How the UK Mortgage Market Has Changed Due to the COVID-19 Pandemic
13 April 2021
Due to the Covid-19 Pandemic, the mortgage world has changed, with greater restrictions on lending and stricter assessment of documents and criteria in general.
The Impact of Coronavirus on Mortgage Deposits
The typical minimum deposit for a mortgage is now 15%, raised from a previous 5% before Covid-19 (based on the purchase price or Home Report valuation of the property, whichever is the lowest figure). This is the biggest change that has happened due to the pandemic.
A limited number of lenders will offer a 10% deposit however, they generally come with strict lending criteria and restrictions. Therefore, a 15% deposit appears to be a new normal requirement.
Schemes for Helping First Time Buyers With a House Deposit
It is understandable that the new 15% deposit required can be challenging for first time buyers however, there are schemes available to help boost your deposit. Unfortunately Scotland’s First Home Fund applications have now closed. However, the Help to Buy Smaller Developers Scheme and LIFT (Low-cost Initiative for First Time Buyers) schemes remain available.
How Being on Furlough Can Affect Your Mortgage Application
Many lenders are asking if clients purchasing a house have been affected by furlough. Lenders will generally only use your full income if you have returned to work or can provide evidence you are returning in the near future.
Mortgages for the Self-Employed During the Covid-19 Pandemic
Unfortunately, those who are self-employed are being more rigorously assessed with questions regarding how their business has been affected during the Covid-19 Pandemic.
Business bank statements are also being regularly asked for to check the performance of the business during this time.
Mortgage Applications Taking Longer
It has become apparent that mortgage applications are generally taking longer to be assessed and processed due to current service levels and the high volume being submitted. The average two to three week turnaround for straightforward cases to be assessed could potentially now take four to five weeks.