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Our 10 Step Mortgage & Home Buying Guide for First-Time Buyers

In this article we have put together a list of the 10 steps involved in the mortgage process for First-Time Buyers in Manchester, so that you can be as prepared as possible ahead of your very own mortgage journey.

There are 10 steps to the process of home buying and obtaining a mortgage. These are as follows;

First Step: Get in Touch for Your Free Mortgage Consultation 

You’ve decided to take the big leap and purchase a home, taking out a mortgage as a First-Time Buyer in Manchester. Without a doubt, this is going to be one of the biggest financial decisions you ever make in your life. Upon this realisation it can be a little jarring, especially when you have no experience in this area at all.

Here is where a dedicated mortgage broker in Manchester can jump in and help you along the process. The goal of our team is to take the stress away from you, working hard to ensure you come out the other side with a mortgage and your first home, happy and deal that works in your favour.

Once you Get in Touch with us, we’ll book you in for a free initial mortgage consultation with one of our very experienced and trusted mortgage advisors in Manchester. At this point, we’ll take your details and look at what you’re planning to do, before starting off your mortgage process.  

Second Step: Mortgage Affordability Assessment – How are you doing Financially? 

Something your advisor will be able to run through in your free mortgage consultation, is a Mortgage Affordability Assessment. This is a quick process where your dedicated mortgage advisor will run through your monthly income and regular expenditures (looking at what you spend your money on), to determine whether or not you have the financial means to afford the monthly repayments of the mortgage amount you’re looking to borrow from a lender.

It is very important for us to do this before putting you forward with a lender, as we need to be confident that you can definitely afford your repayments. This helps to avoid the risk of arrears and any future repossessions that could occur, something the lender will really want to try and avoid themselves if it can be helped.

A Mortgage Affordability Assessment will also usually be undertaken by a lender, so the initial checks we undertake will help save the time of the lender, ourselves and more importantly you, from an application that may be declined later down the line if you fail on affordability.

Third Step: Obtaining a Mortgage Agreement in Principle

Following on from this, the next step in your consultation will be to obtain you a document called a Mortgage Agreement in Principle. If you’ve been doing any research on mortgages prior to receiving First-Time Buyer Mortgage Advice in Manchester, you may have seen this under some different names. These usually include the names ‘Decision in Principle’, ‘Mortgage in Principle’, as well as the abbreviations ‘DIP’ & ‘AIP’. The only difference between them is the name. Other than that, they all do the same thing.

The reason you need a Mortgage Agreement in Principle is to provide a record that you have passed a lenders initial credit scoring system, either via a hard credit search (which leaves a footprint on your credit file) or a soft credit search (which does not leave a footprint on your credit file).

There is still no guarantee you will be accepted on a mortgage, but is a step you must take on your way towards your end goal. Another benefit to you having this document, is that it will show the seller of a property that you are very serious, possibly creating room for price negotiations with them when it comes to making an offer.

A typical AIP will usually last anywhere between 30-90 days, and once it has expired, can be easily renewed. Our team can usually get one of these turned around for you within 24 hours of your initial consultation with an advisor.

Fourth Step: Finding the Right Solicitor 

After you have obtained your Agreement in Principle, you will need to find yourself a Conveyancer to help you with the legal proceedings of the homebuying process. The term Conveyancing is given name for the transfer of legal ownership of property between parties, whether you’re the buyer or seller.

Your Conveyancing Solicitor will be able to handle contracts, give any necessary legal advice, conduct local council/authority searches, help sort out Land Registry and lastly transfer the funds you have acquired in order to pay for the property you wish to purchase. As is surely clear from the tasks involved here, this is a vital role in your process, so you must make sure you carefully make your choice.

Another point that should be made here, is that Licensed Conveyancers are property specialists and can’t deal with complicated legal issues, whereas more general Solicitors offer a full range of services so can often seem more costly. Whilst we do not offer these services ourselves in-house, we have a list of trusted companies that we will gladly be able to refer you out to, should you ask for this.

