COVID-19 Video Guide Summary: Mortgage Product Update

Written on 9 April 2020 by Robyn Clark

What Is Actually Happening in the Property and Mortgage Market?

  • There’s been a lot of press saying that lenders aren’t lending and that the mortgage market has shut down, which isn’t true
  • Lenders are lending but like all of us, they’re having to adapt to a new way of doing things
  • Lenders are however unable to have valuers visit properties to carry out physical valuations at the moment, which is a problem for a lot of lenders offering LTVs (loan-to-values) above 75% as obtaining a physical valuation is often one of their requirements
  • Lenders are working to combat this and it’s possible to secure up to 90% LTV without a physical valuation
  • There are still thousands of mortgage products out there with all kinds of LTVs – some are among the best we’ve ever seen on the market
  • Lenders are definitely still open for business

What Deals Do Lenders Have?

  • John Charcol currently have access to 55 lenders with products available for the public

Residential Products Currently Available

  • There are deals that are all very comparable to what was around a few weeks ago, in fact some deals are actually marketing-leading
  • There are cheap deals out there available to all kinds of borrowers
  • Applicants with LTVs above 75% can still submit an application
    • Lenders might not be able to do physical valuations, but there are lenders doing automated valuations where a human doesn’t need to go and physically view the property
    • You may just find your options limited by this valuation issue

Residential Mortgages for Purchases

  • A tracker rate at 0.84% - which is below the 0.1% base rate – with an LTV up to 75%
    • This comes with a £2,000 fee but no ERCs (early repayment charges) so it could be suitable if you’re looking for a holding product – i.e. one you could have for many months before switching to something else if you want to
  • A fixed rate at 1.25% for 2 years with a 75% LTV
    • This comes with a £1,000 fee
  • A fixed rate a 2.19% for 5 years with a 75% LTV
    • This comes with a £1,000 fee

Residential Remortgages

  • A 2 year fix at 1.26%
    • This comes with a £1,000 fee and a free valuation and free legal service
  • Around 1.79% for higher LTVs
    • These come with £1,000 fees, free valuations and free legal services

Buy-to-Let Products Currently Available

  • Buy-to-let mortgage rates are historically higher than residential mortgage rates, however this is almost no longer the case

Buy-to-Let Mortgages

  • A 2 year fixed rate at 1.59% with a 75% LTV
    • This comes with no fees attached

Buy-to-Let Remortgages

  • A 5 year fixed rate at 1.74%
    • This comes with a £1,000 fee but it includes a free valuation and free legal service
    • Many buy-to-let landlords like a 5 year fix because it gets you an enhanced rental income affordability calculator which allows you to borrow a little more than you would on a 2 or 3 year product

Now I Know This, What Action Can I Take?

  • Speak to a broker about what you’re currently looking to achieve and your future needs; you’re looking for a deal that’s going to last not only now but going forwards
  • Submit your application to reserve a great rate now in case rates start to increase later
  • Make your mortgage adviser aware of when you’re going to want your mortgage to start and ask them to look for lenders that will allow you to switch your product during the application process
    • This will give you the option to switch to another product before your mortgage starts should rates go down and a cheaper product becomes available

Categories: General, Robyn Clark

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