In England the stamp duty threshold sits at £500,000 until 31st March 2020 and buyers completing on their main residence up to this amount before this date, will not pay stamp duty. This is a temporary benefit, and due to the huge surge in the property market currently, applications are taking much longer than expected.
Research by Legal & General Mortgage Club, which surveyed housing market advisers, conveyancers and estate agents gives statistics which support an early as possible mortgage application:
- The average purchase time from finding a property to completion is at least 15 weeks, (four months) as processing times for applications have doubled.
- Before the pandemic, a mortgage application for a consumer with straightforward circumstances took less than two weeks (61%) to move to mortgage offer. Yet, since the re-opening of the mortgage market, advisers have found that this process is taking much longer – 30% said it is taking three to four weeks with a further 32% saying it is taking four to eight weeks. Those with more complex backgrounds, the self employed, those with impaired credit histories or who have been on furlough, may need to allow six to eight weeks (28%) to get approved for a mortgage.
- Conveyancers indicated that the time between offer and exchange is now taking three weeks, while the period between exchange and completion stands at one to two weeks.
- Estate agents indicated that the average time between receiving an offer on a property and completion has increased by some eight weeks.
This is an unprecedented situation and policy makers may need to consider a potential graduating of the stamp duty deadline. Lenders face the challenge of ensuring that borrowers only take on what they can afford in the long term and COVID-19 has complicated the financial situations of millions of people. Making high quality decisions is of the upmost importance.
The whole mortgage industry has an absolute requirement to prove beyond a doubt that everything the borrower says is true, and this is vital to make sure borrowers do not take on more debt than they can afford. Our advice to put yourself in the best position and get your application in before the end of the year is:
- Start your conversations early.
- Understand what you will need to provide-some applications for example, self employed applicants may have more information to gather for an application.
- Be clear on what information lenders require. If you are required to provide two months of bank statements, give every single page of the statement, or it can’t be checked off that all your bank statements have been received and you will go back to the bottom of the queue.
- Get your information together in one hit and packaged up well. Provide whatever documentation you are asked for, as soon as you are asked for it, and without debating the appropriateness of the request. Hesitating to answer, that will only warrant further uncertainty and slow things down more.
Henry Knight from Springtide Capital comments: “Preparation is key. It is important to make sure you understand all the information that is required for your application and provide this in one go. This will prevent your application being sent backwards and forwards, delaying your application. Aim to be the first cleared off the to-do list at each stage of the process so your loan can move forward as smoothly as possible”
In the current environment if you are struggling with what to do next regarding a mortgage, it is important to take advice as there are certain steps which may be worth taking.
At Springtide Capital we provide high quality impartial mortgage advice. We are a specialist mortgage broking business committed to providing a personal and efficient service. We understand the complexities of finding the right loan to suit both your financial and personal circumstances.