Fifth Step: Making an Offer on a Property 

You’ve now spoken to a fast & friendly Mortgage Broker in Manchester, passed the Mortgage Affordability Assessment, obtained an Agreement in Principle and found yourself a Conveyancing Solicitor to help process the legal side of your home buying journey. This means you’re halfway there! Your next step is to make an offer on a property!

As touched upon previously, with an Agreement in Principle in hand, you will be in a much better place to negotiate with the seller regarding price. Make sure not to “low-ball” the seller with an insulting offer, but don’t be afraid to ask for a lower price. Knowing you have an AIP with you, the seller will be more likely to accept your offer than someone who is willing to pay the asking price but hasn’t even begun to prepare themself.

The worst thing that can happen is if the seller says no, but it’s at that point you can work out a more reasonable offer for both of you or walk away and find yourself another property with a better suited price. Once you’ve had an offer accepted, it’s back to your mortgage advisor and onto the last leg of your mortgage journey.

Sixth Step: Submit Your Documents 

Onto an important step, in submitting the required documents to proceed with your mortgage. As you might have expected when such a large amount of money is involved, a mortgage lender will not just lend to anyone who asks for a mortgage. They’ve done this in the past and things didn’t work out too well.

The mortgage lender will need you to provide various documentation to prove that you are the right person, the amount you earn from your current career, where your current residence is and how well you conduct your finances monthly. If you’re obtaining a joint mortgage, they will require this same documentation from each parties involved.

The types of documents you will need to submit, include; proof of identification, proof of address, the last 3 months’ of your pay slips and latest P60 (employed), the last 3 years’ proof of earnings and Tax Year Overviews (self-employed in Manchester), proof of any income such as state benefits or maintenance, proof of deposit and the last 90 days of your personal bank statements. 

Seventh Step: We’ll Progress Your Mortgage Application 

With your mortgage agreed in principle, and having an offer accepted, we can now proceed to submit your full mortgage application. With everything prepared and checked by your hard working Mortgage Advisor in Manchester & their team of Mortgage Administrators, we are ready to submit an application to the lender in hopes of getting you a mortgage.

Your advisor will send off all the collected evidential documentation for this, and then all that is left is to wait for them to respond with either an accepted application or a declined one. Whilst there is no given time frame, our Mortgage Administration team will be able to chase the lender for an answer on this for you, until it has been made clear.

Eighth Step: Property Valuation / Survey 

In-between your mortgage application and being offered a mortgage, the lender will require that your property have a valuation survey taken out on this. These are usually carried out by accredited companies nominated by the lender (someone whom the lender will trust).

The reason they do this is to understand the true value of the property, versus what you’ve agreed to pay for it with the seller. If you’re paying above its actual market value, the lender may be less willing to accept your offer. This is because they will most likely be out of pocket and unable to make back the full borrowed amount, if you happen to fall into arrears at any point. This is usually referred to as a ‘Down Valuation’.

There are various types available when it comes to surveys, with variances in the prices of each of these. Some will just want to check how much the property is worth, whereas some will also provide information on any structural concerns, as well as possible repairs that you may need to lookout for in the future. Your Mortgage Advisor in Manchester will be able to help you out, choosing the right survey for you.  

Ninth Step: Receiving Your Mortgage Offer 

Now it is time for the moment you’ve been waiting for since Step One. Your lender has checked over your case and performed an assessment of all the evidencing documentation. Once this is done, they will present you with your Mortgage Offer.

Our team of friendly Mortgage Advisors and Administrators in Manchester, that you’ve no doubt become friendly with over the course of your process, will check over the offer on your behalf to ensure everything is correct and right for you. Then after your mortgage offer has been received, it’s down to your Conveyancing Solicitor to take your purchase from that point, through to completion. 

Tenth Step: Completing The Process 

Congratulations, you’ve now officially gone from First-Time Buyer in Manchester to a full fledged First-Time Homeowner in Manchester. With any prior stress and anxieties now firmly behind you, we hope you’re happy and ready to begin your new life, in your new home.

