The situation with mortgage applications is ever changing at present but the good news is that the majority of lenders still want to help with mortgages, re-mortgages and rate switches. The availability of mortgage products is changing on a daily basis so we strongly advise that you check with an experienced advisor before proceeding.
Here are the key facts to understand right now:
Surveyors are currently unable to undertake physical valuations until the restrictions on movement are lifted. This has impacted on the availability of mortgage products as mortgage lenders generally want a physical valuation to be undertaken when a client is borrowing more than 75% of the value of a property.
Furthermore many clients want the peace of mind that a comprehensive survey can provide. As a result of this most lenders, but not all, have withdrawn products which enable clients to borrow more than 75% of the purchase price of a house and a few smaller lenders have suspended new applications temporarily. However some lenders are currently continuing to lend up to 95% and, when a physical survey is required, the mortgage application will be processed up to that point and will then be suspended until the survey can take place.
Lenders are now relying on “desk top” and “automated” surveys much more than they have done previously. A desk top survey is when the surveyor conducts the survey using local and industry knowledge and data without visiting the property. An automated survey is where the survey is conducted using data. Whilst a client does not have the peace of mind provided by a physical survey they are allowing lenders to lend and thus clients to buy or re-mortgage.
Stephen Dillon, Linear Financial Solutions advisor for Mansfield said: “A desk top survey provided one of my clients with a buy to let mortgage offer for 75% of the purchase price in less than 48 hours this week.
“Lenders, solicitors and estate agents have lost capacity due to remote working and furloughed staff. They want to maintain good levels of service for those they can still look after but things are generally taking longer.
“There have been numerous changes in criteria from lenders including how they treat furloughed income and overtime, commission and bonuses which can reduce the maximum borrowing clients can have.
“Many lenders have improved the rates they’re offering to existing customers who wish to switch to a better deal as they aren’t currently able to attract as many new clients. Indeed I saved a client £100pm this week by doing so and it didn’t cost the client anything.”
The Bank of England Base rate is currently 0.1% and there are some excellent deals available for clients who are able to move their mortgage from their current lender to a new one (re-mortgage). In many of these deals the new mortgage lender pays for the standard legal costs and valuation.