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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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Cladding-hit flat owner to send repair bills to developer after floor collapses

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‘I’ll be sending the bill to the chief executive’: Cladding-hit flat owner hits out at developer after his floor collapses in latest building fiasco

  • Homeowner sees floor at his London flat collapse in latest building fiasco
  • We exclusively reveal the full extent of the damage – a hole that is 40cm by 30cm
  • The damage is the latest question about building work in flats across Britain
  • Many flats have already been hit by the cladding crisis and face huge repair bills 










A leaseholder who is already having to deal with expensive cladding issues has hit out at poor craftsmanship after the floor of his flat collapsed beneath his feet.

Liam Spender explained that he was at home at the weekend when he felt the floor give way.

‘I felt the floor go and moved quickly out of the way. I turned back and there was a dip in the carpet. I nearly fell through the floor,’ he said.

Leaseholder Liam Spender (pictured) has hit out at poor craftsmanship at his London home in Canary Wharf

Leaseholder Liam Spender (pictured) has hit out at poor craftsmanship at his London home in Canary Wharf

Mr Spender lifted the carpet at his London flat near Canary Wharf to reveal the full extent of the damage – a hole that is approximately 40cm by 30cm.

He explained that his flat is across two levels, meaning that the floor between is allowed to be made as it is – with chipboard and wooden joists – and does not need to include concrete. 

However, Mr Spender claimed that the sheets of chipboard were not adequately supported by the floor joists. 

The damaged floor is on a gallery above his bedroom. ‘It could have been a lot worse and I could have gone straight through,’ he said.

Taking to Twitter, Mr Spender explained how the floor was not adequate, saying: ‘There is only air between the floor boards and the room underneath.’

Mr Spender claimed that the chipboard floor was not adequately supported by the floor joists

Mr Spender claimed that the chipboard floor was not adequately supported by the floor joists

The flat owner revealed the full extent of the damage - a hole that is approximately 40cm by 30cm

The flat owner revealed the full extent of the damage – a hole that is approximately 40cm by 30cm

It is the latest challenge Mr Spender has at his building, as he already faces a bill for remediation works due to cladding issues.

‘I’m going to get the bill for fixing the mess on cladding. The broken floor is literally a step too far. 

He said: ‘I’m going to get the bill for fixing the mess on cladding. The broken floor is literally a step too far.

‘I have not had my bill for the cladding issues yet. But I’ll be sending the bill for the floor and the cladding – when it comes – marked for the attention of the chief executive and chairman of Berkeley homes.’

Since the Grenfell Tower fire in 2017, concerns about cladding have become a national issue.

Lenders have refused to provide finance on some types of cladding, leaving some flat owners trapped in unsafe homes that they are unable to sell.

Berkeley Group was approached for comment, but declined to comment. 

Mr Spender said the broken floor was 'a step too far' as he was already expecting a repair bill for cladding issues at his building

Mr Spender said the broken floor was ‘a step too far’ as he was already expecting a repair bill for cladding issues at his building

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How do you feel about the new carbon budgets?

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We want to hear your views on the proposed new carbon budgets which, the Government says, will change how people live and work. The proposed budgets, published by the Climate Change Advisory Council, will apply to every sector of the economy and will outline a limit for total emissions that can be released.

The first carbon budget, which will run from 2021 to 2025, will see emissions reduce by 4.8 per cent on average each year for five years. The second budget, which will run from 2026 to 2030, will see emissions reduce by 8.3 per cent on average each year for five years. The council says the budgets will require “transformational changes for society” but that failing to act would have “grave consequences”. Environmental campaigners say the budgets will provide a cleaner, healthier and safer future but some rural groups such as the Irish Farmers’ Association say they will have “serious repercussions”.

How do you feel about the new carbon budgets?

Now we’d like to hear your views: Do you support the budgets or are you against them; do they go too far or not far enough?

We will publish a selection of your responses online (If you are reading this on the Irish Times app, click here to access the form for submissions).

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House sales shoot up a THIRD in September amid fears of mortgage rate hike

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The number of homes bought and sold in Britain rose by two thirds in September compared to August, with experts believing buyers are seeking to get ahead of a potential rise in mortgage rates. 

There were nearly 161,000 property transactions in September on a seasonally-adjusted basis, a 67.5 per cent increase on the previous month, according to latest figures from HMRC. 

They also increased by 68 per cent compared to September 2020, and 63 per cent compared to the ‘normal’ market average in September 2017 to 2019.