All you need to do is go get your keys and begin the process of moving in! We hope you received a fast & friendly Mortgage Advice service in Manchester and enjoyed speaking to our team along the way. If you have chosen a fixed rate mortgage, at the end of your term, we will Get in Touch again to help out with your Remortgage! 

The Importance of Changing Your Address

Mortgage Advice in Manchester

When it comes to applying for a mortgage, you need to be careful and watch out for your credit score. The higher your credit score, the more likely that it is that you will be accepted by a lender for a mortgage. There are many different things that can have an effect on your credit score.

One of these, is the fewer addresses you have on your record the better. People are starting to go about this the wrong way though.

More and more, we see applicants who have moved out of their parents address into rented accommodation, but are still leaving their bank statements, credit card and electoral roll information registered to their parents address.

For some reason, people think that it is a good idea and it could help their credit score, however, it can actually damage your credit score. Almost without fail, if you have moved to a new address, there will be some record of this on your credit report, whether you change your details or not.

Things as simple as a delivery address when you have ordered something online or a car/home insurance search can appear on your credit report.

Check before you apply

Before you perform a credit search and apply for a mortgage, you have to make sure that, to your knowledge, nothing will affect your credit score. You will need to get all of your accounts (credit cards / current accounts) and electoral roll are all changed over to your current residential address.

This only really applies to you if you have already moved out of your parents home, as when you are moving out to get a mortgage in a new home, you are able to change your details to the new property once you’ve moved in.

Regardless, all these things needs to be double and triple-checked when applying for a mortgage. We always find that people forget to update their address on their credit file and electoral roll. It can make a massive difference to you in your quest for a mortgage!

It’s important that you get the dates right too, knowing the exact date you moved into your rented property and the day that you left it. If you do happen to make a mistake with these dates, lenders may be under the impression you are living in two places at once.

Impress the lender

By making sure that every bit of information on your file is up-to-date, you are proving to the lender that you know what you are doing and you are taking the process seriously. It’s a more open and honest way of trying to apply for a mortgage. You want to impress them in any way you possibly can and this is a good way to start doing so.

If you still need a bit more help or just want some insight from a professional Mortgage Advisor in Manchester, feel free to get in touch for a free mortgage consultation.

We know that being a First Time Buyer in Manchester with no mortgage experience can be hard, which is where we are able to help. Get in touch with your friendly Mortgage Broker in Manchester today.

How Will Lockdown 2.0 Affect the Property Market?

Mortgage Advice in Manchester

On Saturday 31st October, the UK Prime Minister Boris Johnson announced that England would enter a second lockdown from Thursday 5th November, through until Wednesday 2nd December. This was done with the intention to decrease the spread of the coronavirus across the country, with additional restrictions in place.

Luckily for some, this lockdown is a little more relaxed than the first lockdown we experienced, allowing more industries and educational settings to remain open. The thing that initially concerned us the most, was what would happen to the property market. Thankfully, now that Lockdown 2.0 is underway, we can say that everything looks promising and the property market will remains open as normal.

Of course, there has been some minor changes to areas of the home buying process, most of them relating to social distancing. The property market is still standing strong though! Here is a look at some of the things you can still do:

  • View a property to buy or rent
  • Visit estate agents, letting agents, sales offices and show homes
  • Prepare a home to move into
  • Prepare a home for sale or rent
  • Move home

Lately we have received lots of mortgage questions from First Time Buyers and Home Movers in Manchester about the current national lockdown and how it affects the property market:

Can I move home in lockdown?

Unlike the start of the last lockdown when the rules were stricter, in this lockdown you are still able to move home if you need to. Home removal services, van hire, everything needed to move home will still be available for people to use.

As mentioned at the start, the process of moving home will have to be completed under the social distancing guidelines. This will be vital to follow if you are either viewing other people’s properties or taking house viewings on a regular basis.

Can I visit my estate agents?

