A mortgage is like an ocean to every borrower. It is enormous, lengthy in the procedure, and unpredictable in the approval decision. You may be feeling the same if you are also about to plan a property purchase. But do not worry; close interaction with the details of mortgage debt can calm down your anxieties.
A thorough interaction with the most in-depth details of the mortgage as debt and how it affects your finances can help. Your decision on mortgage selection or your already a mortgagor can manage it in a better manner.
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|The current scenario in the UK mortgage market after covid-19What makes a smart mortgage choice FCA measures to help mortgage customers|
The current scenario in the UK mortgage market after covid-19
Whatever happened in the last few months due to corona was unprecedented and also unpredictable. This is why the result that came out due to the colossal corona was too unbearable. However, the mortgage industry did its best to fight with the circumstances.
- The property buying, which went into cold storage for a while during the lockdown, has come into action again.
- People are applying for a mortgage again, as they can now go for property viewing while following the rule of social distancing.
- A significant part of the staff of the lenders works in the field. With flexible rules on lockdown, they are also now able to do their job.
- The higher LTV mortgage products with 90 to 95% LTV are back, but they are very few. Not all the lenders are in the mood to risk higher LTV, including big names like Barclays, Santander, Virgin Money, etc. The highest level in this respect is 85%, and for the better one, a little more wait is required.
- More applications are for the remortgage and product transfer than the first time mortgage requests. The intense financial crisis of the people is the reason behind this.
- The income assessment has become difficult because many people are on furloughed income. Many of them have no proof that their company will retain them or not.
- 1.9 million people are on mortgage payment holiday, and they are in the end phase of their holiday of 3 months.
- The regularity of the source of income has emerged as the prime concern of the lenders. With the already drained capacity to take risks, they cannot bear to take any chance. They have also instructed the brokers to remain extremely rational while doing the income assessment.
What makes a smart mortgage choice in the current scenario?
With more expensive options available in the market, it has become necessary for you as a borrower that you choose smartly. A collection of tactics should be followed to search and select a suitable mortgage option.
- Do extensive market research. The mortgage industry is going through a bumpy road. The lenders are gaining and losing their confidence again and again. Before you take a mortgage, study the market. Read news, visit the websites of the lenders, and ask countless questions, after all, then only you can get a cheaper deal.
- Hire a broker – With so much destruction in the property market, it can be complicated for you to find a correct option. Brokers are helping the other applicants stay in the process despite the stress in the money market. A broker can be an unbiased platform to compare the available deals. There are already not many promising choices are available.
- Higher equity and the bigger deposit are the two pillars that can bring you the desired amount and rate of interest on a mortgage deal. Show it as much as possible. These two are the safe play factors that are necessary to remain in the picture. Especially if you are an applicant of a bad credit mortgage due to a derailed payment record, both the elements are required.
FCA measures to help the mortgage holders
It is not difficult to understand the pain of the mortgagors. They are going through an unbearably tough time, and the help of hand is necessary to change their situation.
Here are some preventive measures delivered by the Financial Conduct Authority that provide escape windows to the people.
- Those in the last phase of their mortgage payment holiday can extend it to the next three months. However, the advice to them is to start paying the instalments because the payment holiday increases the interest rate.
- A payment deferral will be allowed to the buy-to-let landlords who are not taking any rent from the tenants due to their income source loss.
- The mortgage companies need to ensure that payment deferral should not affect the credit records of the applicant.
- The moratorium has been extended to 31 October 2020 on buy-to-let mortgage and residential mortgage.
- The mortgage holders can get their direct debit cancelled from the lender. However, they have to first agree on payment deferral.
- The mortgage companies should provide funds to those on furloughed income, but their companies will retain them. The applicant needs to prove that through a proof such as a company’s letter that describes the order to keep him in the job.
The above scenario draws the picture of the mortgage industry with all the necessary elements. It is not difficult to estimate that the market is not going to be normal soon. At least this year, it is not possible to see the colors of normalcy.
The stressful situations give no reason to lose hope, as the collective efforts are on the action mode. They are showing results, and the LTV has also reached a promising level of 85%, which is a good sign. With time things will be better and then well. Hope is the best tool to hold in the current time.