COVID-19 Related Mortgage Questions - Common Questions Answered Here

minimike2

So this part of the forum has been going wild the last few weeks with the turmoil in the housing market and there are a lot of common questions being asked. I thought this might help answer some of these common questions to save things getting lost with lots of people asking the same things.

 **UPDATED 28/05/20**

Q. I have an ongoing mortgage application. Will my lender re-assess it?

A. Possibly – This is very much dependant on the approach of each individual lender, so you should be prepared for the possibility of a re-assessment. Lenders still have to abide my MCOB rules which require them to assess affordability. You should check with your broker / advisor / lender if you are concerned. If your application is “pre-offer” then it is likely you are already encountering any additional requirements. If your application is “post-offer”, then you may be asked for further information, or be subject to a re-assessment. Remember that you are legally bound to disclose to the lender if there is any material change, and this would include if you are furloughed.

*Update* - It is likely now that applications which were pending before lockdown have all been assessed, or at least very few will be outstanding in circumstances where physical valuations were still outstanding. If you have an ongoing application still, then it is likely that your lender will assess this in line with any new policy around income, such as not taking into account bonus / commission / overtime. Your broker / advisor will be able to update you.

 

Q. I am waiting on a valuation being carried out. When will this be done?

A. Many lenders are now looking at “Desktop” valuations in order to clear the backlog of cases which were awaiting a valuer to visit the property. Bear in mind that the valuing company still needs to be involved and many of these have been hit by staff shortages. Your application may not qualify for a desktop valuation and you should check with your broker / advisor as to the likelihood of your application being treated in this way. Do bear in mind, that unless the property is vacant then current government guidelines state you should not be moving home.

 *Update* - Physical valuations have resumed in ENGLAND but bear in mind that there is a backlog of tens of thousands of cases across the industry, so do not expect it to be a quick turnaround.

Q. I have a mortgage offer which is going to expire, what should I do?

A. Again, you should be talking with your broker / advisor to see if the lender is offering offer extensions. This will vary between lenders as to when this can be applied for and what stipulations are put in place as part of the extension.

 

Q. Why have mortgage product rates increased when the base rate has come down?

A. Supply and demand. There is an oversupply of demand which lenders are unable to cope with given staff who are unable to work and new ways of servicing the demand are implemented. One of the ways lenders can reduce demand for their products is to increase pricing, thus diverting lending away from them. You then get other lenders following suit as they being to take on more business which they are unable to deal with. Many colleagues across the industry have been re-trained to be able to deal with customer queries around payment holidays. Once service levels are improved, lenders will likely bring back products which are not designed to reduce application flow.

 

*Update* - As lenders have got to grips with the initial issues and capacity has returned to back office staff, rates have seen a number of drops in recent weeks - It is likely that there will be significant fluctuation in rates up and down across lenders over the coming months, so remember the rate you will get will only be what is available when you apply or book your product. What you see one day might not be there the next.

Q. I am on a variable rate mortgage. Why has my interest rate not gone down with the recent cut to base rate?

A. A variable rate mortgage is not linked to the BoEBR – This means that the lender controls what the rate is and is not bound to either increase or decrease this rate in line with changes to the BoEBR. Mortgage funding pricing is not linked to BoEBR and so reductions to this do not directly impact the lenders cost to fund this type of mortgage. Wholesale funds are bought in advance and the terms of the products are set out in a clear way when the contract is started. Other variables can also come into play when a lender makes a decision on if they will reduce the rates on these types of product, such as current competition, impairment and other commercial factors. Whilst everyone would like to see a reduction, the fact is that is it not part of the product terms and so it is unreasonable to feel disgruntled at something you think should happen which was never written into the product terms.

 

Q. I am eligible to apply to a lender for a re-mortgage and they can desktop value my property. How long will the process take?

A. How long is a piece of string, but longer than “normal”. Solicitors are also feeling the effect of self-isolation and staff reduction, so there is a lot of backlog in the system. Give plenty of time for your application and don’t expect a quick completion. Also please be kind to your representative working on your behalf – It is no one’s fault that things are taking longer than usual and is just something which we all have to be pragmatic about and accept. You can help by planning in advance and making sure you are providing all your required documents in a timely fashion.

 

Q. My lender has cancelled my mortgage offer – Can they do that?

A. Yes. Any material change in your circumstances can result in the lender retracting the mortgage offer and also under exceptional circumstances the lender can decide to withdraw it, although it is rare unless due to a material change. If you have already exchanged contracts then this has wider implications and you should ensure that you have discussed this situation with your broker / advisor in advance of the offer expiry – Do not leave this until the last minute.

