How coronavirus may affect your mortgage
Trussle and the property market is open as usual. Find out more about how coronavirus is affecting home viewings, the furlough scheme and how to get a mortgage payment holiday
This guide has information about:
Changes to the mortgage market
Includes information about getting a mortgage with a deposit under 10%
More information if you're buying a house or getting a mortgage
Coronavirus and mortgage payment holidays
Includes how to take a payment holiday, should you take a payment holiday and ways to reduce your mortgage without a payment holiday
What should I do if I’m applying for a mortgage with Trussle?
What should I do if I’ve already applied for a mortgage with Trussle?
What happens if I can’t pay my mortgage because of coronavirus?
Trussle is still open – and so is England's property market
We know things are pretty stressful at the moment.
With a new national lockdown and uncertainty about how long it will last, it’s perfectly understandable to be feeling a bit worried about things.
We’d like to let you know that we’re doing our best to keep your home purchase or remortgage moving along as quickly as possible.
Trussle is still open – and will stay open – no matter what happens with coronavirus or this third national lockdown.
We’re an online broker powered by super-smart technology and qualified mortgage experts – who have all been working safely from home since the first lockdown.
The property market is still open as well. You can talk to an estate agent and view properties, surveyors are allowed to visit properties and provide a valuation, and you can hire a removals company to help you move.
If you're a Trussle customer, you can always get in touch with your adviser or case manager by phone, email or message as you normally would.
We’ll get in touch with you if anything changes with your mortgage.
Keep reading to find out more about how this third lockdown could affect your mortgage or home purchase.
Changes to the mortgage market
Mortgages are taking longer to be approved because of coronavirus.
It currently takes about 20 days for a mortgage to be approved after we submit it to a lender.
This time last year, it only took about 10 days for mortgages to be approved.
This means if you're trying to buy a house before the stamp duty holiday deadline, you should start getting a mortgage soon.
Low deposit mortgages
Because of coronavirus there are very few lenders who will give you a mortgage if you have a small deposit.
If you only have a deposit of 5% you could try to improve your loan to value (LTV) ratio by saving up more money or consider buying a cheaper house.
If you have a 10% deposit, there are still a few lenders who you may be able to borrow from.
If you have a deposit or equity in your home of 15% or more, there are plenty of good mortgage deals to choose from.
The mortgage market is changing every day. Speak to a mortgage adviser at Trussle who can help you find the right mortgage for your situation.
Should I still buy a home?
Buying a home right now may be a slower process than usual because of coronavirus.
The housing market is still open across the United Kingdom.
Estate agents, surveyors, conveyancers, tradespeople and removals companies can all continue working during the lockdown. Home viewings, as long as they follow social distancing rules, can continue.
As long as you’re confident you can afford it, there’s no reason not to buy a home because of coronavirus.
More information if you're buying a house or getting a mortgage
Here are some extra details if you're currently in the process of buying a house or remortgaging.
Previous government guidelines urged people not to move home during the current pandemic.
On the 13 May 2020, the government stated that moving home was once again allowed to go ahead as normal.
However, social distancing is still encouraged.
Lenders have agreed to help homemovers who’ve exchanged contracts and set their completion dates by offering mortgage extensions of up to 3 months.
This extension will vary from lender to lender. It could mean pushing back the start date of a mortgage deal or extending a mortgage deal at the end of its term.
But the effect will be the same.
Get in touch with your Trussle mortgage adviser and they’ll let you know what your lender has planned.
Lenders are changing the availability of their products and the eligibility criteria on an almost daily basis.
But we’re still helping lots of customers successfully remortgage.
We’ll find the best deal for your personal circumstances. If your adviser finds a better deal that you can switch to, they will do that.
We’ll try to keep you up to date with lender delays and will bear this in mind when we make our mortgage recommendation.
One thing that could cause a delay is the valuation.
Valuation surveys are normally done as part of the remortgage process.
Where they can, lenders are moving to an automated valuation model (AVM). This means that remortgages can still happen.
AVM is a way of using data to value a property so a surveyor does not have to visit it.
Applications can still be reviewed, documents can be uploaded and checked, and where possible an AVM can be carried out. So you can still remortgage.