Yes, the government are allowing you to visit your estate agent’s office. However, this is dependent on individual branches, as some estate agents have chosen to work form home and have closed their public office. You may have to check online to see whether they are open or not.

Nowadays a lot of people prefer to transact over the phone, so even if you can’t visit in person, you can rest assured that the staff are fully equipped to get the process started over the phone and even online.

We advise that you take your time if you are going through the process online, and make sure that you fully understand everything that is being communicated.

Can I continue with house viewings?

You can still continue with your house viewings, however, if your estate agent is offering a virtual house viewing, it is probably more recommended to try that. Most home buyers are shifting towards this new way of doing house viewings; as a Mortgage Broker in Manchester, we also expect that the number of virtual viewings will increase over the course of national lockdown.

Even though virtual viewings may be your safest option, we also understand that choosing your dream home is a really big decision for your life going, so if you want to view the property in person, this is understandable. Just remember to be careful!

Your estate agents will also check with the property owners that a property viewing is okay, so long as it is socially distanced property viewing. If they agree, then you can arrange a date and time. Depending on the time of day and the homeowner’s personal situation, they may go out somewhere so that there as few people in the household at one time as possible.

Can I put my property on the market?

The property market hasn’t been put on pause like it was earlier in 2020, so you are still able to go through the home selling process as normal. You will need to consider everything that comes with selling a property, including choosing an estate agent and a property valuation, getting pictures of the property taken and making it presentable for any viewers.

With the guidelines and restrictions in place, there may be some delay in certain areas of the process, though that should not put you off. Estate agents are very busy right now with enquiries and with all of the different measures in place, things that are normally easy to complete are taking a little longer than they would like.

Can I still use conveyancers?

Yes, conveyancing solicitors will remain open as normal. They will still be available to support the sale of your property. Much like estate agents, most solicitors are working from home and we advise that you be patient as due to the demand in the property market, things may not go as quickly as you’d normally hope for.

Can I take out a mortgage payment holiday during this lockdown?

As a dedicated Mortgage Broker in Manchester, this is a question that we have been asked quite a lot during the course of the pandemic. It was particularly asked by lots of homeowners during the first UK lockdown.

In this lockdown, even though it’s much shorter, you can take a mortgage payment holiday if it is really deemed necessary. We understand that there are many homeowners out there that need help meeting their mortgage payments. If this is your situation then taking one out could be a real lifeline for you and your home.

To find out more helpful information about mortgage payment holidays and whether you should take one out, check out our article on mortgage payment holidays.

If you took out a mortgage payment holiday during the first lockdown and are currently still on the scheme, you can extend your holiday further so that it comes to a total of six months holiday. However, if you have already had a six month payment holiday and you have already reached the six month limit and therefore unlikely that you will be able to utilise the scheme again going forward.

Catching up to speed

The property market is slowly catching up to speed and thankfully can continue marching on through this second lockdown. If you are wanting to start the mortgage/home buying process and would like help from someone with experience, it may be within your best interests to get professional Mortgage Advice in Manchester.

With all of the social distancing measures in place and the demand in the market, this could also make things a lot quicker for you. As an experienced Mortgage Broker in Manchester, we have a wealth of knowledge in helping customers achieve their mortgage dreams. We want the whole process to run as smoothly as your do; don’t hesitate to get in touch today and we will get you booked in with a mortgage advisor!

How to Improve Your Credit Score

Way to improve your credit score | moneymanTV

The general rule of thumb, whether a first-time buyer, home mover, or budding Buy to Let landlord in Manchester, is the higher your score, the more likely you are to get accepted for a mortgage.

It is worth noting that lenders have an internal credit score that gets built on the information held on your credit report as well as information within your application. Every mortgage provider follows their credit scoring policy, so just because one high street bank declines you, it doesn’t necessarily follow that they will all say no.

When it comes to which credit reference agency to use, or which one will the lender use, unfortunately, they do not always divulge this information.

In any case, sometimes lenders chop and change between Experian, Equifax, and Call Credit. It is good practice when looking to obtain a mortgage to check multiple credit reference agencies. The reason for this is that information on one agency’s file may differ from that on another.

