During this past week, the coronavirus has hit the mortgage market quite heavily. It can all seem a bit complicated so we are here to try and slow things down and explain what has happened and what could happen further down the line to the mortgage market. Here is a video from the Moneyman himself, Malcolm Davidson:
Every property will need some sort of valuation before the lender can accept their borrower’s application. However, property surveyors and mortgage valuers can’t go out and visit properties which means that lenders won’t accept their applications. Basically, everything is being put on pause for a couple of months.
Sometimes, lenders use AVM’s (Automated Valuation Model) for valuations on a property. This means that the property doesn’t require a valuation from a surveyor or a mortgage valuer, they use their AVM. An AVM is only used on restricted mortgages and on lower loan-to-values.
As of March 28th, some lenders have decided to restrict their maximum loan-to-value down to 60%. So, they are continuing to process these applications but not necessarily ones at higher loan-to-values.
Every lender’s view is different. So far, we haven’t seen any mortgage offers that have been withdrawn by a lender. We think that they are all just waiting before accepting any more deals as they don’t know what could happen in the coming days, weeks, months, it’s hard to tell.
On the other hand, we have seen that some lenders have decided to extend the periods of their mortgage offers from six months up to nine. They are giving the economy and the mortgage market a chance to get back up on their feet.
We talked about mortgage payment holidays in another recent article but we just want to clarify that you shouldn’t rush into taking one. First of all, don’t panic! Do some research, speak to a Specialist Mortgage Advisor in Sheffield first to find out whether you will need to take one before you go directly to your lender.
It is more than likely that they will just extend the period of your mortgage anyway so it may be better to just hold off. If you feel that you will not be able to meet your monthly mortgage payments, you should contact your lender to see what your options are. Lenders will prefer for you to contact them online due to the sheer amount of calls they are receiving daily.
If you are going to take out a mortgage payment holiday, you must check with your lender that it isn’t going to damage your credit score or mark any arrears against your account. Also, it is important that you don’t just cancel your direct debit and remember that you will need to get permission from your lender to take a mortgage payment holiday.
During this stressful time, it is hard not to panic, however, we have to try to remain calm. In time, this will all blow over, someone will press play again and the mortgage market will resume to how it was a couple of months ago.
We are here to help you from 8am – 10pm, 7 days a week with anything mortgage-related. Speak to a Mortgage Advisor in Sheffield today at Sheffieldmoneyman and receive a Free Mortgage Consultation. We can check in whether you will need to take out a mortgage payment holiday or give you advice on anything mortgage that you are worried about! We can’t wait to hear from you!
This article was originally published on 30/03/2020 and as of the 20/05/2020 the property market has now resumed and this information has become outdated. Everything was 100% accurate at the date that this article was published.