See the mortgage payment holiday section of this guide for more information.
Lenders are changing the availability of their mortgages and the eligibility requirements on an almost daily basis.
We’re also seeing certain products and rates being taken off the market.
For new mortgages, lenders have not generally changed their fixed rates after the Bank of England base rate cut from 0.75% to 0.1%.
Fixed rates
There'll be no change to your monthly payments as you’re on a fixed rate until the end of your fixed rate term.
If this is ending in the next few months it may be time to remortgage.
Variable rate and standard variable rate (SVR)
The base rate cut could mean your monthly repayments will go down. Your lender will let you know what this means for you and your payments.
Tracker
Your interest rate tracks the Bank of England base rate (plus a bit extra), so your rate will change.
Ask your lender if you’ve got any questions about what you’ll be paying now.
Lenders are changing the availability of their products and the eligibility rules on an almost daily basis.
We’re also seeing some mortgages and rates being taken off the market.
We’ll still find the best deal to suit your personal situation.
And if a better deal becomes available later on that you can switch to, we’ll do that.
You can discuss it with your adviser who’ll be happy to talk you through your options
You can still remortgage if you’re on a payment holiday.
The Financial Conduct Authority (FCA) have said that taking a mortgage payment holiday should not affect your credit history.
As long as your lender is confident that you can afford your mortgage payments, you should be able to remortgage as normal.
Mortgage payment holidays for the largest UK lenders
Here is more detailed information for some of the UK's largest mortgage lenders. If your mortgage lender is not listed, check their website or give them a call.
You can apply for a mortgage holiday if you've got a residential mortgage and your income has been affected by the coronavirus.
Barclays is looking at a way to help buy to let customers.
The quickest way to apply for a mortgage holiday of up to 3 months is to fill in the online form.
Barclays will confirm by text message if your payment holiday request has been accepted within 3 to 5 working days.
Arranging a repayment holiday won’t affect your credit file.
You can take up to a maximum 3 months’ payment holiday if you’ve been affected by the coronavirus in any way.
The quickest way to ask for a payment holiday is to fill in Halifax's online form, which only takes 2 minutes.
They'll send you a text message in 3 to 5 days to let you know if you can take one.
If you're up to date on your payments, your holiday won't affect your credit rating and you won't go into arrears.
You can ask to take a break of up to a maximum of three months if:
everyone agrees to the payment holiday if you have a joint mortgage
your mortgage payments are up to date
If you've made overpayments in the past 12 months you could ask to underpay for a while, rather than take a payment holiday.
You'll need to call Lloyds before you underpay.
If you think you'll struggle to make your monthly mortgage payments you may be able to take a 3 month payment holiday.
You can apply for a mortgage payment holiday if:
your finances have been affected by the coronavirus
you’re up to date with your monthly mortgage payments
everyone named on the mortgage agrees to it
You can apply for a mortgage payment holiday until at least 30 April 2020.
If Nationwide agree to you taking one, it won’t affect your credit rating.
You can apply for a 3 month mortgage payment holiday if:
the coronavirus has affected your ability to pay your mortgage
you’re up to date with your monthly mortgage payments
everyone named on the mortgage agrees to it
The quickest way to apply for a mortgage repayment holiday is to fill in the online form.
NatWest will take a look and email you within 5 days to confirm when your payment holiday will start.
They'll also include a projection of what your mortgage payments will be after the holiday period ends.
If your mortgage isn’t in arrears, and you pay by direct debit, you can apply for a mortgage payment holiday online.
If your mortgage is in arrears, or your mortgage payment is due within the next 10 days, call Santander on 0800 023 4603.
You'll probably have to wait a while to speak to someone.
If you're up to date with your payments, the mortgage payment holiday won't affect your credit rating and you won't go into arrears on your mortgage.
If your ability to pay your mortgage has been affected by the coronavirus you may be able to take a repayment holiday for up to 3 months.
You have to be up to date with your mortgage repayments for it not to affect your credit file.
If you are currently in arrears, call TSB on 0345 835 3374 for help.
Fill in Virgin Money's online form if you're struggling to pay your mortgage because of the coronavirus and want to take a mortgage payment holiday.