Top Tips to Improve your Credit Rating:

Stop Unnecessary Credit Searches

Until you have registered with one of the credit reference agencies to check your score, the first thing you need to do is stop applying for new items of credit. Be careful, something as simple as comparing car insurance on a price comparison website can register unwanted credit searches.

Are You on The Voters Roll?

Lenders will use the electoral roll to carry out identity checks, so this is a crucial step. Ensure that your names spelled correctly and you get registered at your current address, your credit file will show if you are registered or not, you can also check with your council.

Active Credit

Mortgage Lenders like to see some “active credit” so having a credit card that you use regularly and pay it off in full each month can help over time. However, bear in mind that taking out new credit could have a short-term negative impact. Don’t miss payments!

Don’t Run Close To Your Maximum Limit

Regularly running close to your limit on your credit card or going over the limit will harm your score. Using too much of your available credit will hurt your credit score.

Check Your Address History Gets Keyed Correctly

It is essential that you do not appear to be living in two places at once. In any case, this can happen when you incorrectly enter your dates in and dates out of previous addresses.

It’s worth spending some time double-checking the dates and making sure the formats of the addresses are consistent. However, this is tricky when you have lived in a flat/apartment.

Close Any Unused Credit Accounts

If you have any credit or store cards that you are not using you should cancel these. Please note again that this could have a short-term negative impact on your score.

The systems can’t tell whether it is you or the lender taking this action, but it helps in the long run. Also reduces the chances you’ll fall victim to fraud if they were ever to get stolen.

Check Your Account Addresses Are Correct

Ensure that all of your open accounts get registered at your current address and not a previous one.

Remove Any Previous Financial Links

Your ex-partners could affect yours if you hold joint accounts, a mortgage, or a loan. It is vital to inform the credit reference agencies that you are no longer associated and remove any links.

Love it or hate it credit scoring is here to stay. Also, it will have a significant bearing on whether you will qualify for the mortgage you need. It’s quicker and more consistent for lenders to rely on their systems than their human resources.

Having an up to date copy of your credit report to provide to your mortgage broker will help build up a full picture of your financial situation and help them recommend the most suitable mortgage for your circumstances.

Mortgage Advice in Manchester

Why Should I Use a Mortgage Broker in Manchester?

It is a no brainer why we think when going with a Mortgage Broker is beneficial and speaking to one of our Mortgage Advisors in Manchester, then going straight to a Mortgage Lender—saying that it’s still worth exploring your options. We find that most people use a Mortgage Broker in Manchester; however, in this article, we will explain the pros and cons of both paths.

A Mortgage Broker like us will likely charge a broker fee on top of the other costs, whereas the Mortgage Lenders do not require this payment, thus saving you money on that front.

The Lender offers exclusive direct deals. They do this to attract business from both consumers and brokers alike. In any case, these deals are sometimes available only via the Mortgage Broker and not the branch. Before 2014, your Mortgage Lender would be allowed to let any member of staff sway you towards a potential mortgage without any proper mortgage advice or consumer protection.

By 2014 this was thankfully banned, with only experienced Mortgage Advisors in Manchester allowed to provide Mortgage Advice and make recommendations for their products. However, this, of course, took some adjusting and customers could be left waiting for a month or maybe more, just for an initial appointment.

We still see today that sometimes this can always happen, which isn’t great when you’ve just had an offer accepted for a property. Because of issues like this, applications via Mortgage Brokers started to rise. We offer a same day service, aiming to put you through to a qualified Mortgage Advisor in Manchester either immediately or at the most within the same day.

Mortgage Advice in Manchester

Before the 2010s, it was much more challenging to compare possible mortgage deals. Fast forward to the present day and looking for such deals is significantly more comfortable, with everything just a Google search away. The difficulty now lies in finding a lender whose criteria and features can be personalised, based on your circumstances. It would help if you were wary though, that the deals with the lowest rates tend to carry high arrangement fees.

