Getting a mortgage in the pandemic

 

When the Lockdown in March 23rd came into effect, everything went into a pause, people were days away from completing their purchase and the lender put a stop on releasing funds, some were told that once lockdown was eased the funds would be made available to them again and the mortgage offer would be extended until that time, this was mostly the case with large high street lenders, Santander, Halifax etc. Some were told that their case would need to go through some light underwriting to enable the lender to extend the offer; this was to establish if the applicant’s circumstances would be adversely affected by the lockdown or if they would be left in the same financial position once lockdown was lifted. For some unlucky individuals who had self employed business’s that would struggle to re-open after lockdown or re-open with a vastly reduced cash flow the offer of a mortgage was terminated at that point. 

Some lenders suspended lending completely; with a notice they should or might resume lending after the lockdown was eased; some lender actually considered lending during the lockdown for possible completion once it was allowed if it was a purchase. The lending was significantly tougher with larger deposits needed or lower loan to values for remortgages. If a survey was needed to establish value then the case would be prepared ready for when govt guidelines would allow a surveyor to visit the property. Some lenders were offering desk top valuation if the mortgage deal warranted it. 

Once Lockdown was lifted, the landscape was still very much different to pre- Lockdown lending conditions, the worse effected were the lenders that operated in the Niche or adverse sector of mortgage lending; this was due to difficulty in securing funds from the London Money markets and fear that a large percentage of the potential applicants who were already classed as subprime would have even less ability to service a new mortgage. It has been the case that these lenders are gradually coming back into the market, but with less products, higher interest rates and reduced access through brokers (Together Mortgages for example have gone back to only allowing applicants to apply through a limited number of packagers). 

Prime lenders, who were offering 95% and 90% mortgages, are now only offering 90% mortgages or less, the 90% mortgages are offered on a first come first served basis, by releasing tranches of money in the morning of a given day. Most lending is limited to 85% or less, with tighter underwriting; they are also declining cases where the applicant has opted for a payment holiday on their mortgage or credit cards over the lockdown period. 

Furlough 

People that were on furlough were judged on a cases by cases basis , if it was deemed to be the case that their job looked set to return to normal after lockdown restrictions were removed they would accept them based on amount received from furlough or what their income will return to once normal work resumed . Sometimes this would involve a letter from the employer to confirm this they would return to work ETC on a set date to pre furlough pay. Some lenders would not look at applicants on furlough until they returned back to work. 

To be continued borrowing on commercial property in the Pandemic.

Coronavirus is it a good time to buy a property

 

 It’s a strange time, with so much uncertainty, not just in the property market but in life generally, with constantly changing rules that govt large parts of our lives , deciding if it is the right time to buy a property is daunting .

In March when the economy locked down the property market went on hold as moving was not advised by the UK govt due to the UK wide lockdown. In mid –May the property market came alive and property sales exploded to a level not seen for some time . On Zoopla & Right move they estimated there were £37 billion worth of transactions between July 12 and August 8th. 

Property sales have been increasing steadily in recent years, but currently they have gone up by 20% on the previous year, higher than the record set in March 2017. 

The current Mini boom has no sign of slowing down with weekly sales figures between August 5 and August 12 up by as much of 60% compared to the same period last year, some of this is due to the govt incentive for no stamp duty on properties across England up to £500,000, this is for first time buyers , home movers and second properties , although second properties do still attract the 3% stamp duty charge . This means that people have seen a window of opportunity they have some spare money not spent on a holiday and they have the opportunity to buy a property free off stamp duty or in the cases of second property reduced stamp duty. 

Stamp duty before the recent government incentive for COVID on a property worth 500k was £10000, now it is Zero .

Second property before the recent government incentive for COVID for a value of £500,000 was a massive £30,000, now you would pay £15,000 a whopping £15000 in savings. 

The issue due to all of the above is people are fighting over properties & pushing prices up slightly. There is also an issue with getting a mortgage due to increased and tougher levels of underwriting, some surveyors down valuing properties due to Coronavirus fear of a possible market crash. Its made it a difficult decision to if it is the right time to buy a property. 

If you are moving home then yes I think it’s a good time as increased property prices will be offset by the one you are selling, no stamp duty up to £500,000 if you can secure another property and a mortgage if necessary then to me it’s a good time to move .

For first time buyers who have had stamp duty incentives , before the pandemic it might be best to hold tight as the boom might come to an end with possible prices dropping when the economy goes in to post pandemic recession and the govt is promising more incentives for first time buyers in the coming years . 

Buy to lets, a lot of investors were expecting a significant price drop, but are seeing a boom in in the market so are torn between low stamp duties and increasing prices. 

So in summery it’s good for some but not for others to buy or move home.

The current situation with help to buy

 

 The current situation with help to buy  

The help to buy scheme was made available in April 2013, it was named as the flagship housing policy of the coalition administration, led by the then Prime Minister David Cameron along with former Chancellor George Osborne. 

