What are my options during lockdown if I need a mortgage to buy a property, refinance my current mortgage or looking to raise capital?
With lockdown firmly established and in place until at least 7th May, it has allowed many people to review their borrowing position and their financial objectives.
The main concerns we are dealing with at present are; can I still buy a property with a mortgage, what do I do about my current mortgage deal and can I remortgage, how can I consolidate my other debt, how much can I raise for other purposes?
The immediate impact of a possible lockdown was for lenders to panic. With the Government announcement on 17th March about mortgage payment holidays, lenders suddenly saw the majority of their mortgage book at risk. They also had concerns on how they would manage all the payment holidays requests and staff were diverted from new business positions to servicing of existing customers. As a result of this, lenders either pulled their products, increased rates to stem inflows of new business and limited new borrowing to just pipeline cases.
However, the statistics so far state that only 1 in 9 mortgage customers have been granted a break in payments. This may increase over time as individual circumstances dictate, but it does currently leave the majority of mortgage holders continuing to pay their secured debts, as usual.
This has meant that lenders have changed their stance, with many re-introducing deals, cutting rates and looking for new business.
The current restrictions on movement have been an issue to lenders as a critical assessment by them is the valuation of the security for the debt; the property. Surveyors and valuers are not currently deemed an essential service, so no physical valuations can take place until restrictions are eased or lifted. Lenders have had to adapt to the wider use of Automated Valuation Models (AVM).
So, the good news is that lenders are lending, but what does that mean?
If you are looking to buy a property with a mortgage, you still can. Whether this is your next home or for investment purposes, fantastic deals are on offer.
Residential mortgages for new purchases are available with some lenders using AVMs on borrowing up to 85% loan to value. At this borrowing level, fixed rates might be in the region of 1.75% for 2 years and 2.15% for 5 years.
If you can fund a higher deposit, the choice of lenders and deals is far greater. 2-year fixed rate deals might be in the region of 1.20% and 5 year fixed are around 1.50%.
The same applies to product transfers and remortgages. Even with just 25% equity, 2-year remortgage fixed rates are in the region of 1.35% or 5-year fixed rates at about 1.60%. These may also come with a free AVM and subsidised of free legal package.
Most lenders will allow some debt consolidation when remortgaging however, advice should be sought in this area to assess the long-term cost of securing personal debt against your home or investment property.
We are seeing many enquiries from business owners looking for affordable and “on my terms” borrowing to inject much-needed funds into their businesses. The good news is that there are lenders in the market able to consider capital raising for business purposes which can be secured against your home or your investment property. Rates on offer, secured against an investment property, might be from 1.60% for a 2-year deal at 60% loan to value or from 3.60% for a 5-year deal at 75% loan to value.
This article does not cover all areas of secured finance. However, we have access to the full range of lenders, to cover the above, but also Equity Release, second charges, short term funding, bridging, commercial, semi-commercial and borrowing within a suitable pension.
The above is only an indication of what might be available and is subject to change, on a daily basis at present. It is also dependent on your personal circumstances and because of this is, it is vital that you seek independent financial and mortgage advice so that the best product and lenders are matched to your objectives and requirements.
We are qualified to give mortgage advice as well as full financial planning, and we provide innovative finance and legal solutions. Our expertise in accountancy, wealth planning and law means you benefit from a truly integrated service, with greater simplicity and better outcomes.
We would be happy to discuss your individual mortgage needs, and if required, we would offer the services of our other group companies in relation to your taxation and legal needs.
Please contact Geoff Morrey-Jones at Prydis Wealth Limited on 01392 671671 or via email at email@example.com. Please visit our website Prydis.com for further information on Prydis Wealth Limited and the other group companies, Prydis Accounts Limited, Prydis Consulting Limited and Prydis Legal Limited.
Any rates, lending policy or lender requirements noted above are subject to change without notice.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.