Finance

Mortgage: What will lenders be looking for after coronavirus? Follow this advice

Mortgage approvals hit a low in May, reaching only 9,300 in total. This was a drop of 90 percent when compared to February’s figures.

Approvals for remortgages also fell to 30,400, a 42 percent drop when compared to February.

Despite the dire figures, some have highlighted that the collective mood may be changing, which could be sped up with the potential news of stamp duty changes.

Richard Hayes, the CEO and Co-Founder of Mojo Mortgages, commented on this coming change: “The market is changing rapidly, and we are seeing signs of confidence growing within the housing market now.

“If you are looking to move home or you’re remortgaging, there are a few things you can do to improve your chances of being approved for a mortgage.”

READ MORE: Stamp duty: The ‘government needs to take immediate action’

It can be easy to only focus on your own financial difficulties given the current environment.

However, Richard implores those affected to think of the people on the other side of the paperwork: “Firstly, it’s worth bearing in mind that lenders are still under resourced, so speaking to a whole of market broker about your options is the best thing to do.

“When speaking to your broker, provide them with as much information as you can, especially in relation to your income.”

This will become especially prevalent when new financial measures are incorporated, as Richard continued: “For example, if you’ve been furloughed, most lenders will typically look to use 80 percent of your basic income for their affordability assessments of the new mortgage, plus any commission you have generated, or overtime you have undertaken.

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“More recently though, some lenders have confirmed that where the employer is topping up your income to 100 percent of your normal salary, this can all be included in the affordability assessment, so give your broker a true picture of your financial circumstances as it will give you a step in the right direction.”

Some people may be looking to get a mortgage for the first time, especially if housing prices lower due to more economic damage.

Unfortunately, first time buyers are likely to struggle once the market completely reopens.

As Richard explained: “In relation to first time buyers, there are limitations, especially when it comes to the loan amount as many lenders have capped this at 85 percent, meaning that you need at least a 15 percent deposit to get a mortgage approved.

In recognition of this, Richard concluded with advice for those looking to remortgage in the coming months.

As always, the best thing to do is just to embrace communication: “For those who are remortgaging, the challenges are slightly less and again, the best thing to do would be to speak to your existing lender or broker about a new deal as rates are still at a historical low.

“You don’t always have to move to a new lender when remortgaging.

“You can always do a product transfer, but again, getting advice on what’s best for your particular circumstance would be the first point of call.



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