With the country on lockdown, it’s essential that you understand your options as a borrower.
In this guide, we’ll try to give you the answers you need. Keep reading for a summary of the latest government rules for moving home, information on coronavirus and mortgage payment holidays and responses to your COVID-19 mortgage FAQs.
If you’re left with unanswered questions, call us on 0330 433 2114 or simply send us an enquiry.
New COVID-19 Government Advice for Moving Home
The government announced that from the 13/05/20, buyers would be able to physically view properties, surveyors could conduct physical valuations and surveys and people could hire removals companies.
We’ve provided a summary of the government’s latest advice below. You can find the full guidelines on the GOV website.
COVID-19 Guidelines for Physical Viewings
You can now physically visit a property you’re thinking about buying for a viewing and/or have people physically visit and view a property you’re selling. Here’s what you need to know as a buyer and/or a seller.
- You should do initial viewings virtually – estate agents may ask you to do this
- You’ll need to make an appointment to view a property
- Only physically view properties you’re serious about potentially making an offer on
- Physical viewings should be limited to members of the same household
- Only those who must view the property should go
- Agents can accompany clients when viewing a property
- Avoid touching surfaces
- Wash your hands regularly where hand washing facilities are available
- If you must take young children with you, try to stop them from touching surfaces and make sure they wash their hands regularly
- Bring and use your own hand sanitiser
- If you want to buy a new build property, contact the developer and make an appointment; you should be able to view the show home or the plot you’d like to purchase
- You can put your property on the market
- Open house viewings aren’t allowed
- Estate agents can visit the property to take photos/videos
- Open all internal doors before the viewing and keep them open during
- Allow access to handwashing facilities
- Provide separate towels/paper towels for people viewing your property where possible and clean/dispose of these safely after each viewing
- Clean surfaces – including door handles – after each viewing with household cleaning products
- Vacate your property when people are viewing it
And lastly, everyone must maintain social distancing in line with public health advice.
If you’re really worried, speak to your landlord or estate agent so they can put extra safety measures in place.
Note: visits from estate agents and physical viewings should be delayed if any member of the household of the property for sale, or any member of the household viewing properties, is showing coronavirus symptoms or is self-isolating.
COVID-19 Guidelines for Valuations and Surveys
Surveyors can now carry out surveys/valuations for buyers/lenders. We’ve listed a few of the main things the government advise for surveyors and property owners, below.
Advice for Surveyors and Property Owners
- No surveys should be carried out by someone with coronavirus symptoms or someone who’s self-isolating
- Only one surveyor should visit the property
- Surveyors shouldn’t enter a property if a member of that household is showing coronavirus symptoms or is self-isolating
- Inspections should ideally take place by appointment
- Surveyors should wash their hands upon entering the property and should dry them using separate towels/paper towels, which should be cleaned/disposed of safely
- Surveyors should contact property owners before surveying the property to make sure they:
- Understand which areas of the property will be surveyed
- Open all doors and access panels
- Clean all doors and access panels with household cleaning products
- Surveyors must make it clear in reports if they were unable to inspect any areas of a property due to public health limitations
- Property owners should allow the surveyor access to every part of the property they need to inspect where possible
- Property owners must try to minimise contact with the surveyor – e.g. by waiting in a different room while they carry out their inspection
And finally, everyone must follow social distancing rules.
COVID-19 Guidelines for Removals
You can now move home and hire a removals company to help you. We’ve summarised the government’s advice, below.
- Contact removals firms as far ahead of the move as possible
- Try and pack as much as you can by yourselves
- If it’s not possible to pack everything, speak to the removals firm ahead of the move about this
- Clean your belongings with standard household cleaner where possible
- Open all internal doors before the removers arrive
- Wash your hands regularly and avoid touching surfaces unnecessarily
- Give the removers access to handwashing facilities where possible
- Provide separate towels/paper towels for the removers if you can and wash/dispose of these safely after use
- Don’t provide refreshments for the removers
- Contact the household before the move to make sure that no one is showing coronavirus symptoms or is self-isolating
- Ask the household to open all internal doors
- Ask the household to clean surfaces and possessions with household cleaning products
- No employees can assist with a move if they have coronavirus symptoms
- Wash your hands after entering the property
- Use separate towels/paper towels and ensure these are washed/disposed of afterwards
- Limit contact with the property owners where possible, following social distancing guidelines
- Use a buddy system where the same 2 people continue to move heavier furniture together
- Make sure you have access to handwashing facilities
- Make sure you use separate towels/paper towels and that these are washed/disposed of after use
- Bring your own refreshments
And once more, follow social distancing guidelines as much as you can. Property owners/members of the household and removers should try to keep 2 metres apart.
