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How to improve your chances of getting a mortgage amid the pandemic

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Getting your finances in order to buy a home can be tough enough at the best of times. But in the midst of a pandemic, there can be an added layer of difficulty.

For example, what’s the best way of securing a good mortgage rate from a nervous lender if your income has taken a hit? And can you even still get a mortgage if you’ve been furloughed?

The answers to these questions are not always simple and so we have spoken to some mortgage experts for their advice. 

Their comments come amid a fast-moving backdrop that has seen a new lockdown applied across the country bumping into a stamp duty holiday that comes to an end in March, with no indication yet that it will be extended. 

The housing market has remained open this time around, although there is speculation that tighter curbs could be introduced – including the shutting of estate agents – if people flout the rules. 

We ask the experts: Can you get a mortgage if you've been furloughed amid the pandemic?

We ask the experts: Can you get a mortgage if you’ve been furloughed amid the pandemic?

Mark Harris, of mortgage broker SPF Private Clients, said: ‘If you are one of the many people moving for more space, inside or out, or to be nearer family, and are keen to take advantage of cheap mortgage rates and the stamp duty holiday, it can be frustrating if your income has taken a hit thanks to the pandemic.

‘With some lenders tightening criteria for groups such as the self-employed or those requiring high loan-to-values, getting a mortgage is not necessarily as straightforward as in the past.’ 

Here, we provide some top tips for helping you to wade through the mortgage application minefield amid the pandemic…

1. Know your credit score

It is more important than ever amid the coronavirus pandemic to know what your credit score is and how you can improve it.

This is because lenders are increasingly turning to credit scores to determine whether they will approve your mortgage application. 

So without a decent credit score, you may miss out on the best mortgage that you can get – or a mortgage altogether. 

Lenders have become nervous about lending to people who may not be able to repay their home loan at a time when unemployment is rising and workers are falling ill.

Gerard Boon, of mortgage brokers Boon Brokers, explained: ‘Lenders’ appetite for risk is becoming less and less as the pandemic worsens.

‘We have seen many cases in recent weeks that would otherwise fit a lender’s criteria under normal circumstances. But the mortgage has been declined merely due to the risk factor of the pandemic.’

He said: ‘Arguably what has been affected the most is credit scores. Especially in the higher loan-to-value brackets, lenders are limiting borrowing based on credit score rather than general affordability.’

For example, even though an applicant may be able to easily borrow up to 90 per cent of the value of a property based on their income and financial commitments, a lender may force this to be reduced to 85 per cent due to a borrower’s credit score.

Mr Boon added: ‘This is a key factor that is preventing most first-time buyers from proceeding with property purchases – as they can often only afford to put down a maximum deposit of 10 per cent of the purchase price.

‘Mortgage applicants with a low credit score will find it harder to get a mortgage offer as lenders may perceive it as an indication that they could miss a mortgage repayment.’

You can check your credit score on sites such as Experian, Equifax and ClearScore. If your credit score is low, it may be worthwhile trying to improve it and waiting a few months, making sure all your payments are made on time and information is up to date as a way of boosting it.

By contrast, some borrowers can be caught out by having too little debt. This can also lead to a low credit score due to a lack of credit history.

Mr Boon suggested that one way of establishing a higher credit score and proving that you can manage credit with no risk is by taking out a credit card to pay for basic expenses, such as grocery shopping and ensuring that the balance is cleared every month.

You can also improve your credit score by making sure you are registered on the electoral roll.

2. Avoid too much debt

Some lenders may decline your mortgage application even if you make all your credit payments on time as you may have a large amount of outstanding debt.

Recent credit applications may also count against you as a red flag and experts recommend not applying for credit for at least six months leading up to your mortgage application to stand the best change of having it approved.

3. Minimise your outgoings

Lenders will review your income to help establish whether you can afford a mortgage.

Historically, lenders would have a calculation – such as four times your salary – to calculate whether you could afford the loan.

But more factors are now taken into account based on affordability of payments, including where you spend your money.

It means that paying careful attention to how you spend your money in the run-up to applying for a mortgage, and minimising your outgoings will work in your favour.

For example, if you have a personal loan, you may be better waiting until it is paid off.

