First published 17 April
- A temporary stamp duty holiday has been implemented to help home movers and first-time buyers
- Estate agents opened and property viewings and home moves resumed in May
- Mortgage deals are available for home movers, first-time buyers and those remortgaging to get a better deal, although rates are frequently changing
- Some first-time buyers and home movers may need slightly higher deposits than pre-Covid, with some lenders seeking a 10-15% deposit
- Mortgage lenders are still 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?
The housing market, including estate agents, lenders, valuers, surveyors and solicitors, is open for business again – and now could be a good time to buy.
The government has implemented 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 up until (and inclusive of) 31 March 2021.
In Wales and Scotland, buyers won’t pay the equivalent ‘land and buildings transaction’ up to the higher threshold of £250,000. Again, the break applies up to, and inclusive of, 31 March 2021.
In Wales – unlike the rest of the UK – the tax break does not apply to the purchase of additional properties.
If you’re currently looking to buy, find out how much you could save on stamp duty with our calculator.
If you had agreed an exchange date on a property purchase that was delayed due to coronavirus, lenders are offering a three or six-month extension on mortgage offers. Although you will also need to disclose any change in circumstances since then, such as a fall in income due to being furloughed.
The market is also very busy as more people act to take advantage of the stamp duty holiday, which is causing longer than average delays on mortgage processing, according to brokers.
Looking to remortgage?
With interest rates having been reduced to historic lows of 0.1%, it could be a good time to consider changing your mortgage deal. The first port of call is to check when your existing deal is expiring – but six months before the renewal date is not too early to start the process.
Bear in mind lenders are very busy and repricing their mortgages frequently, which can delay the mortgage application process.
It could be that you decide to change lenders, or simply switch to new deal with your current lender – known as a ‘product transfer’.
Remember, if you don’t take any action, you’ll be automatically reverted onto your lender’s standard variable rate (SVR) when your current deal ends. An SVR could work out significantly more expensive than your current monthly repayment.
You can compare the latest remortgage deals here and speak to an independent mortgage expert free of charge.
Looking for a mortgage payment holiday?
Back in March, banks agreed with the government to offer a three-month payment break for those struggling to make repayments due to coronavirus. This was then extended, and you will be able to apply for a new (or further) payment break up until 31 October.
Regulator, the Financial Conduct Authority (FCA), has set down proposals to extend help to beyond 31 October for those struggling to pay their mortgage due to coronavirus – which must be offered by lenders on a ‘tailored’ basis.
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.
Bear in mind interest will still be charged during any payment holiday and added to your outstanding mortgage balance.
We’ve built a 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 up until 31 October, there should be no negative impact on your credit score as you will not have ‘missed’ a payment without prior agreement.
However, banks consider wider factors when deciding whether or not to lend – such as the balance of your mortgage debt over time – which could impact your chances of being accepted.
Our credit score partner TransUnion also adds that you should always make sure your lender records it properly on your credit file.
Crucially though, any more tailored help handed down by your mortgage lender after 31 October will affect your credit score, according to FCA proposals – which have yet to be finalised.