Coronavirus Mortgage Payment Holidays
On 17/03/20, Chancellor Rishi Sunak announced that mortgage lenders in the UK would offer a payment holiday of up to 3 months to support both residential and buy-to-let mortgage borrowers in light of the COVID-19 outbreak.
Whilst the move has been largely supported by UK lenders, there remains a lack of clarity about what this actually means, how the initiative will be implemented by individual lenders and what impact this might have on the borrowers who do opt to take payment holidays.
What Are Mortgage Payment Holidays?
Payment holidays aren’t exactly new. In fact, they’ve been a feature offered by a number of mortgage lenders for some time. They allow you – as the borrower - to take a short break of typically 1 - 3 months from your mortgage payments. Lenders will only allow you to take this break if you meet certain criteria.
Under the measures introduced by Rishi Sunak, all lenders will effectively be forced to offer payment holidays, however they'll have discretion on how to treat borrowers who request a payment holiday and the circumstances under which to offer one.
To find out whether a payment holiday is an option for you, you simply need to contact your lender and ask if you can utilise this feature. In some cases, your lender may only offer a payment holiday if you’re unable to pay your mortgage in the short term. Whatever their policy, we recommend you ask your lender some questions like these so you can find out about the potential implications you could face - we’ll go into this in more detail below.
If you're facing financial difficulties as a result of COVID-19 and are granted a payment holiday, your credit rating won't be affected.
How Does a Mortgage Payment Holiday Work?
A payment holiday means that you don't have to make your normal monthly payments for a certain period of time - in this case up to 3 months. Although you don't make some payments, your lender will add those payments onto your mortgage balance until you recommence paying. This means that the lender will charge interest not only on your outstanding balance as normal, but the missed payments as well unless you pay them off later when you have a bit more cash. Essentially, your cash flow is eased whilst you have a payment holiday, however you end up paying more interest overall.
Why Might a Payment Holiday Be Rejected by a Lender?
There are many reasons why a lender might reject your application for a payment holiday, including:
- Some lenders might only offer a payment holiday to the borrowers they perceive to really need one
- You may have already fallen behind on your mortgage payments so your lender may decide that a different course of action is necessary - if this is the case, communication with your lender is vitally important
- You may have just remortgaged with a new lender who require that you make a certain number of payments before allowing you to take a payment holiday
What Are the Alternatives to Payment Holidays?
There are many alternatives to payment holidays that you might want to consider. It’s worth seeking independent advice before you make a decision:
Some mortgages have an underpayment feature which allows you to reduce your monthly mortgage by a set amount. Your proposed monthly payment must cover the interest on your mortgage as a minimum. Underpayments can help if you’re able to make a partial payment on your mortgage but can’t afford the whole thing. They’re more cost-effective than a payment holiday, as you still pay a bit towards your mortgage each month. You’ll need to agree on an underpayment strategy with your lender, regardless of whether it’s already a feature. This option typically won’t affect your credit rating.
In extreme cases, a lender may allow you to switch to an interest-only mortgage part way through your mortgage term. You could also consider remortgaging with a new lender on an interest-only basis, but obviously you must meet their criteria for this to be possible. It’s worth noting that, whilst this might alleviate some financial pressure in the short term, you would need to provide evidence of how you would repay the mortgage balance in the future, otherwise you could find yourself facing a much bigger problem further down the line. It’s important to seek advice on this as it’s a rather big decision with long-lasting ramifications.
