Applying for a mortgage during Covid-19

Since the lifting of restrictions from the first lockdown, the demand for housing and mortgages is phenomenal. This is great if you are selling a house but not so good if you need a mortgage. Applying for a mortgage during Covid-19 is now much trickier. With people trying to beat the stamp duty deadline, the number of mortgage applications has gone through the roof (excuse the pun). Also, lenders are pulling back on products.

So, how can you ensure your mortgage application is successful? By getting ‘mortgage application ready’. Mortgage expert, Richard Lester lays out five things to do to help increase your chances of getting a mortgage in the next few months.

Applying for a mortgage during Covid-19

1. Check you have enough deposit

Since demand is so high for mortgages, lenders have increased the deposit needed to reduce the number of applications. As a result, 95% mortgages are no longer available, meaning you can no longer buy with a 5% deposit (unless using Help To Buy on new build properties). Also, 90% mortgages are mostly only available to first-time buyers. Therefore, you need to have at least a 15% deposit to buy your next home.

2. Taken a payment holiday break? Check your credit score

Supported by financial providers and the Government, payment holiday breaks have been a great relief during the pandemic. However, some lenders have inadvertently registered late payments, creating issues with credit scores. Although this can be rectified, it will take time. So, if you have taken a payment holiday break, this is worth looking into before applying for a mortgage. Try using a multi-agency site to check all your credit reports in case of mistakes.

3. Check your affordability

If you had an AIP or affordability check before the pandemic, the amount of mortgage available to you might have changed. Many lenders have stopped including bonuses and overtime (unless you work within healthcare). Additionally, some lenders have now restricted the maximum they are prepared to lend. So with this in mind, it is worth checking your affordability once again. 

4. Get your paperwork ready

Applications and the house buying process has slowed down under the strain of transactions. People not providing the right paperwork is also causing further delays with applications. As lenders take longer to assess the application, it is only further down the line that they spot issues with the paperwork. For instance, payslips or bank statements in the wrong format or date is incorrect on the application.

Therefore, if you want your mortgage application to go through as quickly as possible, make sure you have all the correct paperwork ready. Your mortgage provider should be able to tell you what is needed. At the very least you will need the last three months worth of payslips and bank statements. If you are self-employed or run your own business, you will need the last two years tax calculations and tax year overviews. Along with two years worth of accounts (for the self-employed, this data can’t be more than 18 months old.)

5. Seek independent advice

Before applying for a mortgage, it is worth seeking independent advice rather than going directly to your bank. Your own bank might not have the products you need or be able to meet the timescales required to beat the stamp duty deadline. Whereas, an independent adviser has in-depth knowledge of lending criteria across the whole market to help find the right product within the time-frame required.

Which leads us nicely onto Richard Lester and the team from APR Money Limited. APR are experts in comparing and recommending the best mortgages no matter what your financial situation READ MORE.