Finding mortgage deals in the post-lockdown property market

The coronavirus pandemic has no doubt had a big impact on the property market as we witness multiple daily changes to rates and criteria. These changes to the lender’s criteria have caused a lot of uncertainty for aspiring house-buyers as their eligibility for loans to change nearly every day. 

Recent research by Knowledge Bank shows that in the month of June there were 746 changes to residential lending criteria, compared with 390 in the same month last year. The number of criteria changes for buy-to-let mortgages also increased, from 146 in June last year to 393 in June 2020.

New criteria for applicants

Self-employed 

Lenders have had to quickly adapt in these ever-changing economic landscapes and to do this, they need to adjust and refine their criteria. For self-employed clients, most lenders are now carrying out manual assessments to ensure their income is secure and, as many self-employed people have had to cease their business during this pandemic, this has caused a lot of uncertainty. 

Employed 

Certain lenders are still using employed applicants’ additional income (commission, bonus or overtime) to support their mortgage application, some lenders have reduced the amount of income they will now accept. For example, one major lender used to use 100% of bonus income but will now only use 25%. 

Furloughed employees

Different lenders’ mortgage application criteria for furloughed workers varies considerably across the UK. According to Trussle, some lenders such as Virgin Money and Clydesdale Bank are not accepting furloughed income as part of their affordability assessment. Nationwide are only accepting those furloughed workers who can prove that they will be returning back to work within the next four weeks, whereas HSBC states that borrowers must be turning to work within the next 3 months.

Some positive criteria changes 

Foundation Home Loans recently returned to 80% LTV lending for landlords on buy-to-let mortgages and Mansfield Building Society has recently started accepting applications from clients looking to purchase a holiday let property. Natwest has also just relaunched 85% LTV products on applications only available for residential purchase and remortgages on a like-for-like basis. 

If you’re looking to move home or remortgage in the next few months and can put up 15% or more, you’ll have plenty of mortgage options and be in line for a good rate. At 60%, 75% and 85% loan-to-value, there are more than 100 two-year and five-year deals currently on the market, as shown in the chart below.

Can I still obtain a mortgage with a 10% deposit?

It is still possible to purchase a property with a 10% deposit, however it is more difficult than before. HSBC, Accord Mortgages and Platform are the biggest lenders offering 10% deposit rates, with Accord’s rates specifically available for first-time buyers. Most banks and building societies require borrowers to have a deposit of at least 15% although some of the smaller lenders expect a larger deposit.

How can a mortgage adviser help?

Mortgage advisers help to facilitate communications between all parties to make sure you find the right mortgage. Our advisers also have quick access to changing criteria and rates so we are able to help you find the best deal on the market. Due to the ever-changing property landscape, using a mortgage adviser is more important than ever.