How coronavirus may affect your mortgage
Trussle is open as usual. Find out how Covid-19 is affecting the mortgage market, if you can still complete a purchase, 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?
England's housing market opens up
The government has slightly relaxed the coronavirus lockdown in England.
You’re now allowed to visit 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.
Mortgage applications that had been paused by lenders are now being processed. And if you’re part of a frozen property chain, it can start moving again.
If you’re waiting for your mortgage application to be approved, we’ll send you more info as soon as we get an update from your lender.
If you're expecting to complete in the next few weeks, we recommend calling your solicitor now to get an update. We'll also be contacting your lender and solicitor to make sure your mortgage keeps moving.
You can always get in touch with your adviser or case manager by phone or email if you have any questions.
Keep reading this guide to learn more about how coronavirus, furlough and mortgage payment holidays could affect your mortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Trussle is still open and will stay open
We know things are pretty stressful at the moment.
With new government guidance every few days, and an uncertain few months ahead of us, 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’s happening with the coronavirus pandemic.
We’ve emptied the fridge, given the plants a good watering and are now all working just as hard from home.
We’re an online broker powered by super-smart technology and amazing mortgage experts.
You can still get in touch with your adviser or case manager by phone, email or message as you normally would.
We’ll get in touch if anything changes with your mortgage.
Changes to the mortgage market
Some lenders temporarily stopped offering certain mortgages because of the coronavirus pandemic.
This was because a surveyor needs to visit the property to carry out a valuation for some mortgages and it would’ve gone against social distancing rules.
As of 13 May 2020, lenders announced that in person valuations can start back up again.
Check with a broker to find out more about the mortgages available.
Lenders
Because of the coronavirus pandemic there are very few lenders who will give you a mortgage if you only have a 5% deposit or a loan to value (LTV) of 95%.
If you only have a deposit of 5% you could try to improve your LTV by saving up more money or consider buying a cheaper house.
If you have a deposit of 10% or equity in your home of at least 10%, there are currently 4 big lenders who may be able to give you a mortgage: HSBC, Virgin Money, Clydesdale and Accord.
If you have a deposit or equity in your home of 15% or more, there are now plenty of lenders who may be able to give you a mortgage.
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.
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.
I'm about to complete on my new home. Can I still exchange and move in?
Previous government guidelines urged people not to move home during the current pandemic.
On the 13th of May the government stated that moving home was once again allowed to go ahead as normal.
However, social distancing is still encouraged.
What if I’ve exchanged and can’t complete?
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.
Can I still remortgage?
Lenders are changing the availability of their products and the eligibility criteria on an almost daily basis.
Even so, 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. Any that need a physical valuation have been put on hold for the next few weeks.
Where they can, lenders are moving to an automated valuation model (AVM) which means that remortgages can still happen.
AVM is a way of using data to value a property so a surveyor doesn’t 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.
What if I can't pay my mortgage?
See the mortgage payment holiday section of this guide for more information.
What about the base rate change and my mortgage?
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 haven’t 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.
Should I delay my mortgage application?
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
Can I remortgage if I’m on a mortgage payment holiday?
You can still remortgage if you’re on a payment holiday.
The Financial Conduct Authority (FCA) have said that taking a mortgage payment holiday shouldn’t 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 isn't here, check their website or give them a call.
Barclays
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.
Halifax
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.
Lloyds
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.
Nationwide
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.
NatWest
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.
Santander
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.
TSB
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.
Virgin Money
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.
Yorkshire
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.
Accord
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.
Coventry
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
If you’ve recently been furloughed as a result of the coronavirus crisis then 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 in cases where your employer tops up the portion your salary not covered by the government’s furlough scheme.
While you’re furloughed, many lenders may not accept your normal bonus or overtime pay.
You’ll have to show that you’ll definitely be returning to work before a lender will accept your mortgage application.
However, 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.
What is the furlough scheme?
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 has made a second emergency interest rate cut to try and control the economic fallout of the coronavirus outbreak.
It has 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.
Should I still buy a home?
Buying a home right now may be a slower process than usual due to the backlog after many mortgage approvals were delayed.
As long as you’re confident you can afford it, there’s no reason not to buy a home because of coronavirus.
Following a brief pause, valuations can now go ahead as normal.
You’re also able to continue with your planned home move.
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?
Some lenders have changed their rates following the Bank of England decision.
Some lenders have also withdrawn all or some of their mortgage products because of coronavirus.
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 up to 2 weeks.
And things are taking even longer at the moment.
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.
Now find out...
Sources
¹ Nationwide House Price Index: February 2020
² Guardian: UK banks offer mortgage holidays for customers affected by coronavirus
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