Another point to take note of its affordability. No matter how good a Lenders deal is, you must be able to afford it. Because this is such a big deal, many people choose to go with a Mortgage Broker in Manchester as we’ll compare the criteria and find something that matches you and your circumstances.

These days, thanks to tightened regulations post Credit Crunch, mortgage applications are no longer straightforward. There are a variety of things that could potentially be a hindrance when you are making your application. These can include:

  • I have a poor credit history.
  • I am receiving self-employed income.
  • I am using a mixed deposit source, i.e. Gifted & Savings.
  • Opting for Let to Buy. Renting your current home to buy another.
  • Being a contractor or working under a zero-hours contract.
  • I am struggling on the affordability front.

Lender vs Broker | Mortgage Advisor in Manchester

Over the years, Mortgage Lenders would show their competitive side, often trying to offer better deals than the next Lender. Nowadays, because of tightened margins, their differences come from their lending criteria.

Examples of these include the amount some would lend to the self-employed compared to others, as well as being slightly more lenient to previous adverse recordings on your credit report.

Whatever the situation, it is unique to you. When you explain this to an experienced Mortgage Broker in Manchester, they will likely have encountered something similar before. Hopefully, they’ll use this experience to recommend the most appropriate mortgage for you, at the lowest rate available to you.

Why a Mortgage Broker in Manchester will benefit You

Our service goes beyond just the mortgage too. Customers will rely on Mortgage Advisors in Manchester for more, even if the application is straightforward. They can discuss how much they’re planning to offer on a property, recommend services such as solicitors and property surveys, and go through any available protection.

Another significant aspect of the service a Mortgage Broker in Manchester provides is the ability to be more responsive than the lenders’ direct propositions. Out of hours and weekend, appointments are common-place, as are our Mortgage Advisors in Manchester working late on an evening to respond to customers’ emails.

An often-overlooked factor of why most applicants prefer a mortgage broker is that everyone seems to be busy, and you might need someone to handle the full transaction and take away your stress. Professional applicants will see the benefits of this as they have clients of their own that they’re able to charge their services.

Maybe in the future, lenders will want to take back more clients from brokers. If this happens, it’s relatively unlikely they’ll staff-up their branch networks. They will likely make investments in technology to transact with customers online.

For clients who want to do business that way, with say a straightforward product switch, it’s great. Generally, whether they are First Time Buyers in ManchesterSelf Employed in Manchester, or looking to Remortgage in Manchester, people enjoy having the “human touch” when it comes to the mortgage process.

Mortgage Advice in Manchester | Mortgage Advisor in Manchester

Need a Mortgage Agreement in Principle in Manchester?

What is an Agreement in Principle? | MoneymanTV

An Agreement in Principle (AIP) is where you pass a Lender credit score to qualify for a potential mortgage. Sometimes you may also hear it being called a Decision in Principle.

With an Agreement in Principle in hand, you are ready to support any offers you make as a First-Time Buyer in Manchester. You may be able to negotiate a lower price if you have one of these as it shows the seller you are serious and have the funds to proceed. 

Will obtaining an Agreement in Principle affect Credit Score? 

Nowadays we see more lenders using soft searches than not, however some may still affect your credit score. This can be the case if it is a hard search, but usually a soft search should leave your credit score unaffected.

Soft searches don’t dig as deeply as hard searches, though you can trust that the lender made the correct choice either way.

Should I avoid hard credit checks? 

If it is once every blue moon, then a hard search or two should not make too much difference. The problems arise if you start having multiple hard searches within a small window of time.

That being said, if your credit rating is good and you know it, do not let this put you off, especially if taking a hard search with that lender is the best deal.

Is an Agreement in Principle a guarantee that I will get the Mortgage? 

Though it would be nice, there are no guarantees that having an Agreement in Principle will get you a mortgage. The Lender will still need to see all your documents and only then will an Underwriter make the final decision.

