Coronavirus and UK mortgages: 6 reasons to feel positive about your mortgage prospects

House buying propects

The housing and mortgage market has been affected by coronavirus, there’s no denying it. It’s true, whether your struggling to meet your mortgage payments, whether you’re trying to apply for a mortgage or you’ve been delayed in exchanging contracts, the pandemic has made a difference in the market.

However, the government, the FCA and the Bank of England have stepped in to help keep the market going making it beneficial for home-owners and potential home-owners to proceed with applications.

So why is now a good time to get your application started or re-assess your current mortgage deal?

In the latest round of lockdown measures set to last until the 2nd December, the Housing Secretary, Robert Jenrick advised on how restrictions would affect the housing sector saying that:

  • The housing marketing would remain open – you are still able to apply for a mortgage or move house.
  • Tradespeople may enter your property under social distancing rules to complete renovations.
  • Construction work can continue if they adhere to current guidelines.

Mortgage payment holidays would continue beyond October.

This is good news for anyone looking to buy a home right now.

There are positive changes under current regulations put in place this year and we’ve put together a list of 6 reasons why temporary measures that have come into practice can benefit your house buying prospects post-COVID.

1. A temporary holiday on stamp duty has been implemented by the government.

What does this mean for you?

It means that whether you’re a first-time buyer or a home mover you will be exempt from paying stamp duty when buying a main residence up to £500,000 of the property value.

However, this is only a temporary holiday set to last until 31st March 2021, after which it will return to previous thresholds.

2. Lenders are still offering temporary payment freezes or payment holidays.

If you have been affected by coronavirus financially lenders are offering temporary freezes, whether it’s a freeze on all payments or a partial freeze on payments you can apply for them for up to 6 months in total.

What’s more, is that this should have no impact on your credit score in the future as an agreement will be in place meaning there are no ‘missed’ payments.

According to the Financial Conduct Authority, they are proposing that:

  • If you have not yet taken a payment holiday, you will be eligible for 2 payment holidays of up to 6 months in total
  • If you currently have an initial payment holiday, you will be eligible for another payment holiday of 3 months
  • If you have resumed repayments after an initial payment holiday, you will be eligible for another payment holiday of up to 3 months 

Under FCA proposals, you will have until 31 January 2021 to request an initial payment holiday. 

Some borrowers may not be eligible for a payment holiday if:

  • You’ve already had 2 payment holidays of up to 6 months in total, but you may ask for tailored support from your lender.
  • You have made alternative arrangements with your lender.

3. The Bank of England has reduced interest rates to 0.1%.

With lower interest rates being maintained at 0.1% this has an impact on tracker and variable rate mortgages. It means if you are looking to purchase or re-mortgage there are some great deals available.

Note: Where you are looking to remortgage you will need to check when your existing deal expires, however starting the process 6 months before is not out of the question.

4. Lower deposit mortgages are starting to return to the market.

Unfortunately, one of the immediate effects of the coronavirus pandemic was that lenders took their high LTV (loan to value) deals off the table.

Subsequently, it meant that deposit requirements increased to about 10-15% across the board.

However, we’ve started to see the re-emergence of higher LTV mortgages from some of the market lenders.

What’s more, is that lenders are extending mortgage offers by up to 6 months if you experience any delays because of coronavirus.

5. Estate agents are still open for viewings and homes moves are going ahead.

Estate agents are still open and have taken measures to safeguard themselves and their customers. Whether you need a valuation or your house putting on the market, agents and prospective buyers can take a virtual tour and still visit in person. Agencies are putting social distancing measures in place and adhering to current guidelines in order to keep the property market moving so be sure to check with each agency what you will need to do and what to expect.

6. You can still apply for a mortgage while on furlough.

It may be possible to find a lender based on your full salary especially if you can provide proof that your job is secure and that your salary will return to normal. Some lenders will also want to see proof that your salary has returned to normal on your return to work to protect themselves against any ‘furlough fraud’.

However, whilst these measures will be beneficial to individuals if you are a landlord with buy-to-let properties you may not be entitled to all of the measures put in place. In some cases, landlords can be eligible for 3 month payment holidays especially if their tenants are struggling to pay rent due to financial difficulties caused by coronavirus.

It is always worth getting in touch with your lender first to see what solutions they have to offer.

The mortgage industry has proven resilient in the face of the coronavirus pandemic. It has adapted to circumstances to keep the market ticking and in the long term, the new ways of working could free up waiting times and remove geographical restrictions.

If you are looking to apply for a mortgage at this time you should start by:

  • Checking and optimising your credit reports.
  • Ensuring you are registered on the electoral roll.
  • Avoid multiple credit searches that will appear on your file.
  • Prepare your documents.
  • Speak to a mortgage advisor.

It is also worth noting that the government are currently planning to roll out a new 5% deposit scheme in an effort to ‘turn generation rent into generation buy’, though it is not clear when it will be launched or what it will look like. As ever we’ll be keeping an eye on the progress of this so be sure to check back in on our blog for updates.

If you’re thinking about applying for a mortgage right now but are unsure how the current restrictions and what the wider impact of coronavirus means for you get in contact with us at The Online Mortgage Guru. We’re keeping abreast of all the changes that come into effect within the mortgage and housing market to give you the most up to date advice and guidance to navigate through these unprecedented times.

Contact us at Online Mortgage Guru on 0345 3669799 or email us via and we will put you in touch with a suitable specialist to handle your enquiry.  

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