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FAQs: Mortgages and Lending

  1. 15 April 2020
  2. By Andi Michael

We know that one of the main concerns for those planning on moving right now is mortgage offers - so we asked our property experts to answer your questions.

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How long will my mortgage in principle last?

Mortgage in Principle/Agreement in Principle offers typically last for 30 days, so you may need to get a new one. However, most lenders do another soft check once the application is submitted and can soft check for affordability all the way through the process to ensure additional credit is not taken on. This means your credit score shouldn’t be impacted.

Will my mortgage offer expire?

As the government has asked for people to delay their moves, many lenders have agreed to extend current mortgage offers. This could be for up to three months. However, lenders tend to generate their own policies, so do check with your lender or broker about how long your current mortgage offer can be extended for. 
 

Will being on furlough affect my credit score/mortgage offer?

If the mortgage offer is already in the pipeline when you are furloughed, it should be okay, but check with your lender or broker, as there isn’t ‘one policy’ fits all. 
 
Being furloughed should not affect your credit score as this is related to your ability to pay bills and any debts, so as long as you can continue to meet these, you should be fine. There are ways to limit any effect on your credit score during this time.  
 
For future mortgage applications lenders will check payslips carefully to check to see if applicants have been furloughed and if an applicant is only receiving 80% of salary then they may base the offer on that.  If this is the case, it might be worth delaying until you know what your income will be after lockdown. It's always best to discuss your circumstances directly with a broker.

What about council tax?

The current property owner is responsible for council tax until completion. However, there may be some exceptions, such as for properties being sold by executors – it’s worth checking gov.uk for further information.

How are valuations impacted?

Currently, surveyors are not able to carry out valuations, which is making offering mortgages quite difficult (as well as assessing the impact of coronavirus on property values). As such, that means many mortgage lenders are only offering mortgages to those who have a high deposit.

Can I still get a mortgage?

Lenders and brokers are still working hard to help people looking for mortgages, but you may find that with the stricter rules, it’s harder to get a mortgage. Some lenders will only accept those with larger deposits to limit the risk. However, if you are in a good position in that you are continuing to work and haven’t been furloughed, and you have a sizeable deposit, it may be worth starting your application. By applying now you lock in the rate of the offer at this time, even if it may take time to move forward.

What are mortgage payment holidays and how do I get one?

A mortgage ‘holiday’ means you are able to pause your mortgage repayments for up to three months, if you are struggling to pay due to coronavirus. You do not need to have contracted the virus, but you will need to show that you are struggling to pay, for example due to job loss or furloughing. Bear in mind that you will still pay the amount back, and there may be slightly more interest due to the larger unpaid amount. Which? have a great guide to applying for a mortgage payment holiday.
 
 

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