If you take a payment break, they'll make sure it doesn't affect your credit file.
At the end of your payment holiday, Virgin will work with you to agree the best way for you to repay any extra interest and make up the missed payments.
If the coronavirus has affected your ability to pay your mortgage you can ask for a payment holiday of up to 3 months.
You have to be up to date with your mortgage repayments and it won't affect your credit file.
If you have a buy to let mortgage, and Yorkshire agrees to a payment holiday because your tenant can't pay the rent, the benefit of the payment holiday should be passed on to the tenant.
You may be able to take a payment holiday for up to 3 months if you're:
a residential customer
a buy to let landlord with tenants
having difficulties with your finances because of coronavirus
up to date with your payments
Accord will make every effort to make sure that the payment holiday doesn't affect your credit file.
If you’re up to date with your mortgage payments the quickest way to apply for a payment holiday is to complete the online mortgage payment holiday form.
If you’re behind with your mortgage payments call Coventry as soon as possible.
It will probably take longer than usual to get through.
Getting a mortgage if you've been furloughed
The government have extended the furlough scheme until the end of March 2021. This is following the announcement of a second national lockdown.
If you’ve been furloughed you might be worried about how it’ll affect your mortgage or remortgage application.
When calculating what you can afford, many lenders will only consider 80% of your income (up to a maximum of £2,500 a month) if you’ve been furloughed.
Some lenders have said they’ll consider 100% of your salary. But only if your employer tops up the part of your salary not covered by the furlough scheme.
While you’re furloughed, many lenders may not accept your normal bonus or overtime pay.
You’ll have to prove you’ll definitely be going back to work for a lender to accept your mortgage application.
But not all lenders will accept applications from furloughed customers. Learn more in our mortgage lenders guide.
Given the changing nature of the current situation, you could find that lenders will update their criteria. So speak to a mortgage broker like Trussle for advice.
On 1 March 2020, the government put in place a temporary furlough scheme for companies to make use of if they find themselves struggling during the pandemic crisis.
The furlough scheme is officially known as the Coronavirus Job Retention Scheme.
Around 7.5 million workers have been furloughed since the start of the coronavirus lockdown.
This means that the government will cover 80% of each employee’s salary up to £2,500 a month.
The company can also 'top up' the salary.
Not every company will make use of the scheme, but your employer should let you know if they will.
The emergency interest rate cuts and your mortgage
The Bank of England made a second emergency interest rate cut on 19 March to try and control the economic fallout of the coronavirus outbreak.
It cut the bank rate from 0.25% to 0.1%.
This may affect your payments if you’re on a variable rate mortgage.
It won’t affect your payments if you’ve got a fixed rate mortgage.
If you’re on a tracker mortgage, which tracks the bank rate, your mortgage payments will go down.
If you’re on a discounted variable rate your lender may reduce your interest rate. Speak to your lender or broker to find out.
What should I do if I’m applying for a mortgage with Trussle?
Nothing changes if you’re applying for a mortgage with Trussle.
We can still give you a recommendation so there’s no need to wait to apply.
If mortgage rates change, we can review your mortgage to make sure you’re on the best product for your situation before we send your application to a lender.
If you have any questions, you can call, email or message us.
What should I do if I’ve already applied for a mortgage with Trussle?
There’s nothing you need to do if you’ve already applied for a mortgage with Trussle.
We’ll make sure the mortgage we recommend for you is the best one for your situation.
And we can review it before completion so you’re sure you’ve got the best deal.
If you have any questions, you can call, email or message us.
What if I’ve already had a mortgage offer with Trussle?
If your lender changes their rates or withdraws the mortgage we recommended, we will review your mortgage to make sure you’re still on the best product for your situation.
Changing your mortgage offer isn’t difficult, but it could take a few weeks because coronavirus is slowing things down.
If you have any questions, you can call, email or message us.
Should I still remortgage?
You can still remortgage as long as you can afford the payments.
This has always been the case.
If your lender changes their rates, we can review your remortgage to make sure you’re still on the best product for your personal circumstances.
Sources
¹ Nationwide House Price Index: February 2020
² Guardian: UK banks offer mortgage holidays for customers affected by coronavirus
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Your home could be repossessed if you don't keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.