What will the latest lockdown mean for your home buying plans? Greg Cunnington, our Director of Lender Relationships and New Homes, explains everything you need to know about viewings, purchasing and taking out a mortgage while restrictions are in place.
Once again the nation is in lockdown. Many people are working remotely, children are home learning and everyone is doing their bit to protect the NHS from being overwhelmed whilst we wait for a vaccine.
For those buying a home these new tougher restrictions have naturally created a great deal of anxiety and raised a number of questions.
Can I still move into the home I am buying? Can I still sell my property? Will we still be able to view prospective houses?
Indeed, the property market has been buoyant since it re opened in May last year, with a combination of pent up demand from the initial lock down period and the stamp duty holiday seeing record numbers of property sales agreed.
With the impending stamp duty holiday deadline of 31 March we saw a further rush of demand late last year as buyers looked to find a new property to complete on a purchase by this deadline, and it was expected that the start of this year would see a similar rush from buyers.
So, how will this play out now we are in lockdown? Hopefully I will answer this and the many other questions you may have below…
The property market remains open
The good news, and big difference to the initial lock down of last March, is that the government has confirmed that the property market can remain open as long as social distancing is maintained and all guidance for the sector is followed.
This includes estate agents and construction sites – so you can still search for a new property and, if you are purchasing a new build the process will not be impacted.
RICS (the Royal Institute of Chartered Surveyors) which enforces surveying standards in the UK, has also confirmed mortgage valuation and property surveys can still take place.
This is very positive, as without this in place large delays would have occurred to purchase processing timeframes. It has also been confirmed property viewings with an estate agent can still take place.
It has also been confirmed that you can still move home, with the one change being that you should not enlist assistance from people outside your household or bubble to help ‘unless absolutely necessary’.
Removal firms are can continue to work as normal to help and are not included in this guidance.
The Mortgage Market
The mortgage market also remains open. Mortgage lenders have worked very hard to ensure they are operating as efficiently as possible in the current conditions with many staff already working remotely.
In fact they are set up to carry on lending as close to normal as possible.
You may find if you approach your bank directly you will struggle to get an appointment within a two week period. This is due to the operational pressures lenders are facing mentioned earlier.
The good news is that as an intermediary we remain very much open for business to assist you with your mortgage requirements, and our advisers can speak to you at a time that works for you.
Warning - delays likely
On the face of things it is very much business as usual for the property and mortgage markets.
However, as with many things, there is more to the current market than meets the eye and the property and mortgage markets are still not back to how things were prior to the pandemic.
The property market has been so busy that this has put strain on various parts of the process, meaning that the timescales of buying a property are longer right now than pre-pandemic.
The impending stamp duty deadline has added further pressure here as clients rush to complete their purchase before this deadline, causing service pressures in all parts of the purchase chain.
Mortgage lenders are taking longer to issue mortgage offers, local authorities are taking longer to carry out their searches (which are required as part of the purchase conveyancing process), and conveyancers have large backlogs they are struggling to keep on top of. All this means buyers may face delays.
How an intermediary can help
These service pressures make it more important than ever that you speak to a mortgage intermediary.
A good intermediary will monitor each lender’s current timeframes. As such, if your purchase or remortgage application needs to move quickly – for example if you have a set completion date or your current fixed rate shortly ends – we can ensure your application is submitted with an appropriate lender based on their current service levels.
This will become even more important as the stamp duty holiday end date, 31 March , looms closer.
We also know which lenders will require a more detailed manual assessment based on your scenario, so we can advise accordingly here.
Most importantly, we have exclusive access to the decision makers and escalated service teams with many lenders. This means by using an intermediary such as ourselves your application will be reviewed quicker than if you use a lender directly, and also that if any issues arise we are on hand to help smooth these through with the lender to avoid long delays.
Also, we have access to mortgage lenders who will accept indemnity insurance from your solicitor in place of a local authority search.
Some local authorities are already stating they will not be able to return searches in time for the stamp duty deadline, an issue that the latest lockdown will exacerbate, so using one of these lenders will be beneficial in order to complete your purchase before the stamp duty holiday ends.
Mortgages with a 10% deposit
Another part of the mortgage market which has undergone huge change as a result of the pandemic is the number of mortgage products available.
As lenders have looked to limit the number of applications they receive to cope better with service levels, the number of products available in the market has been lower (and this has also seen mortgage rates increase).
The good news is the number of available mortgage options for borrowers has been steadily increasing recently. As such, for many buyers there are plenty of options available once more and rates are becoming more competitive again.
Unfortunately, for first-time buyers in particular, one of the main challenges here has been a large decrease in available mortgages for those with a 5% or 10% deposit.
But in a recent turn of events, we have seen several mortgage lenders reintroduce mortgages with a 10% deposit, including some of the largest lenders such as Halifax, Nationwide, Barclays and NatWest.
This is great news, as it means buyers with a 10% deposit who have had to put their home ownership dreams on hold for most of last year can now return to the market.
However, you need to be careful as some of the lending criteria is still a bit more restrictive as lenders look to slowly return to this type of lending. So, the maximum mortgage offered may be lower, the credit score required to be accepted can be more stringent and there may be specific rules on the type of property you can purchase.
As such, if you have a 10% deposit you should definitely speak to an intermediary who can navigate the options for you here.
Some lenders are also only offering mortgages with a 10% deposit via selected intermediaries to ensure they can manage the number of applications received.
We have access to some mortgage products on a semi-exclusive basic with a 10% deposit, so if you are thinking of purchasing in the near future please do not hesitate to contact us to speak to one of our mortgage advisers.
This article was originally posted in What Mortgage online. You can see the original article here. Please note this will launch a new web page.