How does COVID-19 affect me when buying a home?

The unprecedented changes to rules and regulations due to current circumstances are being updated almost daily. This article was written with the latest guidance as correct on 3 April but may quickly cease to be accurate. We take no responsibility for inaccuracies in this post and we recommend checking with any parties involved in your transaction, in addition to referring to the government guidelines on the subject

The lockdown imposed to restrict the spread of the Covid-19 virus has impacted all industries and all individuals. Home-buying is certainly not an exception - read on to find out how you might be affected, and what you can do to make the most of the “pause” in usual routine that can put you in the best possible position for when restrictions are lifted. 

Summary of key COVID-19 effects on the housing and financial market

  • Interest rates are at a record low - the Bank of England has lowered its base rates in order to ease the overall impact of an economic downturn
  • Selected mortgage lenders have restricted their lending criteria for new applicants
  • Current mortgage offers are still being honoured
  • Moving home is permitted as long as individuals follow government guidelines

I’ve read that first time buyers can no longer get a mortgage, what should I do?

Most readers will fall into one of two categories:

You’ve already received a mortgage offer

In this case, your mortgage offer is still valid until the expiry date (typically for 3-6 months after the offer is issued). Checking the date on the offer may put your mind at rest. Your lender may offer an extended validity period for another 3 months - although it might take a while for this to be confirmed. Check your emails for information, as call centres are overwhelmed by the needs of current customers requesting “mortgage holidays”. These essential provisions by lenders are resulting in mountains of admin and hours of call time as each case is considered. Read the government guidelines for more information

You’ve not yet had a property offer accepted, neither have you received a mortgage offer.

You can RELAX. While the market is on hold, mortgage lenders are moving at sloth speed, and sellers aren’t going anywhere. Some branches of estate agents are closed, in-person viewings are now off the cards, lenders are going nuts while they deal with tens of thousands of calls from their existing customers. You’re frustrated, we’re all frustrated, but at the end of the day all parties are stalled. You can see this as an opportunity to build up your finances a little more (assuming you’ve had no change to employment status, you could be making substantial savings during this period), and do plenty of additional research and planning - see below  how to make the most of this lockdown for planning your purchase

My bank scrapped their 95% LTV mortgage and it’s going to take me years to save a 40% deposit! 

Don’t panic. Certain banks have temporarily changed their lending policy. Other banks have not. We advise speaking with an independent mortgage broker to find out what you can borrow. The situation is changing daily, which is a reminder that banks can reverse changes as easily as they can make them. A mortgage broker is best placed to advise you on the likely lending picture in the near future. A main cause for concern is the requirement for physical valuations which are unable to take place. Not all lenders rely on physical valuations, and it’s logical to assume that once social distancing restrictions are lifted, lenders will no longer face this roadblock.

I was thinking about buying a home but now with all the market uncertainty I’m not sure. Maybe I’ll wait a few more years.

Due to the crisis, interest rates are at record low levels. This means that money in a savings account is earning little interest, and many sources will confirm that investing your savings in a property would be a sound financial decision - low interest rates mean low mortgage payments! In addition, sellers who were hoping to sell their homes will have to wait an additional 2-3 months, maybe even longer. This means they are more likely to lower their asking price in order to make a quicker sale. 

I was hoping to view some properties and maybe make an offer in the coming weeks but now I can’t. What can I do while viewings and exchange of contract are paused, other than sit and twiddle my thumbs?

Actually, there’s a lot you could be doing.

Take this lockdown as bonus time, giving you a chance to:

  1. Find and organise your paperwork
  2. Eek out more savings for your new home
  3. Re-evaluate and refine your needs in a home
  4. Research, research, research! Understanding the market in the area you’re looking to buy in will give you a huge advantage when it comes to negotiating the price later down the line

See our in depth guide to buying a home in lockdown

You can also visit the Proportunity website to get started on your home-buying journey today.

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SSM One Limited (trading as Proportunity Loans) is an intermediary only lender authorised and regulated by the Financial Conduct Authority (with firm reference number 716565). SSM One Limited is registered in the UK at Companies House with reference number 09273700, with its registered office at GG 405, Metal Box Factory, 30 Great Guildford St, London SE1 0HS, United Kingdom.
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