2020!!! Speak of the devil, there it is. Only God knows what has happened to 2020. The year has qualified for the tag of ‘one of the toughest years for human civilization’. It is sure to show its presence in history too.
The year started normally, but from the starting of March, things changed gradually and then drastically. The whole world encountered the intruder covid-19, and today we are living under the effect of this ubiquitous threat.
Property buying is in intense struggle
People have lost their jobs, and many are on furloughed income. Big financial decisions like property buying are in difficulty. However, people are trying to gain back the normalcy to get on the property ladder. With reduced fiscal capacity, the property buyers are in a fix and need supportive suggestions to improve mortgage eligibility. Are you also in the condition?
With the following situations, you can try to get a smoother reach to funds –
Provide job continuation proof if you are on furlough
You may not believe it, but your job is as essential for the lender as it is for you. After all, it puts the money at risk when you borrow funds through a mortgage. In case you fail to make the instalments or delay the payments, it is a massive loss for the mortgage provider.
Already due to corona pandemic, the income assessment has become stricter. The lenders, as well as the brokers, need to know what your current income status is. Your furlough is a good thing for you as at least you are getting something in the name of monthly salary. However, that is not enough.
The mortgage providers are asking for a job continuation letter. It will be great if your company provides any letter of proof that describes that after it reopens the office, it will retain you. It is a robust way to achieve approval on a mortgage application.
Go for equity release
Equity release option usually works as the last-minute saviour. This suggestion can bring a positive change in your situation. But, you should consider it only if you are mentally prepared.
- Go for equity release mortgage – You get a considerable amount of cash in exchange of your current property. However, you remain the owner but as the funds are taken in the name of the house, you either pay the rent or let the interest accumulate. You can also reserve a certain part or percentage of the property for your children to give through inheritance.
- Equity release through home reversion – You will sell a part of your property or sometimes the complete property to a reversion provider in the exchange of money. However, you can continue to live in the house without paying any rent. But you need to maintain the good health of the property and also the need to insure it.
Both the above methods are incredibly useful if you want to work on the equity release method. However, make your final choice according to the convenience. The first one of ‘equity release mortgage’ is considered as the better option.
Stretch the deposit limit for low LTV products
You know how dull the mortgage market is nowadays. It can be difficult for you but what other choices you have. The logic is clear and precise, to buy the property, proper arrangements are necessary.
Gone are the days when you were able to dare to ask how to get a mortgage without a deposit. Such options are out from the market. Current situation communicates only one thing. Bring a bigger deposit and take mortgage approval. 20 – 30% down payment is advisable.
Either you wait for a more promising comeback of higher LTV options, or you arrange the deposit money. However, some lenders have come back to cover a bigger percentage of property value through the mortgage but qualifying for them is difficult.
Your affordability, monthly salary, job stability, etc., are the factors that play a decisive role. It is better to save more money for the down payment; with that, there is no need to borrow a big amount.
Prove repay capacity and bring guarantor for higher LTV mortgages
In case, you find any loan deal with higher LTV, do not forget to work on the two essential pillars. Otherwise, it is not possible to qualify for the funds.
Prove that your current income status is stable despite the prevalent mess of corona.
Bring a guarantor with a strong financial background, job stability and good credit score.
The above two points are even more important for the applicants with bad credit situation. The present situation demands a larger than life repayment capacity because already the mortgage market is in a big loss.
The final word is…..
All the above ways are useful and can remove the stones of obstacles in your way. You know what; if you are secure financially, all other things can be tackled later. Keep your finances organised and promising on repay capacity and 2020 can turn into a happy year for you.
Author’s note – XYZ is an online broker and keeps an in-depth knowledge about the mortgage market. Here, he explains the ways that can help you get eligible for a mortgage in 2020.