Other financial commitments that are important to minimise in the run-up to your mortgage application include credit cards and hire purchase loans.

4. Maximise your deposit

Some mortgages that only require a small deposit have been removed from the market amid the pandemic as lenders become increasingly adverse to risk.

That said, it has always broadly been the case that the bigger the deposit you have, the better interest rate you will get on your mortgage.

As such, if you’re close to saving a 15 per cent deposit, you may want to wait until you have the full amount as it will give you access to better rates. These rates mean you will pay a lower mortgage payment every month.

5. Challenges for the self-employed

People who are self-employed will generally find it more difficult to get a mortgage.

Lenders tend to require the last two years of tax calculation and tax year overview documents for those who are self-employed.

Rather than take recent income into account, most lenders will average the self-employed income figures declared on these tax documents.

Amid the pandemic, some lenders are also applying further tighter lending criteria for those who are self-employed. These include requiring larger deposits of up to 40 per cent of the value of the property.

Ray Boulger, of mortgage brokers John Charcol, explained: ‘There is currently an even wider variation than normal between lenders’ criteria for new mortgage applicants, particularly the self employed.

‘For example, Santander announced that from January 9, its maximum loan-to-value for self-employed borrowers is reduced to 60 per cent.’

6. Getting a mortgage if you’ve been furloughed

Lenders are also looking closely at the incomes of those who have been furloughed.

They want to see evidence that these borrowers will return to work at a set date in the future at the same salary.

Mr Harris confirmed that those lenders who will consider applicants on furlough – and where the applicant is also in receipt of an employer top-up to their salary – will require evidence and confirmation of an end date or return, and income top-up, from their employer.

He added: ‘Some lenders will require those who have returned to work after furlough to provide a payslip showing one full month’s proof of income, rather than a letter from the employer as evidence of return to work.’

Mr Harris suggested that if you are coming up to remortgage, it may be better to stay with your existing lender rather than try to remortgage away.

He said: ‘If you have been furloughed but are keen to move, it may be worth considering putting that move on hold until you return to work at your normal salary, if you can, and can access a much wider range of lenders and products again.

‘While it will be annoying to miss out on the stamp duty holiday, there are market commentators who believe house prices will dip anyway later in the year so it may not be a disaster returning to the fray at a later opportunity. You may also feel better prepared to take on a bigger mortgage at that time when your job and income is more guaranteed.’

Meanwhile, Mr Boulger went on to explain that lenders are generally not rejecting employed applicants who work in badly affected sectors, but an increasing number are ignoring furlough income in their affordability calculation – which in many cases has the same effect.

Lenders are not required to apply the onerous affordability test imposed by the Bank of England if the mortgage selected is fixed for at least five years 

Ray Boulger, John Charcol 

He said: ‘Borrowers in this position coming to the end of their deal who find they can’t remortgage will in most cases be able to obtain a new deal from their existing lender, thus avoiding reverting to their lender’s more expensive standard variable rate.’

‘Some lenders are asking borrowers shortly before completion to confirm that there has been no material change to the information provided on the application form. If the borrower confirms a change, such as being placed on furlough, there is a serious risk of the mortgage offer being withdrawn.

‘For many joint applications an acceptable way to address this problem is available because lenders are not required to apply the onerous affordability test imposed by the Bank of England if the mortgage selected is fixed for at least five years.

‘Providing the borrower has selected a fixed rate for at least five years the lender could base its affordability test on the mortgage pay rate rather than the much higher stressed rate and it seems reasonable for the lender to assume that after five years we will no longer have coronavirus imposed restrictions on economic activity.’

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New-build flats with communal work-from-home space are just the job 

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Whether it’s perching computers on ironing boards or struggling to find a peaceful corner in the chaos of a noisy family house, most of us have had to adapt our homes over the past 18 months.

But as the trend for flexible working looks set to continue, a new concept in housing is gaining traction.

Work from home (WFH) developments with a ‘hub’ shared by other residents are popping up across the country.