Often we find that customers get in touch having been declined at application stage, due to missing some small print in their Agreement in Principle. You will need to provide ID to prove that you are genuine, payslips to prove you earn the amount you claimed and bank statements to prove you conduct your finances, before a lender will offer your case.

Can I make an offer without an Agreement in Principle? 

Though it is possible to make an offer without an Agreement in Principle, we would not recommend it. An Estate Agent with credibility will want you to prove you can in fact proceed.

How Long Does it take to get an Agreement in Principle? 

It is possible to obtain an Agreement in Principle within 24 hours of speaking with a Mortgage Advisor in Manchester.

How Long Does an Agreement in Principle Last For?

Usually an Agreement in Principle will expire after 30-90 days. You do not need to worry though as this does not mean you should just apply for the first house you find. If your Agreement in Principle expires, you can quite easily have it refreshed when you are ready to make an offer.

Finding a mortgage only to be declined a mortgage can understandably be disappointing. As such, we recommend getting an Agreement in Principle as early as possible.

Mortgage Payment Holidays Advice in Manchester

Mortgage Advice in Manchester

At the beginning of the Coronavirus pandemic in March 2020, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday if they needed it. Most lenders followed the Government’s guidelines and did their best to help their borrowers during these tough few months.

We have thought very carefully about the possibilities of what could happen to your mortgage over the next few months and are working very closely with our panel of lenders to ensure that if anything changes, we can inform you right away and recommend the best option for you to take so that you still feel secure and happy with your mortgage.

What is a Mortgage Payment Holiday?

Mortgage payment holidays are agreements you make with your bank, building society or mortgage lender, allowing you to take a small break from your monthly mortgage payments for a set period. In the case of the current COVID-19 crisis, homeowners are being granted 3-months.

The 3 months will be added on at the end of your term or your payments will be recalculated at a slightly higher level, meaning you will still have to pay those 3 months back at some point.

Your interest, however, carries on as normal, meaning you’ll technically be paying an additional 3 months of interest on top of what you’ve paid already.

Most lenders would likely prefer to not extend your mortgage term, as you may end up going beyond their standard retirement age. There’ll be more information on this over time.

Depending on the mortgage deal you have in place, you may be able to pay off a lump sum later on in the year to bring your mortgage in line with where it would’ve been had you not taken a holiday.

Mortgage Payments Holidays are available for those with residential mortgages and Buy to Let mortgages, meaning landlords will also have help if their payments are affected.

What is the government proposal?

The full proposal is in detail below:

  • Mortgage lenders will offer an automatic 3-month mortgage payment holiday for customers impacted, directly or indirectly, by COVID-19.
  • The mortgage payment holiday will apply to customers who are up to date on their payments, not in arrears, and wanting to self-certify that they are impacted by COVID-19.
  • This means that lenders will not complete an income and expenditure assessment, or an assessment of alternate payment options as ordinarily required under MCOB.
  • This proposal will allow lenders to be more responsive to customer needs and offer forbearance in a simple way to customers in an environment where the operation of collections teams made be also impacted by COVID-19.
  • Customers will be made aware that interest will accrue in the holiday period and they will need to make up deferred payments in the future.
  • Customers who wish to undertake a full assessment of their ability to pay or financial difficulty may still do so.

Mortgage Payment Holidays: How do I apply?

To discuss your options for Mortgage Payment Holidays, we would recommend speaking to a Mortgage Advisor in Manchester to start with and not jumping straight into taking a holiday.

We’ll be able to take a look for you first and see if this option is something worth your time. Lenders will no doubt be facing an influx of calls, needing to be free to speak with the most urgent matters over everyone else.

We’ll look through your personal situation and see if there are any other options for you first before you decided to take a Mortgage Payment Holiday.

For a customer, up to date with payments, not in arrears and impacted by COVID-19:

  • The customer would contact the lender and inform them that they are impacted by COVID-19.
  • The lender would accept these details from the customer and offer an automatic 3-month mortgage payment holiday.
  • No evidence will be sought from the customer.
  • The lender makes the customer aware that interest will accrue and will be contacted at the end of the three months to complete an assessment of the customer’s circumstances.
  • At the end of three months, an arrangement to pay will be agreed with the customer according to their circumstances to recover any shortfall, while ensuring that the mortgage remains affordable and sustainable.
  • The lender notifies the customer that if they wished to complete a full assessment now, there may be other forbearance options more suitable to the customer.

