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FAQs on coronavirus and mortgage applications

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FAQs on coronavirus and mortgage applications

Independent mortgage advisor, Richard Lester from Apr Money Limited answers some FAQs on coronavirus and mortgage applications.

Will coronavirus affect my mortgage application?

Possibly. Coronavirus has affected most industries, and mortgage applications are no exception. However, this doesn’t mean you won’t get a mortgage. Whilst lenders have made some changes borrowing will still continue.

Can I still get a mortgage with a 5% deposit?

At the time of writing, the only way to buy with a 5% deposit is to purchase a new build where Help to Buy is available to boost your deposit with a government equity loan. If it’s a re-sale property you will need a minimum of 10% and even then it is more realistic to assume 15%.

I’m still receiving bonuses and overtime, can this be included for affordability?

Some mortgage lenders have withdrawn the use of overtime unless you are a key worker, although some will still take additional income into account if a suitable justification can be provided, like you work in an industry unaffected by coronavirus.

How do I give myself the best chance of being accepted for a mortgage?

The key is to use the right mortgage lender for your circumstances. During these uncertain times many lenders have put in place short term changes to their standard underwriting and others haven’t to the same degree. Always seek professional advice to ensure your circumstances are matched to the right lender.

My pay was reduced when furloughed, will this have an effect on how much I can borrow?

You can still get a mortgage if you are furloughed. If you are on 80% of pay this is the income that will be used. If you have now returned to full pay then the lender will be now happy to use the full salary despite being previously furloughed.

Is the current situation similar to the credit crunch and the last financial crash?

No, this is very difference. Back then lenders didn’t have the money to lend. That isn’t the situation now, as lenders are far more robust financially as a result of the measures put in place to ensure that situation didn’t happen again. We are experiencing what is likely to be a short term adjustment in lending policy while banks wait and see what happens to jobs and house prices. Lenders will want to get back to normal service as quickly as they when they feel it is safe to do so.

For further advice see here: MORTGAGE ADVICE

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Date Posted

June 24, 2020

Article Category

Author

Katy Storer

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