Modern living: Work from home developments with a 'hub' shared by other residents, which aim to retain the social aspect of office life, are popping up across the country

Modern living: Work from home developments with a ‘hub’ shared by other residents, which aim to retain the social aspect of office life, are popping up across the country

‘The hub is a way of retaining the social aspect of office life,’ says Karly Williams, director of Barratt North Thames. ‘Being close to home enables residents to manage domestic issues, while mixing with others staves off any sense of loneliness and alienation.’

At Barratt’s Linmere development in Houghton Regis, Bedfordshire, which is due to launch in December, the office hub will be surrounded by cafes, shops and green outdoor space.

WFH residents won’t feel they are missing out on the coffee breaks and sandwich lunches they used to enjoy as part of conventional office life. Barratt’s co-working offices and homes are priced from £101,000 to £439,500.

WFH developments can also be effective in regenerating rural areas where unemployment is a problem.

In the village of Lawrenny in the Pembrokeshire Coast National Park, planning permission has just been granted to a local farmer, David Lort-Phillips, to build a WFH development of 39 homes with shared offices. 

Lawrenny has been in steady decline since the 1980s and until recently looked like becoming little more than a cluster of holiday homes.

‘A village should be more than that; it should be a place to earn a living and to have a busy family life,’ says Lort-Phillips. ‘Many of the new WFH houses will be bought by people returning to Lawrenny, having been brought up here.

‘They will put back into the community, using local businesses and training up local young people.’

Prices of the new homes will range from £300,000 to £500,000 for two to four bedrooms, with management fees of £400 per annum.

One danger of building this kind of development in the countryside is that the new homes will jar architecturally with older, nearby properties. But this doesn’t have to be the case.

Galion Homes builds its developments in Somerset with home-workers in mind, so all the homes have offices with superfast broadband as well as nearby hubs and cafes.

‘We won’t be ugly “tack-ons” to villages,’ says Victoria Creber, sales director at Galion. ‘We build developments of no more than 50 homes, at low density, using local stone with a big nod to the local vernacular.’

Disturbing research, based on figures from the Office for National Statistics, was published recently showing 25 per cent of WFH Londoners said they had suffered reduced well-being.

Fizzy Living, which targets its rental apartments at young professionals with an average age of 32 and earning £44,000 a year, tries to make life as stress-free as possible in its East 16 block in Canning Town. 

The scheme comprises 292 apartments, each with its own balcony. Amenities include a meeting room, residents’ lounge, games area and yoga studio.

It claims to be the most pet-friendly building in London, having a specially designed dog washroom (known as the Pawder Room) and it offers a pet-friendly furniture pack for the more delinquent cats and dogs.

‘This block works for me because I can use different spaces for different activities and this combats stress,’ says designer Asher Peruscini, 37, from San Francisco.

‘I use my desk when I’m in design mode, the balcony for more creative stuff and the meeting rooms downstairs for socialising.’ Rentals are from £1,430 pcm.

For those who appreciate the zany side of life, Quintain Living has built The Robinson, a collection of three apartment blocks at Wembley Park in North-West London, in what its describes as ‘retro kitsch’ style.

Each building has a roof terrace where there are surreal delights such as a giant orange-shaped juice bar, a 50-yard row of sun loungers — reputedly the longest in Britain — and a slide that runs down to a courtyard in the floor below.

The WFH component isn’t forgotten — high-speed wifi is found in converted campervans on the terrace.

To de-stress, there is even a rentable spa caravan with a hot tub. From £1,755 furnished; £1,670 unfurnished.

Are WFH developments here to stay?

‘I don’t think working from home will ever replace the buzz of a team of people working towards one goal in the same office,’ says Harry Downes, managing director of Fizzy Living.

‘But I do foresee people being given the freedom to work at home when they need to, reporting into the office only to be kept updated on the bigger picture. It’s a new lifestyle and this type of development caters for it.’ 

