4 Reasons To Feel Positive About Your Post-COVID House-Buying Prospects

4 Reasons To Feel Positive About Your Post-COVID House-Buying Prospects
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: May 2, 2023

To say the coronavirus crisis has changed the world we live in would be a massive understatement. Everything from the way we work to the way we holiday has been turned on its head, and this has led to the kind of economic uncertainty not seen since the financial crisis of 2008.

As Britain strives to find its feet amid a new normal, it’s all too easy for house-hunters to get swept up in the doom and gloom and simply assume the current financial climate has forced them to put their plans on hold. This isn’t necessarily the case. The mortgage market has been resilient throughout the pandemic and the green shoots of recovery are already starting to sprout.

If you’re hoping to buy a house post-COVID, here are four reasons to feel upbeat about your prospects…

1. You could qualify for a Stamp Duty holiday

Most actual holidays may have been placed on the backburner by the pandemic, but if you’re applying for a mortgage, a Stamp Duty holiday can bring just as much respite.

After the COVID crisis hit, Chancellor Rishi Sunak raised the Stamp Duty threshold to £500,000 in England and Northern Ireland to help buyers whose finances have been impacted and reinvigorate the market amid the lockdown slump, which saw house prices fall for four consecutive months.

This means that anyone buying a main residence costing up to £500,000 will be exempt from paying Stamp Duty. What’s more, properties priced higher than this will only be taxed on their value above £500,000, so all buyers stand to benefit, as long as they complete while the measures are in place.

According to Sunak, the average Stamp Duty bill will fall by £15,000 and nine out of 10 people buying a main residence will pay no land tax at all. But the threshold increase will only remain in place until 31st March next year, after which it’s set to return to £125,000 for primary homes.

2. Help is at hand for those financially impacted

For many of us, the COVID-19 outbreak has meant taking a financial hit, whether that’s the result of being placed on furlough or freelance work drying up during lockdown. Some people have even been forced to take a mortgage payment holiday to see them through this period of uncertainty.

Lots of people affected by any of the above assume it will hurt their chances of landing a mortgage, and while it’s true that some mainstream mortgage lenders might be cautious about offering finance under these circumstances, there are specialist lenders available for prospective borrowers who were placed on furlough leave and complex self-employed customers.

Finding the right lender for these niche circumstances can be challenging, but keep in mind that there are mortgage brokers who know exactly which providers are best equipped to help customers after (or during) a furlough, a mortgage payment holiday or with fluctuating earnings.

3. The mortgage industry has proven resilient

The coronavirus era has been a testing time for most industries, the mortgage sector included. It’s a business that relies heavily on face-to-face transactions and paper-based dealings, so you’d be forgiven for thinking it isn’t the best time to be calling on its services.

However, our industry has, in reality, proven resilient and adaptable amid the uncertainty. Brokers called on video conferencing apps to keep the market ticking over through lockdown, and in the longer term, their adoption will free up waiting times and remove geographic restrictions.

Moreover, some mortgage lenders turned to automated valuations models when on-site visits were impossible, plus broker portals have become a useful tool for quick quotes and speedy decisions in principle. Although there is still uncertainly around the pandemic itself, the mortgage industry continues to take measures to safeguard itself and serve customers during unprecedented times.

4. Lower deposit mortgages are gradually returning

One of the most immediate effects of the coronavirus and subsequent rates drop by the Bank of England on the mortgage industry was lenders scrambling to remove their high loan to value (LTV) deals from the market, making lower deposit mortgages almost impossible to come by.

While tight LTV caps remain in place at many mortgage providers, there are early signs of lower deposit deals creeping back onto the market. West Bromwich Building Society, for instance, has launched a pair of discounted variable-rate mortgages with an 85% loan to value ratio.

Tipton, meanwhile, is offering a flexible family assist mortgage to help first-time buyers with minimal deposit to their name and a family member that’s willing to help them out. This deal requires a 20% security from the family member, which means either securing the debt against a property they own and hold equity in, or having them place cash in a Tipton Family assist savings account

Accord recently launched first-time buyer mortgages with 90% LTV, but they were only available on a time-limited basis through brokers. Although lower deposit deals like this are the exception rather than the rule, it proves that lenders are starting to test the water on high LTV mortgages again.

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