at the start a quarter of employees in Britain have been on leave since the government launched its coronavirus retention program on April 20.
Under the regimeChancellor Rishi Sunak said the Treasury would pay 80% of the wages of workers on leave, up to £ 2,500 per month, so employers facing difficulties can avoid layoffs and keep staff on the payroll .
The program was originally supposed to last until June 1, but has now been extended until at least the end of June.
With over 6.3 million employees currently on leave with reduced wages, how does this affect mortgage applications?
If I have been put on leave, can I still get a mortgage?
If you apply for a mortgage while on leave, lenders will only consider income on which you have been put on leave.
This will be a maximum of £ 2,500 per month paid by the government.
They will include the amount that the employer completes, if this is confirmed by the company.
Some lenders ask the employer to confirm if they plan to rehire the employee, but of course it is difficult to answer.
I had a principle mortgage on a new property, accepted an offer on my house, and then was put on leave. And now?
If you have a principle mortgage and received an offer before being put on leave, it goes to the lender.
As of right, the mortgage in principle should be binding, but some lenders write to borrowers to confirm that there has been no change in circumstances, such as lower wages or time off.
The request could be re-subscribed, reduced or withdrawn.
I was not put on leave. Will I still be able to get a mortgage at this time?
The foreclosure temporarily shut down the mortgage market.
On March 19, the Bank of England cut interest rates from 0.25% to 0.1%, the lowest in its 325-year history.
International call centers have been shut down and a shrinking workforce has been inundated with borrowers asking for mortgage leave or trying to switch to follow-on loans. As a result, banks have withdrawn more than half of their products, closed doors to new applications, and stopped physical mortgage appraisals.
The products that were canceled tended to be high loan-to-value mortgages, such as purchase assistance loans.
However, it is now possible to get approval based on an automated appraisal for mortgages below 60% of the loan value on a property priced below £ 500,000.
Lenders are now starting to relax this point further. Higher value mortgages are gradually coming back and automated appraisals are available for homes priced below £ 700,000.
Help with buying is back
The government-backed Help to Buy program is available for new homes valued under £ 600,000 in London. The buyer needs a five percent deposit while the government grants a 40 percent loan and the bank lends the remaining 55 percent.
So it’s a 95% loan-to-value product and was pulled by many lenders when the coronavirus hit.
However, lenders are starting to offer it again. Lenders offering Help to Buy London products are:
- Bank of Ireland
- Leeds Construction Company
- Leek United Building Society
- National construction company
- Newbury Construction Company