Extending the Mortgage Term
Another - often preferable - option is often to reconsider the length of time over which you repay your mortgage. You can sometimes alter your mortgage term with your existing lender or can simply remortgage. It’s more likely you’ll be able to extend your term if you remortgage. Extending your mortgage term can help to significantly reduce your monthly payments. What’s more, most mortgages allow you to make overpayments therefore you could increase your monthly payments when you find yourself in a better financial situation, in order to save interest and lessen the negative effects of having increased your loan term.
Remortgaging to a Lower Rate of Interest
Arguably the most obvious option is to remortgage to a lower rate of interest, but many borrowers don’t consider this while they’re still in their fixed rate period. This is often because you’ll face ERCs (early repayment charges) if you remortgage before your introductory rate ends. However, as rates are currently very low, you may find that you’re able to lower your monthly payments and reduce the amount of interest you have to pay by enough that it’s worthwhile.
What Questions Should I Ask My Lender if I Want to Take a Payment Holiday?
Communication with your lender is essential right now, as is knowing the right questions to ask them if you’re having issues or are likely to have issues paying your mortgage.
We’ve listed some of the main questions below:
- Will this payment holiday have a negative impact on my credit rating?
- How much will my monthly payments increase by following the payment holiday?
- How much additional interest will be charged over the term of my mortgage as a result of taking a payment holiday?
- Are there any fees involved in taking a payment holiday?
- Will I need to set up a new direct debit mandate?
- When is my current mortgage product due to end?
- Will this payment holiday affect my ability to take out a new product with you?
COVID-19 Mortgage FAQs
Can I Still Buy a Property?
People are still able to buy properties, either by purchasing them outright or by taking out mortgages. If your financial situation has changed since you first started looking into purchasing a property, speak to a mortgage broker about your next steps. Call us on 0330 433 2114.
Can I Still Move Home?
The government has officially said that people can move home from 13/05/20. There’s now clear advice on what everyone can do to try and keep safe when viewing properties, carrying out valuations and moving belongings.
How Is the Homebuying Process Now Different?
Things aren’t returning to normal just yet, but the government are introducing new practices to keep as many people as safe as possible while moving home.
These new practices include but are not limited to:
- Washing hands more regularly
- Maintaining social distancing when viewing properties
- Conducting more of your initial viewings online
- Staying in a different room from the surveyor while they carry out their inspection
- Cleaning your belongings before they’re handled removers, where possible
- Cleaning door handles and keeping internal doors open for viewings, valuations and when removers are in your home
See our summary of the government’s advice for viewings, valuations and removals above or visit the GOV website for the full guidelines.
Can I Visit a Property for a Viewing?
The government announced that from 13/05/20, people are now able to physically visit properties for viewings in the UK.
However, these viewings must follow government guidelines on social distancing and are only allowed if neither the estate agent, nor anyone in your household nor the seller’s household have coronavirus symptoms or are self-isolating. You also shouldn’t view a property unless you’re serious about potentially making an offer.
The government also recommend that you do as much of your research online as you can. This includes partaking in virtual viewings to help narrow down your options. You can find more information above.
Can I Buy a Property Without Viewing It?
The government said that from 13/05/20, physical viewings can recommence – subject to certain rules and guidelines. See above for more information on the government’s advice.
Nonetheless, you can buy a property without physically viewing it and just doing virtual viewings.
How Are Properties Being Valued in Lockdown?
The government have announced that surveyors can physically visit properties to carry out valuations and surveys – subject to certain rules and guidelines. You can view these above.
Can I Trust a Non-Physical Valuation?
Firstly, non-physical valuations are now no longer the only option. The government announced that from 13/05/20, surveyors can again carry out physical valuations for lenders and even surveys for borrowers – as long as surveyors and households follow government guidelines.
Secondly, non-physical valuations are for the lender – not the borrower – and they aren’t anything new. Lenders have been using non-physical valuation methods for a while, particularly as part of a remortgage process. It’s just that they became our only option at one point during the lockdown. They’ve proven a successful solution for many lenders.
Are Removal Companies Operating?
