One of the main things that is mentioned when talking about mortgages and the impact the current Coronavirus pandemic is having on customers is the option of a mortgage payment holiday. But is this the right thing for you to consider?
Mortgage Payment Holidays
A payment holiday is a deferral of interest rather than an option not to have to pay your mortgage.
It’s in this first instance our advice would be that if you can afford to pay your mortgage without a payment holiday, then you should do so – as this is a holiday of payment and would still have to paid back at some point.
Also, whilst the government may extend the period (we stress may, as this is completely discretionary to the lender) at present these payment holidays are capped at three months. People thinking of requesting a mortgage payment holiday should ensure this facility is available in the future when it is really needed, rather than making use of it too early when their financial position maybe less in need than in a couple of months’ time.
Anybody considering a payment holiday should first speak to their mortgage intermediary, who will be able to discuss this option in more detail and to help signpost how to contact your lender if this is appropriate.
Can I still apply for a new mortgage, or remortgage, now?
Banks and lenders are still taking applications for new mortgages, in fact, there remains a great deal of competition in the mortgage market as lenders fight for customers. Having said that, now, more than ever, it is important that you consider whether you can afford your monthly repayments.
Nationwide Building Society, one of the UK’s biggest lenders, recently withdrew mortgages with a loan-to-value (LTV) ratio above 75% from sale.
All fixed rate and tracker mortgages for buyers with a deposit smaller than 25% are therefore unavailable, including for new build purchases, first-time buyers and remortgages.
It comes after the government effectively halted the UK’s housing market by advising people to delay moving home, wherever possible, in order to avoid breaking social distancing guidelines.
Other mortgage lenders have made similar moves at the same or greater LTV’s than that of Nationwide.
So, to put this all into context, there are still a good quantity of very good deals out there for people looking to move or remortgage who have good deposits/equity but for first time buyers the market is very unobtainable.
How can I find the best mortgage deal for me?
Before the Covid-19 outbreak, many lenders allowed you to borrow up to a maximum of 95% LTV, meaning many first-time buyers with a small 5% deposit could get onto the housing ladder.
We are lucky in our industry, that we can work remotely, and as such are still here to help our clients as usual at this very troubled time.
Intermediaries can access the various lenders on the market and will be able to help navigate through these options at this time for you to find the best solution.
From an intermediary perspective, it is currently business as normal in terms of us helping our clients. If you need any guidance of the things you can and can’t do in these unprecedented times, we encourage you to get in contact with us, and Temple Wealth will be more than happy to help.
Your home may be repossessed if you do not keep up repayment on your mortgage.