When the Help to buy was set up it was due to expire in April 2021. With a new version of the scheme (for first time buyers only) that will run from April 2021 to March 2023. Under this plan , sales transactions would need to have been agreed by December 2020 so that you can take advantage of the scheme . 

What does this mean for buyers? 

To ease pressure on house builders, the government’s Help to buy lp to Buy building deadline has been pushed back by two months to help thousands of families move into their new homes despite interruptions in building these new homes because of the pandemic.

 The government says the deadline for the homes to be completed in order to comply with the equity loan scheme has been extended to ‘ensure customers do not miss out if there has been a delay in construction due to the pandemic’. 

Rather than the new homes needing to have been finished being built by the end of December – as was the original plan - the extension means the deadline will now move to 28 February 2021, ‘helping thousands of customers to get the keys to their new home’. 

However, the deadline for the legal completion of the sale will remain the same – namely March 31 2021. That said, the government has put in place an extra measure for those existing customers who have experienced severe delays as a consequence of Covid-19. 

Homes England, the non-departmental public body that is charged with funding new affordable housing in England, will work with those who had a reservation in place before 30 June to examine their situation and look to provide an extension where necessary. If this is needed, they will have until 31 May 2021 to legally complete. 

In its announcement, the government also confirmed that the new Help to Buy scheme, which will replace the current scheme, will still come into place from 1 April 2021 and run until March 2023 as planned. There are no proposals for further extensions. The new scheme, restricted to First Time Buyers only – to bat away the criticism from some that Help to Buy has been helping more buyers further up the ladder than was perhaps intended – will implement property price caps to support people into their first home.

5 Potential problems if you decide not to get a property survey

 

 5 Potential problems if you decide not to get a property survey 

In most cases if there is a problem with your property a survey should find it, the list below highlights 5 main ones. 

1. You will miss out on advice and recommendations from an expert 

For a lot of people, getting a survey on your property that you intend to buy getting a survey on the property will mean you will get the knowledge and expertise of a qualified professional with year of experience in the field of property surveys. You need to make sure you use a surveyor that is regulated by RICS (Royal Institution of Chartered Surveyors) you can utilise the advice given on the property to make a final decision on whether to progress with the transaction. 

Also in addition to their extensive experience in the industry as a whole securing the advice of a local property expert can be invaluable-by requesting a surveyor that operates within your region, you will be guaranteed that they will be able to draw upon a wealth of local expertise. Some properties will be affected by local environmental conditions , like risk of flooding , tree issues etc and the surveyor will be aware of these issues due to their local knowledge .

 2. You cannot guarantee an accurate valuation  

There is a difference between a valuation for mortgage purposes and a specific property valuation. People are often confused by the 2 types of valuation as both can be requested to establish a property’s value. The mortgage valuation is mostly for the lenders benefit, allowing them to know if the property is safe to lend its money on. In most circumstances this survey isn’t sent to you as it now goes directly to the lender and unless you request a copy (sometimes lender will still refuse to send it to you) . If you pay and request for a survey privately, the surveyor is working on your behalf and not the lender so they will report directly back to you . 

3. Renegotiations will be more difficult 

In the case that your survey does identify several issues regarding the condition of the property, the report can subsequently be used to effectively broker the price with the seller. This is especially true of Homebuyer Reports, which provide a detailed record of all the issues or defects identified, as well as one of three different condition ratings which is used to indicate the severity of these concerns and the immediacy in which they need to be dealt with. 

By citing the expert findings of your RICS accredited surveyor, you are far more likely to be successful in your renegotiations. More specifically, the seller will be more inclined to offer one of the two following options. They will either, propose a reduction in the asking price of the property that is roughly equal to the buildings estimated cost of repairs or they will agree to make the necessary renovations prior to your move in date. 

4. Future costs may be incurred 

In addition, once you have received the completed report, you should have a far greater understanding of what exactly the surveyor identified during their inspection. This includes any defects or shortcomings that would have otherwise continued to go unnoticed by the tenant or vendor. 

This is where a property survey could potentially save you thousands of pounds in future expenditure. 

By having a comprehensive inspection undertaken by a qualified expert, you may be alerted to any number of serious or costly defects that are not immediately obvious. When these kinds of issues are left unattended to, they not only incur significant expenditure later down the line, but also pose a tangible danger to any future occupants. It’s in your best interests to instruct a surveyor to identify these shortcomings early and deal with them accordingly. 

5. No peace of mind  

As we previously mentioned, buying or selling a home is undoubtedly one of the biggest decisions a person will ever make. That’s why, when you request a property survey, you can rest assured that the independent evaluation will guarantee that you’re making a confident and informed judgement, based on the advice of a qualified professional. Not to mention saving a homebuyer thousands of pounds in future costs through the potential to renegotiate the selling price based on issues identified in the report.

 Different types of survey click on names for more information

Home buyers report  

Condition report  

Condition Surveys 

lenders survey