Mortgage Payment Holidays – What does this mean for my credit score?

Generally, these can show up on your credit score as a negative mark, but most lenders have said if your case is linked to the virus, they’ll make sure it doesn’t affect your credit score at all.

It’s important that you speak directly with your lender to ask them this, recording their response. Also take the date and time, as well as the name of who you spoke to, to avoid any confusion later on. Different lenders will handle these things differently than one another.

Will I still be able to remortgage or take a product transfer with my lender?

Controversial for some, but there is now evidence that lenders are asking borrowers to try and not make changes to their mortgage whilst within the holiday period. This means, for the time being, you can’t take out a remortgage or product transfer.

In simpler terms, borrowers reaching the end of their current product may be forced to move to the higher lenders variable rate. This means many borrowers who act too quickly could find themselves on a Mortgage Payment Holiday that gains interest on a more expensive variable rate.

This is another reason why we highly recommend speaking to a Mortgage Advisor in Manchester first, to determine the right path for you to take. If possible, try arranging a transfer prior to asking for a holiday, as that seems like a more sensible option.

What “Other Options” are available?

Some lenders are offering a temporary switch to interest-only, in order to reduce monthly payments by a large amount, while not adding on any further amount to the loan, by still servicing the interest each month.

You may not need to convert the entire mortgage to an interest-only mortgage and it may be that putting only a portion of this mortgage on that basis could give you room to breathe.

Those who have savings may prefer remortgaging onto an offset basis. This would reduce their monthly payments whilst keeping their savings safe and intact.

For example, someone with a £500,000 loan and £100,000 in savings would only pay interest on £400,000 reducing their payments accordingly.

For others, remortgaging onto another lender, calculating the cost of any early repayment charges, maybe all you need to ease the pressure you currently face. You could also simply extend your current term, thus spreading your payments across a longer time frame.

To discuss any of these options, or to just have a helpful chat about your current situation please contact us and we’ll see how we can be of assistance.

Buying as a Sitting Tenant in Manchester

Buy to Let Mortgage Advice in Manchester

We often hear from customers who get in touch that they are looking for Specialist Mortgage Advice in Manchester. A large portion of these are currently renting from a landlord that is wanting to sell them their property. From the perspective of a landlord, selling a property to their current tenant can actually be easier. As such they may give the tenant the possibility to buy the property before it goes on the open market.

Mortgage Advice in Manchester for a landlord

Reasons a landlord may be selling

Because of government tax relief clamps, a lot of current landlords are now paying more tax than they would have done in years gone past, leading some to call it quits on their housing ventures and go seek another investment in another market.

Investors that are really serious about their job as a landlord and keeping the property market going, tend to keep on going through these legislative changes. Their mindset when it comes to being a buy-to-let landlord, is that their property is a long-term investment. On the flip side, amateur landlords are more likely in it for a “quick buck” and will sell if things don’t quite go their way.

The benefits of selling to a tenant

  1. It saves them from the costs of estate agent commission.
  2. Rent will continue to come in until the purchase is finalised.
  3. They could save money on the costs of refurbishment.

Mortgage Advice in Manchester for a tenant

The benefits of buying from a landlord

It’s not just landlords though – There are also advantages to the sitting tenant who is considering buying from the landlord:

  1. You have already lived in the property, so you know what it is like!
  2. There is no waiting for the previous owner to find a place to live, as you already live there.
  3. Due to the landlord not having to put as much money aside to sell the home, they can often discount it to you for a lower price!

If price you both agree on is below the value of the property, a lender may accept putting the properties equity towards your deposit. If there is enough equity in there, you may not actually require a deposit at all!

Manchestermoneyman.com & Manchestermoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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