Removals companies are now allowed to return to work (13/05/2020), which means you should be able to hire them to help you move into your new property.
Are House Prices Low at the Moment?
The housing market has had quite a shock over the last couple of months. Obviously demand almost stopped as people couldn’t physically view properties, however there are early signs that things are starting to move again.
Times of uncertainty often present the opportunity to secure a property at a slightly lower price, so if you’re thinking of moving now could be the time to buy. Speak to a mortgage broker on 0330 433 2114 to find out more.
Are Rates Better or Worse at the Moment?
Fixed and tracker mortgage rates have fallen over the last few months – some are among the lowest we’ve ever seen. Use our tool to compare the best mortgage rates on the market right now.
Are Mortgage Deposits Lower?
You may now find that the deposit you initially needed to afford your dream home has fallen, following any reduction in house prices. Speak to us on 0330 433 2114 to find out what’s now within your budget.
Should I Wait to Buy a Property?
Whether you should wait to buy a property really depends on whether your circumstances have changed – e.g. you’ve been put on furlough, your income has decreased, you’ve had to self-isolate, etc. Speak to one of our advisers on 0330 433 2114 if you’re not sure about your current options.
Can I Remortgage?
It’s still very much possible to remortgage your property, it’s not really that different from normal as you don’t need to view properties, the lender will often only require a non-physical valuation and you don’t need to move home.
See our best buy tool for the latest remortgage rates on the market.
Should I Remortgage Now?
If you’re up to 6 months away from the end of your current introductory rate, you should already be considering remortgaging. It’s arguably even more important now if you’re concerned about how your income might change in the coming months as remortgaging can help reduce and stabilize your monthly payments.
Am I Able to Make Home Improvements, Given Social Distancing Measures?
The government has said that from 13/05/20, people can have work carried out on their properties again. There are a few rules everyone needs to follow though.
These rules include:
- Tradespeople should contact the household of the property that requires work, to check that no member of the household is showing coronavirus symptoms or is self-isolating
- No work should be carried out by someone with coronavirus symptoms
You can find the full government guidelines on the GOV website.
Can I Secure a Mortgage on a Property I Can’t Move into?
You can secure a mortgage on a property you might not be able to move into just yet. If a surveyor can value the property and the lender can produce the mortgage offer then it’s down to the solicitors to complete the transaction – regardless of whether you need to wait to move in. Most mortgage offers are valid for at least 3 months, so check when it’s due to expire and try to get things completed before then. Once you own the property you can move in whenever you want, but you must let your buildings and contents insurers know when you do plan on moving in.
I Was Planning on Moving Home but I've Put That on Hold - What Should I Do?
If you’re delaying your plans to move home and are coming to the end of your current mortgage deal, you may want to remortgage to a new deal with no ERCs. This could reduce your monthly mortgage payments whilst you decide when and how best to proceed with your home move. There are a number of mortgages available that can be either redeemed penalty-free at any time or ported to a new property when you do move. If you want some more information, call us on 0330 433 2114 or simply send us an enquiry.
I Want to Buy My New Home but Can’t Sell My Current Property. What Can I Do?
You may be a candidate for let to buy, which is where you remortgage your existing home onto a buy-to-let basis, releasing equity from it at the same time that you can put towards a deposit on your new property.
How Long Will My Decision in Principle Last?
A DIP (Decision in Principle) is typically valid for up to 30 days.
Can I Get a Tenant Now?
It’s still possible to go about getting a tenant if you buy a property now. You and/or the estate agents you use will just have to make sure everyone follows government guidelines for letting agents and private landlords when they come to view the property and/or move in.
Nonetheless, it’s always a good idea to make sure you have the means to cover any expenses or payments for a few months should it take longer than normal to get a tenant.
What Should I Do if I’m Unsure About My Options?
Speak to an independent, qualified mortgage adviser. The initial discussion should be free and they’ll be able to guide you through your options, making a recommendation based on your circumstances and current and future needs. Call us on 0330 433 2114 or send us an enquiry for more information.
If you want some more information, call us on 0330 433 2114 or simply send us an enquiry.