 

Q. I applied for a mortgage which didn’t get offered and now my lender has cancelled my application. Can they do that?

A. Again, yes – In this instance they can choose to cancel the application for any reason. At the moment this is most likely to be because they are unable to satisfactorily value the property, or they have concerns about the sustainability of your income.

 Q. My lender has asked me to confirm if my income has changed. What should I tell them?

A. You have a legal obligation to be truthful. Do not lie to your lender. If you are impacted due to furlough, reduction of overtime / bonus etc, then this must be disclosed. It isn't a wise move to intentionally put yourself into a situation where you have an unaffordable mortgage anyway, but if you were to lie to the lender then this is fraud.

Q. I am furloughed. Can I still apply for a mortgage?

A. Yes, although lenders may treat your application differently. Your broker / advisor can guide you through your available options.

 

Q. Will house prices reduce as a result of COVID-19?

A. There is nothing to suggest a direct correlation between COVID-19 and a reduction in house prices, however this is something which you can never tell unless you are looking back. Many people can predict, but predictions are often not accurate. So the answer is maybe, maybe not.

 

Q. I have made an offer on a property and now I want to reduce it because of COVID-19. Should I do this?

A. This is your decision to take. As above, there is no evidence of any immediate reduction to property values / asking prices, as the market is simply “paused”. As at any time, you are able to request a reduction in price, however your vendor may not look on this favourably.

 

Q. My valuation has come back less than what I offered for the property, but it was carried out as a desktop valuation – Can I appeal this?

A. You should speak to your broker / advisor about your specific lenders policy on this as it will vary.

 

 

I think this covers most of the main topics being asked and I will update with anything new.

*Disclaimer - I do not have an MSE standard signature as I am not a mortgage broker (any more!), however I have 17 years experience working in mortgages and currently still work in the industry*

jenks48

Where do I stand with a morgage offer approved just before lockdown...then informed us I was the wrong client the email was sent too confirming the offer even though it was my name and case number. Admitted it was a mistake it is now with internediary escalations came back with an offer £6k less broker has spoke to the New build dept I pass all the affordability for what I sent to borrow but then the underwriter doesnt agree. It doesnt make sense the broker and all the team at Barclays agree I pass the affordability so they have esculated again
 Any advice on this bearing in mind now week 8...

[Deleted User]

Great idea! Clear and well set out, should cover a lot of queries.

MovingForwards

jenks48 said:

Where do I stand with a morgage offer approved just before lockdown...then informed us I was the wrong client the email was sent too confirming the offer even though it was my name and case number. Admitted it was a mistake it is now with internediary escalations came back with an offer £6k less broker has spoke to the New build dept I pass all the affordability for what I sent to borrow but then the underwriter doesnt agree. It doesnt make sense the broker and all the team at Barclays agree I pass the affordability so they have esculated again
 Any advice on this bearing in mind now week 8...

Keep your other posts updated as the members can then review everything and comment.

jenks48

MovingForwards said:

jenks48 said:

Where do I stand with a morgage offer approved just before lockdown...then informed us I was the wrong client the email was sent too confirming the offer even though it was my name and case number. Admitted it was a mistake it is now with internediary escalations came back with an offer £6k less broker has spoke to the New build dept I pass all the affordability for what I sent to borrow but then the underwriter doesnt agree. It doesnt make sense the broker and all the team at Barclays agree I pass the affordability so they have esculated again
 Any advice on this bearing in mind now week 8...

Keep your other posts updated as the members can then review everything and comment.

Okay thank you..

minimike2

Moving back up to the front page

Natasha.rb

Hi,
There are currently no 10% deposit mortgages available as lenders removed these as part of crisis management. More mortgages are slowly coming back online, do you have an indication of when 10% deposit mortgages will be available again?
Thanks
Natasha

kingstreet

There are 90% products visible on my sourcing system.

Natasha.rb

There are no 10% deals for new builds. The best we can find is 15% deposit required at HSBC. 

kingstreet

You didn't mention newbuild in your question. There aren't many lenders who offer 90% products on newbuilds at the best of times, particularly on flats. HSBC, NatWest, Nationwide, Santander, Halifax etc all top-out at 85% on newbuild houses; although Halifax does normally offer 90% products through selected builders/brokers.

minimike2

I have updated some of the questions on here following some recent developments. Hope this continues to help people.