30 Mar Financial Support: COVID – 19
At Howard Mortgages, we appreciate that many people may be going through some financial strain and uncertainty at the moment. For most people the monthly mortgage commitment will be the largest single expense. Therefore, it is important mortgage borrowers understand their options and are able to act on the areas which will provide financial support to them.
Mortgage Payment Holidays
Mortgage payment holidays have come into force as a result of a government proposal that borrowers who have been financially impacted by Covid-19 both directly and indirectly receive support. People who qualify will be eligible for a three-month mortgage payment holiday, for both residential and buy-to-let mortgages by completing an online application form. Once completed it normally takes the lender 7-10 working days to process your request and you will not see a difference until the following month. Mortgage payment holidays are not guaranteed and are on a case by case basis.
If you take the 3-month payment holiday, it does not negatively impact your credit file as it is not classed as an ‘arrangement to pay’ so can be done without fear of it ruining your chances of getting another mortgage later down the line.
In some cases, lenders are also offering for you to switch to an interest only mortgage or part and part, again this is a case by case basis. Extending the term of the mortgage could also be an option to reduce your monthly outgoings.
A payment holiday is a ‘deferral’ of interest rather than an option not to have to pay your mortgage. Therefore, in the first instance my advice would be that if you can afford to pay your mortgage without a payment holiday, then you should do so.
What is the impact of taking a mortgage payment holiday?
In simple terms it could mean that your monthly payments will go up and you will pay more interest over the term of your mortgage.
We would only advise to take a mortgage payment holiday as a last resort. We would also recommend that you ask the lender to confirm what will happen to your mortgage payments after the 3 months, some lenders are adding the 3 months to the end of the term of the mortgage, some will increase your monthly payments and some could ask for a lump sum at a later date. If you cannot get hold of your lender then please contact me for assistance.
Extension of Mortgage Offers for home movers
This is something that most lenders are offering when waiting for lockdown to be lifted. Home movers cannot complete at the moment, so lenders are offering an extension on the mortgage offer for up to 3 months.
Mortgage Options – can I still apply for a mortgage?
Lenders are still open for business. First time buyers are still purchasing properties and there are many competitive mortgage rates to be had.
Purchase and re-mortgage rates are still available for landlords.
Physical valuations have been put on hold during this period of self-isolation. This means that valuations are currently deferred for an initial period of around four weeks. However, this does not mean you should hold off applying for your mortgage. By applying for a mortgage, you are locking in the rate. Depending on the loan to value and lender, desk top valuations are being completed.
Using a mortgage broker
I have access to the whole of the market, which opens up opportunities for you. I am also still working during Covid19 and I am available during flexible hours. Video calls can be arranged or a phone appointment. A broker is a vital tool to use in a climate where it is difficult to get hold of various people needed to support your purchase.
Did you know?
• You can defer your council tax bill for 2 months during Covid19?
• You can change your mortgage product 4 months before it ends?
• Banks are reducing their overdraft fees during Covid19?
If you haven’t done so already, I would recommend digging out your bank statements or view them online and take a look at all your direct debits and standing orders you have in place.
Questions to ask yourself
• Are there any old standing orders/direct debits in place that are dormant? If so, close them down.
• Are you paying for something that is not essential and is not unsecured credit? Can you afford to live without it? If you can, then close it down.
• When was the last time you reviewed your gas and electric supplier? Are you on the best deal at the moment?
• Have you reviewed your credit card deal recently? Would you benefit for a 0% deal?
• When was the last time you reviewed your protection/insurances?
• Could you benefit from a better mortgage rate?
Martin Lewis (money saving expert) is a great resource for comparing energy deals and credit cards and he is a big advocate for getting mortgage advice from a mortgage broker like myself. Interest rates are at an all-time low and thousands many be looking to re-mortgage their homes. If you are one of the thousands considering re-mortgaging, please contact me to discuss your options and see how much money you could save.
As a thank you to the NHS staff, we are waiving our broker fee for NHS on any new mortgage and re-mortgages through April & May, a saving of £395. Please contact us for full details. For more information please contact Samantha on 07766901797 or via email [email protected].
Your home may be repossessed if you do not keep up repayments on your mortgage.
Buy to Let mortgages are not regulated by the Financial Conduct Authority.