On the market… with office space 

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South Africa 17 Lions 22

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15 Stuart Hogg

Something of a flip-flop in terms of his strengths as a player as one or two misplaced passes in attack but resolute and solid in defence. A couple of glimpses of his footwork and pace but he’ll be hoping for more ball next Saturday. Rating: 6

14 Anthony Watson

He was excellent in the first half, the Lions most potent force in attack in being able to escape multiple tacklers, albeit most of the time in lifting pressure in his own 22/half. The ball didn’t run his way after the interval. Rating: 7

13 Elliot Daly

It was his first game at outside centre in Test rugby in five years and it showed. He gave away a couple of penalties, missed his trademark long-range penalty, was bested physically in the collisions and will be under pressure to retain his place. Rating: 5

Robbie Henshaw is tackled by Elton Jantjies. Photograph: Dan Sheridan/Inpho
Robbie Henshaw is tackled by Elton Jantjies. Photograph: Dan Sheridan/Inpho

12 Robbie Henshaw

Shaded his physical duel with Damian de Allende, carried aggressively, was accurate in the tackle and scrambled well, highlighted by forcing a crucial knock-on from Lukhanyo Am. He made one fine break albeit losing possession and a couple of finger-tip knocks-on but generally good. Rating: 7

11 Duhan van der Merwe

A couple of snapshots of his power in the tackle but like Watson was never given the type of ball where he could impose his strength. He didn’t have many questions to answer in defence because Cheslin Kolbe got very little ball. Rating: 6

10 Dan Biggar

The Welsh outhalf kicked 14 points from the tee and in a general sense, one pulled place-kick aside, his kicking game was reasonably well directed. He didn’t really bring his backline into play at any stage, suffocated by the Boks’ defensive press but overall the ledger was appreciably positive. Rating: 7


The British & Irish Lions

Full coverage of all the action in South Africa READ MORE

9 Ali Price

He looked a little overwhelmed by the pace and physicality in the first 20 minutes but he gradually settled to the task. It was his excellent box-kicking after the restart that yielded opportunities for the Lions to regain possession and wrest control. Rating: 7

1 Rory Sutherland

A late call-up to the starting team due to Wyn Jones’s unavailability he was pinged twice at the scrum and the fact that his replacement Mako Vunipola made an appreciable difference when introduced could see him struggle to be in the matchday 23 next Saturday. Rating: 5

2 Luke Cowan-Dickie

Two errant lineouts, one overthrown the other crooked, were the only real blemishes on his try-scoring performance that was accompanied by a high work-rate on both sides of the ball. Rating: 6

Tadhg Furlong appeals to referee Nic Berry during the first Test. Photograph: David Rogers/Getty Images
Tadhg Furlong appeals to referee Nic Berry during the first Test. Photograph: David Rogers/Getty Images

3 Tadhg Furlong

Loves a good celebration from the lineout maul tries, he won an important scrum penalty and was an important buffer in that set-piece when the Boks chased dominance there. He carried and tackled with typical application in a robust performance over the 67 minutes. Rating: 7

4 Maro Itoje

Deserved man-of-the-match, three turnovers in the first half alone including one within a few metres of the Lions’ line that saved a try. Immense in every facet of the game, he led by example especially in defence; intelligent and unrelenting. Rating: 9

5 Alun Wyn Jones (capt)

He was very quiet in the first half but considering the injury from which he has recovered that was to be expected. He was a key figure in the Lions’ second-half revival that included work-rate and decision-making. Rating: 7

6 Courtney Lawes

A huge performance in all aspects of the game, out of touch, carrying, making an eye-catching break that took him through three attempted tackles as a pre-cursor to one of his side’s better attacking moments. Tackled with authority. Rating: 8

7 Tom Curry

There could be no faulting his desire and work ethic but in conceding three penalties he demonstrated an impetuous streak that proved a bit of a handicap to his team in that opening half. His place will be under threat. Rating: 5

8 Jack Conan

He provided illustrations of the many qualities that he brings to a team, making one of two line breaks, defending and tackling with intelligence and carried the ball more than any other Lions player. Rating: 7

Replacements

In a collective sense they, to a man, added energy and momentum at a crucial stage. Mako Vunipola and Kyle Sinckler gave their team a rock solid scrum, forcing a penalty there to boot. Hamish Watson was lucky to avoid a card for a dangerous tackle. Conor Murray and Owen Farrell brought control and maturity for the most part. Rating: 8

