to buy your very first home straight out of lockdown.
If you need any help navigating through a challenging mortgage market, then our team of local advisors are here to provide you with reliable, easy to understand mortgage advice that’s made for you.
Reach out to us on social, visit our website or give us a call on 01925 573328.
*Correct as of 23-09-2020 (Source: https://www.bankofengland.co.uk/)
**Information collected on 23-0-2020 (Source: https://www.santanderforintermediaries.co.uk/products-and-criteria/latest-mortgage-rates/)