The COVID-19 ‘lockdown’ and the subsequent jolt to the World’s economy has been a unique challenge for all of us. Due to the government’s decision to close businesses and effectively isolate people in their homes, the furlough scheme was introduced for employees unable to work. This scheme effectively enabled the government to pay employees that would otherwise have been laid off, without pay.
If you have an interest-only mortgage coming to the end of its term or your initial fixed-term period is about to expire, you are more than likely going to need to re-mortgage. When fixed term rates end, most mortgages revert to the lender’s standard variable rate and with so many lenders out there in the market, your lender’s SVR is unlikely to be competitive. This is why we always recommend that our clients periodically check in with us so that we can assess the market and keep you saving money.
So, what if you need to remortgage but you are currently furloughed at 80% of your salary or £30,000 per annum, whichever is the lesser?
Some of the UK’s top mortgage lenders have intimated that existing customers remortgaging on a like-for-like basis won’t need to undergo ‘affordability assessments’ which, if furloughed on a lower income than your usual one, might previously have caused significant problems for those looking to remortgage. This means there should be no negative effects for people looking to remortgage with their existing lenders.
Also, UK Finance has confirmed that banks and building societies have collectively agreed to allow customers who’ve taken mortgage payment holidays to make product transfers without requiring an affordability assessment. This is good news and should mean that taking a mortgage repayment holiday due to the COVID-19 situation should have no impact on your ability to switch with your current lender.
However, if you are looking for a new mortgage or wish to remortgage with a different provider then you will need to comply with affordability assessments. Each lender seems to be approaching this issue in a different manner. Some lenders are taking each case on its own merits. Others are limiting Loan to Value to 65% or only assessing based on the furloughed salary. Others still, are taking into account any top-up paid by employers although in some cases lenders are requesting letters from employers confirming their intent to re-employ.
Whatever your situation, it makes sense to explore the options open to you sooner rather than later. We usually recommend that we have a chat with our clients about 4 - 6 months before they need to remortgage so as to give them time to make an informed decision.
For more information please contact us on 01628 507477 or click here to book a free phone or video appointment.
Research from buy-to-let lender, Landbay, shows that UK landlords are looking at raising rents ahead of the Renters' Rights Bill which is due to come into force this year.
Data shows landlords could miss out on green mortgages due to expired energy performance certificates.
Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.
16 days ago
Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.
17 days ago
It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.
20 days ago
There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish.
27 days ago
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
7 May 2025
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.