COVID-19 FAQs For Landlords
Everything You Need To Know About COVID-19 & Your Mortgage
We want to help keep you as up to date as possible with all of the latest developments with the recent outbreak of COVID-19 (Coronavirus) and what this all means for your property business, your responsibilities as a landlord and how you can safeguard your portfolio in this uncertain time. Here are all of the top questions that we have recently been asked by our clients.
If you still have questions, don’t worry our entire team are on-hand to help. We can offer you contactless advice wherever you are, via our robust remote working and technology platforms, so feel free to call us on 08009499410 now.
Can I Use a Government Loan As A Deposit?
Recently we have been asked once or twice as to whether you can use a Coronavirus Business (CBILS) or Bounce Back Loan Scheme (BBLS) as part of a deposit for a property. Although there is no direct Governmental guidance on this, it’s not really in the spirit of the scheme and since most mortgage lenders do not accept any form of loan as origin of deposit, this source of deposit funds would not be acceptable.
If you have any further questions regarding this, please call us today to discuss.
How Can My Property Be Valued During Lockdown?
As of the 18 May, several lenders have re-introduced Physical Valuations but if this is not possible many lenders are now able to value your property via an Automated Valuation. As the list changes on a daily basis, if you would like more information, please speak to your mortgage advisor.
Is Buy to Let lending on lockdown?
Absolutely not, it’s true that there are some casualties – but the vast majority of lenders are actively lending using updated technology for ID and Valuations so that lending can be contactless. Yes, some LTV ‘s are restricted with some lenders, criteria has been updated – but the outlook right now as things stand is positive and we are obtaining mortgage offers for our landlords in many cases with ease.
I Have A Buy To Let Mortgage Application In Progress, How Will The Outbreak Affect This?
Having robust remote working already established within our business means that our entire team will continue to manage your application with little to no disturbance to our service, we’ve worked hard to ensure that our technology is up to the minute. It’s highly likely that we’ll be in constant touch with you already, but as ever if you have any queries regarding your application/s, please get in touch with your dedicated broker or case manager. Of course if you’d like us to review any of your other mortgages, please ask – we’ll only be too happy to help.
Since we never stop finding the best best available deals for our clients, we are actively monitoring the market and we will update you if a more cost-effective option to slot into your portfolio becomes available before completion.
My Tenants Have Said They Can’t Pay Rent, What Do I Do?
We are all facing unprecedented times, with the impact of the outbreak being felt by homeowners and renters alike. As a landlord, it is important that you are in communication with all of your tenants to fully understand their situation so that you can quickly identify any risk of rental voids.
I Have Been Put On Furlough, How Will This Affect My Mortgage?
If you have recently been furloughed due to the COVID-19 pandemic and you have any questions about your mortgage application or eligibility for a mortgage, we strongly recommend that you get in touch with one of our mortgage specialists.
All of the lenders have different criteria when it comes to furloughed income and eligibility is changing on a daily basis, so by calling we will be able to give you the most up-to-date information. You can either call us on 08009499410 or use the callback request form below and we’ll respond as soon as possible.
Am I Eligible For A Three Month Mortgage Payment Holiday?
Probably, yes. But the far more important question is – Do you absolutely need to take a payment holiday?
If there are no other options (chat to us first!) and this is the route you are forced to take, then of course, the holiday is there for that reason. Never stop direct debit payments without agreeing a holiday first, otherwise you will go into arrears.
We have however, had landlords who have taken the view that they will take it because they’ve been offered it and they feel there is some advantage to gain – there absolutely isn’t.
Taking a payment holiday will only delay your payments, not remove them – you will still have to pay the holiday payments back in future. Most landlords are in a fixed period right now, or a lower rate introductory period for say 2 or 5 years, if you take a holiday now, during that low fixed rate period, the 3 months would be added to the end of your mortgage, so when you come to remortgage at the end of your fixed or introductory period, you will still owe those deferred 3 months payments, which will then need to be cleared before you can exit the mortgage – sometimes at the higher standard variable rate, depending upon the lender! – interest will also accrue on your holiday payments, so this could be expensive – again, only take this if you need it. We may be able to help you restructure your portfolio to avoid having to do this.
There are also underwriting issues here. The Government have said that these holidays won’t affect your credit score. But – does this mean lenders will still lend to you if you have declared that you cannot afford your current mortgages now? No it doesn’t. The Buy to Let Broker have seen live applications declined where clients have either taken or only expressed an interest in a payment holiday. A payment holiday is an admittance that you are currently insolvent and unable to pay your outgoings, this will impact your ability to borrow now, but for how long into the future we don’t know.
Don’t forget that if you are a portfolio landlord, your business plans will have likely expressed to lenders your ability to withstand rental voids (yes we do appreciate that right now this is not a normal occurrence). Indeed, lenders do view your bank statements and rental income when assessing decisions under PRA regulations to assess the liquidity of your portfolio. Again, please be aware that if your tenants are paying you, lenders will take a dim view of you taking payment holidays when you come to require funding, so please continue to make your payments if you have the financial ability to do so. We need to protect your ability to borrow in the future, even if that’s for a remortgage to a better deal and you have no immediate plans to expand your portfolio in future.
It’s also important to note, that not all lenders are supported by the Governments ‘Term Funding Scheme’ or TFS. Lenders that raise money on the wholesale markets or through institutional investors or Peer to Peer funds, may not have the same financial backup to assist you. Also, lenders do not have to assist landlords who have borrowings within a corporate of SPV structure, although they may well still assist if you really need this help.
At the same time, we are seeing many lenders allowing remortgages, with capital raising, using automatic valuations, so we can assist you in better ways than the ill advised ‘Government Assistance”.
Always check exactly what the terms are before starting a payment holiday. Better still, talk to us first because we are here to help you through this.
Can The Base Rate Decrease Further?
The base rate is already at a historic low of 0.10%. However, the Government has not ruled out any further emergency measures since the current situation is so unprecedented and it could even drop into negative figures.
Will The Change In The Bank of England Base Rate Affect My Mortgage?
The Bank of England has reduced the base rate twice in the last few weeks in emergency response to COVID-19, with the latest reduction from 0.25% to 0.10%; a historic all-time low. How this will affect you will depend on the type of mortgage you currently have. For example, if you are on a ‘Base Rate Tracker’ you will have heard from your lender with details over when your payments will reduce. If you are sitting on a lenders ‘Standard Variable Rate’ or SVR however, this will be at the lender’s discretion as to how they set their rates in future. If you are on a fixed-rate mortgage, there will be no change to your current payments or rate.
We strongly recommend that you speak to one of our advisers to establish exactly how this may affect your portfolio in an effort to keep your mortgage rates as low as possible.
If You Still Have Questions, We Have Answers!
To get the answers you need, simply pop your details in the form below and one of the team will be in touch to get you sorted. If you are in a rush, you can also call us on 08009499410 now.