First published 17 April
- From Wednesday 8 July changes to stamp duty have been introduced to help home movers and first-time buyers
- The market is now open for business with estate agents adapting and able to offer property viewings and home moves resuming from mid-May
- Most of the mortgage backlog from COVID-19 has been completed with mortgage valuations and lenders back up and running
- More mortgage products are now available for home movers, first-time buyers and those remortgaging to get a better deal
- First-time buyers and home movers may need slightly higher deposits than previously, with many lenders seeking a 10-15% deposit
- Mortgage lenders are offering payment freezes for customers financially affected by coronavirus – but interest is still charged during any payment holiday
- Interest rates have been cut to 0.1%, lowering costs for borrowers already on tracker rate and some variable mortgages – there’s also great deals available for those looking to purchase or remortgage
Looking to buy?
If you are just starting your search, now could be a great time to buy. The housing market in England is ‘reopen’ for business – with property viewings, surveys and physical mortgage valuations possible again. What’s more, recently announced changes mean you can save on stamp duty if you buy during the temporary ‘holiday’.
The government has announced a temporary increase to the stamp duty threshold to £500,000. This means first-time buyers and home movers in England and Northern Ireland won’t pay stamp duty on the first £500,000 of the property value, from now until 31 March 2021. If you’re currently looking to buy, our calculator can tell you much you could save on stamp duty.
However, there are fewer mortgage deals choose from than before coronavirus. This is especially the case for first-time buyers with smaller deposits, as many lenders have pulled what they deem to be higher-risk deals. So make sure you have at least a 10% deposit before going out to house hunt.
If you had already agreed a mortgage before coronavirus, your offer should be valid for between three and six months depending on the lender.
If you had already exchanged contracts on a new home and your completion was delayed due to coronavirus, all lenders are offering mortgage offer extensions for three months – and some, such as Barclays, for up to six months. You will need to disclose any change in circumstances though, such as a fall in income due to being furloughed.
Looking to remortgage?
It could be a good time to think about updating your mortgage deal. The Bank of England dropped the base rate to a historic low of 0.1% in March, with mortgage rates following this downward trend - so there are some great deals to be had.
Lenders have almost finished working through the processing backlogs caused by coronavirus and mortgage payment holiday requests - so you shouldn’t experience too many delays.
Check out our tables to see what remortgage deals are available.
Check to see when your mortgage deal is expiring and then think about when you might need to update your deal. You can choose to switch mortgage providers or simply move on to a new deal with your current lender – known as a ‘product transfer’.
Remember, if you don’t take any action, you’ll usually be automatically reverted onto your lender’s standard variable rate (SVR) when your existing deal ends. An SVR could work out significantly more expensive than your current monthly repayment.
If you need advice, we can help. Take a look at the available deals and then we can put you in touch with a free mortgage expert who’ll help you to find a mortgage that’s right for your circumstances - all over the phone.
Looking for a mortgage payment holiday?
In March banks agreed with the government to offer a three-month payment break for those struggling to make repayments due to coronavirus. This has now been extended and you will be able to apply for a payment break of a further three months if you are still struggling.
If you have not applied for a mortgage payment holiday, you will be able to do so until 31 October.
In either case, you can apply to make underpayments instead.
Rules are slightly different around buy-to-let mortgages but the same payment breaks are likely to apply if you are struggling due to non-payment of rent – contact your lender to find out.
Any payment freeze agreed is likely to take two forms:
- it’s added to the total amount outstanding, leading to a small increase in monthly payments for the rest of the term
- the term itself could be extended.
Either way, interest will still be charged during the payment holiday and added to the outstanding amount.
Here at MoneySuperMarket we have built a free mortgage payment holiday calculator to help you work out how much the extra interest will increase your mortgage repayments by once the pay freeze comes to an end.
Who is eligible for a mortgage payment holiday?
You won't need to actively demonstrate that coronavirus has impacted your finances. But you'll need to answer all questions in your application truthfully and be up-to-date with your repayments.
If you don’t wish to take a full payment holiday, you may be able to reduce your monthly payments for a certain period.
Contact your lender directly for more information.
Note that if you are a landlord with a buy-to-let mortgage you are also likely to be eligible for a mortgage payment holiday if your tenants are unable to pay their rent because of coronavirus.
Will a mortgage payment holiday affect my credit rating?
If you agree a payment holiday or a payment reduction with your lender, there should be no negative impact on your credit score as you will not have “missed” a payment without prior agreement.
That said, banks consider wider factors when deciding whether or not to lend – such as the balance of your mortgage debt over time – which can impact your chances of being accepted. In short, the decision to apply for a payment holiday should not be taken lightly.
Our credit score partner TransUnion also adds that you should always make sure your lender records it properly on your credit file.