Mortgage rates: How borrowers could access ‘lower interest rates with lenders’
Much of everyday life has been put on hold in the past eight weeks, with the coronavirus (COVID-19) crisis having a devastating impact across the UK and the world. While the UK lockdown remains in place, some tweaks have been made in certain parts of the UK, and today, the Government is setting out plans to restart England’s housing market.
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The move is something which seems to have prompted some to take to the internet in search of a mortgage, according to MoneySuperMarket.
The price comparison website has today reported an 18 percent uplift in visitors searching for mortgages deals compared to the week before, just one day since the announcement was made.
For those looking to move or for borrowers hoping to remortgage, Emma Harvey, mortgages expert at MoneySuperMarket, has shared some expertise.
“The prospect of the housing market starting to open up again will be welcome news for many would-be homeowners and movers, however, like many aspects of life in the COVID-19 era, it will be a far from straightforward recovery,” she said.
“Underwriting and approving mortgages is still a hugely manual process which requires workers from across the industry being able to work together.
“Not just the lenders themselves, but also brokers, valuers, estate agents, councils and solicitors.”
So, what does this mean for people who are mid-move?
“If you’re mid mortgage application I would stick with it, and chat to your lender or broker for updates – we’re seeing things get moving more every week and the industry is also starting to adapt,” Ms Harvey said.
“For example, using automated valuations where possible, digital ID verification and the use of PPE where surveyors need to do home visits.
“That said, unfortunately, some of these transactions will be affected as banks are overwhelmed restarting their mortgage pipelines and some offers may expire.
“We are also seeing some lenders decline applications with high LTV’s due to the inability to survey properties, for example.
“There have been decreases in the Bank of England rates and your lender or broker can ensure you get the right rate with your new mortgage – the biggest factors here are going to be your LTV (Loan to Value) and your personal credit profile.
“It is worthwhile knowing more about your credit score before you apply for products. “
With 7.5 million jobs having been protected under the Coronavirus Job Retention Scheme, many may well be wondering whether they can still proceed with a home-move or remortgage due to being on furlough leave.
The situation for those who have been furloughed is something which the mortgage expert has addressed.
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“Banks will always ask for the last three months of earnings, with some lenders offering more flexibility around exceptional circumstances than others,” she said.
“However, those people who are currently furloughed should not suffer any adverse credit or change in risk profile.
“Consumers just need to be honest about the situation and if in doubt talk to their lenders or broker for support.”
While making ends meet may well be a struggle, for those who can, keeping planning and saving for a deposit is something which the mortgage expert suggests.
“As always, the larger the deposit you are able to put towards your property, the better,” she said.
And, it may well be that saving for a mortgage deposit will reap rewards in terms of rates.
“It will bring down your LTV and give you access to the lower interest rates with lenders. If you’ve been able to save any additional funds during the lockdown, this will certainly be beneficial.”
For some, moving won’t be something they’re looking to do right now, but it may be that homeowners do want to renew their mortgage.
And, for these people, it could be timely to do so, the mortgage expert said.
“Now is a great time to lock into a new mortgage deal, especially with the two drops in interest rates we’ve seen from the Bank of England in recent months. Take a look at your current mortgage deal to check when it expires,” she shared.
“If it’s already expired – search for the latest mortgage deals immediately, as you’ll probably be paying extra interest to your lender.
“It is always a good idea to compare rates across both your current provider and the other top lenders. Switching lenders is easy but staying with your current provider can be even easier.
“If your deal hasn’t already expired take a look at your current interest rate and compare it to those available across the market.
“You’ll then need to look into the conditions of your mortgage to check for Early Repayment Charges and check the cost to exit your current deal vs what you might save with a new deal.
“If in doubt – call your lender, they’ll be able to help you understand any early repayment penalties and then you’ll be sure if you’re on the right deal or not.”
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