Prepared by Carter Lemon Camerons.
The Government has pledged to do “whatever it takes” to help individuals who are experiencing financial distress.
But what options are available to help you through these difficult times? You may be able to make more progress in your transaction than press reports might suggest.
Question: I have an ongoing property purchase
Answer:
On 26 March 2020, the Government published new advice on home moving during the coronavirus outbreak, which puts the property market effectively on hold.
If you have exchanged contracts, the guidance advises:
- Home buyers and renters should, where possible, delay moving to a new house while measures are in place to fight coronavirus (COVID-19).
- Our advice is that if you have already exchanged contracts and the property is currently occupied then all parties should work together to agree a delay or another way to resolve this matter.
- If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on staying away from others to minimise the spread of the virus.
- In line with Government’s advice, anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice which will mean not moving house for the time being, if at all possible. All parties should prioritise agreeing amicable arrangements to change move dates for individuals in this group, or where someone in a chain is in this group.
In response, UK Finance – the representative body for the banking industry – has said that all mortgage lenders are looking to enable borrowers who have already exchanged contracts to extend their mortgage offer for up to three months so the move can be delayed.
If your circumstances or the terms of the purchase change significantly during this time and continuing with the mortgage would cause financial hardship, UK Finance has said that your lender will work with you to help you manage your finances.
The Government has issued the following advice to people who have agreed a sale in principle but who are yet to exchange contracts:
- If the property you are purchasing is unoccupied you can continue with the transaction.
- If the property you are purchasing is currently occupied, we recommend that all parties should work to either delay the exchange of contracts until after the period where stay-at-home measures to fight coronavirus (COVID-19) are in place, or include explicit contractual provisions to take account of the risks presented by the virus.
Crucially, the guidance states clearly:
Conveyancers should continue to support the sales process as far as possible and should make sure their clients are aware of the difficulties of completing transactions in this period.
This is exactly the approach we are taking. We will help you complete your transaction wherever that is appropriate. Where this is not possible as a consequence of Government advice, we will work towards progressing your transaction as far as possible in order to enable you proceed to completion as soon as possible after the measures are lifted.
Question: I want to apply for a mortgage
Answer:
Several lenders have withdrawn from the market as they are unable to carry out physical valuations and are needing to divert resources towards helping existing customers in need.
Many of those still in the market have reduced their maximum loan-to-value (LTV) to 60 per cent.
Question : I am struggling to pay my mortgage
Answer:
There are a range of options which may be available to you, depending on your circumstances, including:
- Government-backed three month mortgage repayment holiday
- Converting your mortgage from capital repayment to interest only
- Further advance options
- Remortgaging options
- Equity release
You should not just cancel your mortgage payments without consulting your lender as this could cause you significant problems in the future.
We will of course update this information regularly to let you know about any additional measures the Government announces to help through these difficult times.
We are operating business as usual and our support team are available to discuss your individual situation.
For advice and information to help you make the right decisions for you and your family, contact us today.