Coach

Warren Gatland deserves great credit for the team selection initially as most of the big calls that he made work out superbly. His half-time recalibration of tactics and focus worked a treat as did the timing of the replacements. He’s never been afraid to change things up and that may be reflected in a couple of changes for the second Test one of which could see Bundee Aki drafted in at 12 with Henshaw moving to 13. Rating: 8

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Norfolk’s Hemsby tops the list of villages with the biggest house prices

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Seaside sun… rises! Norfolk’s Hemsby leads villages with the biggest property value boom as buyers search for coastal countryside views

  • Norfolk’s Hemsby tops the list of villages with the biggest house price increases
  • The average value of a home in Hemsby is up 22% during the past year
  • Three of the top five villages with the biggest price increases are in Norfolk

Britain’s village hotspots for homebuyers have been revealed and dominating the list are seaside locations.

The pandemic has seen a ‘race for space’ with people living in cities moving to rural and coastal areas due to more flexible working practices.

They are shunning busy city landscapes for open green spaces in the countryside and easy access to expansive sea views.

Britain's village hotspots for homebuyers have been revealed by property website Rightmove

Britain’s village hotspots for homebuyers have been revealed by property website Rightmove

This four-bedroom house in Hemsby is on the market for £300,000 via Bycroft estate agents

This four-bedroom house in Hemsby is on the market for £300,000 via Bycroft estate agents

Hemsby, just north of Great Yarmouth, tops the rankings produced by Rightmove, having seen the biggest rise in average house prices during the past year.

The typical value of a home in the Norfolk village has increased 22 per cent in the 12 months from June last year, from £221,533 to £270,144.

Three of the top five villages with the biggest house prices increases were in Norfolk, with Heacham and Caister-On-Sea also making the list.

Heacham saw asking prices increase by 20 per cent in June 2021 compared to the same period last year, while asking prices in Caister-On-Sea rose by 12 per cent.

Caister-On-Sea also saw one of the biggest rises in demand for villages, with buyer demand up 46 per cent in June 2021 compared to June 2020. Average asking prices in Caister-On-Sea are £240,909.

David Lowes, of estate agents Mr & Mrs Clark in Norfolk, said: ‘With a general “escape to the country” desire prevalent for many, the rural county of Norfolk is in high demand.

‘With its 90 odd miles of varied coastline, the added possibility of a “next-to-the-sea” lifestyle, and the simple pleasure of a stunning sunrise or sunset means the coastal villages are of particular attraction.’

Heacham saw asking prices increase by 20 per cent in the year to June 2021, says Rightmove

Heacham saw asking prices increase by 20 per cent in the year to June 2021, says Rightmove 

This four-bedroom house in Heacham is for sale for £475,000 via Sowerbys estate agents

This four-bedroom house in Heacham is for sale for £475,000 via Sowerbys estate agents

He added: ‘Hemsby and Caister in the east and Heacham in the west of the county offer some of the more affordable options thus driving strong percentage price growth. 

‘Each of these villages are close to larger towns too which helps with the transition to the countryside in terms of availability of amenities and activities.’

Rightmove defined demand as the number of enquiries it had via emails and calls to agents via its website. 

Average prices percentage increases in these villages appear to be around three times as much elsewhere. But this may be affected by villages having lower stock and fewer transactions. 

The average price of a home in Britain increased 6 per cent during the past year to June, from £317,058 to £336,073, according to Rightmove.

This four-bedroom house in Caister-on-sea is for sale for £400,000 via Bycroft estate agents

This four-bedroom house in Caister-on-sea is for sale for £400,000 via Bycroft estate agents

Rightmove revealed that six out of the top 10 villages with the biggest annual price growth in June are near the sea. House price growth in all of these villages rose at a higher rate than the national average.

Rightmove’s Tim Bannister said: ‘During the past year, we’ve spoken a lot about the changes we’re seeing in where people are choosing to live, and this data shows continued demand from buyers looking for villages and rural locations outside of traditional major cities.

‘While we have seen signs that cities are starting to make a steady comeback, particularly in the rental market, price growth across all areas of Britain continues to be strong.

‘With the summer weather finally here, we’re seeing an added drive from buyers looking for that perfect village location by the sea, which is supporting price growth in these areas.’

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