The cost of a mortgage could be set to increase, if the Bank of England base rate rises

The cost of a mortgage could be set to increase, if the Bank of England base rate rises

Experts say the sharp rise was only partly a result of the Government’s stamp duty holiday, which has fuelled price growth of around £25,000 in the last year but finally ended on 30 September. 

It initially allowed buyers to save up to £15,000 in taxes as they did not need to pay stamp duty on the portion of their property purchase under £500,000. 

But in September, the tax break would have had a more subdued effect.

In England and Northern Ireland, it was tapered down between July and September so that buyers could only save £2,500.

And the holiday had already expired in Scotland and Wales, on 31 March and 30 June respectively. 

Given that the impact of the stamp duty holiday was lessening, some suggest that other factors have become more important in maintaining high levels of activity in the housing market. 

There are a number of things at play, according to Lawrence Bowles, senior research analyst at Savills.

‘There’s more to this activity than a stamp duty holiday: record-low mortgage rates, desire for more space, and a core of unmet pent up demand all continue to push up transaction volumes,’ he says. 

Although it is one of several reasons why the housing market remains hot, the desire for a cheap mortgage has become more of a pressing issue for buyers in recent days and weeks. 

This is because speculation about a rise in the Bank of England’s base rate has threatened an increase in the current super-low rates.

At the moment, rates are available as low as 0.89 per cent – but they are already rising. At its lowest, the cheapest fixed rate on the market was 0.84 per cent.

Major lenders including NatWest, HSBC and Barclays have all moved to increase rates on some mortgages, after months of sustained falls. 

With a base rate rise being predicted by some for December, experts are suggesting that the threat of mortgage rates going up is the ‘new stamp duty holiday’ and that the rush to complete sales before rates rise is now keeping the housing market buoyant.

Simon Bath, chief executive of technology company iPlace Global which created the property advice app Moveable, says: ‘We have reached another crossroads in which following the stamp duty holiday, there is another potential deadline for Brits to prepare for.

‘It seems likely that house prices will continue to rise before demand slows down, as Brits race to obtain lower mortgage rates.’

Rising costs: Those buying homes have seen the typical sale price increase by £5,000 in the last month alone, according to data from the property platform Rightmove

Rising costs: Those buying homes have seen the typical sale price increase by £5,000 in the last month alone, according to data from the property platform Rightmove 

Early statistics back his price rise theory up. According to Rightmove’s latest house price index, which covers the first half of October, the average house price jumped £5,000 compared to the previous month. 

In addition, every UK region broke asking price records for the first time since March 2007.

The property portal noted in its report: ‘The continued fast turnover of property for sale and a window of opportunity to buy before a potential interest rate rise seem to have overcome the final expiry of all stamp duty incentives and are keeping activity robust.’

This trend is keeping the market buoyant for now, but could it really lead to another buying frenzy? Iain McKenzie, chief executive of The Guild of Property Professionals, says so. 

‘With demand for properties still high, and a potential mortgage rate rise on the horizon, this could be the perfect storm to see another frenzy to buy, so long as the shortage of stock doesn’t continue,’ he says. 

There is also the simple fact that people who were trying to meet the September stamp duty deadline, but failed, are unlikely to abandon their purchases, and will continue to add to the totals over the coming months. 

But others are less sure about talk of another buying boom. With the base rate rise only tipped to be from 0.1 per cent to 0.25 per cent, the difference in people’s mortgage payments may only be a few pounds per month. 

For example, for someone with a £120,000, two-year fixed rate mortgage on a £200,000 home, the difference between a 0.89 per cent rate and a 1.04 per cent rate would be just over £8 a month, or just under £200 across the fixed period. 

Office for National Statistics data showing house price increases over the past 15 years

Office for National Statistics data showing house price increases over the past 15 years

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: ‘People will still move without stamp duty holidays and will continue to refinance their homes, whether mortgage rates are below 1 per cent or around 2 per cent.

‘Borrowers are keen to secure these historically-low mortgage rates but if the right property comes along, they are still likely to buy even if they have to pay say 15 basis points more and won’t qualify for a stamp duty holiday.’

But as the stamp duty holiday proved, the psychological impact of thinking you are saving money can be powerful, even when the actual cash saving is negligible. 

While buyers did indeed ‘save’ up to £15,000 in tax, house price rises during the stamp duty holiday were upwards of £20,000, eclipsing the actual saving.   

The true impact that the mooted rise in mortgage rates will have depends on myraid factors, including whether there is further clarity on if and when the base rate change might actually happen, and how mortgage lenders continue to respond to the situation. 

All eyes will be on the October transaction statistics and house price indices to see whether the market is remaining buoyant. 

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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