UK Government figures painted a mixed picture in relation to household debt and the pandemic. Savings increased and unsecured debt fell, though total household debt increased by over 2%. However, even if households were able to build savings and reduce unsecured debt over the past 2 years, it seems that a cost-of-living increase may hit many of them in the pocket. 

We are already seeing signs that more and more people are struggling, with an increase of 61% in the number of people taking out debt relief orders (DROs) compared to a year ago. This indicates that there will be increasing numbers of potential homebuyers who will worry that poor credit history will be a barrier to that property purchase. But problems with credit in the past, even in the recent past, don’t necessarily mean you won’t be able to find a mortgage lender. There are steps you can take to improve your chances.

Face your problems

You won’t get anywhere without first acknowledging that you may have a problem. To get an idea of how severe that problem may be, the first thing to do is check your credit history by looking at your credit report. This is easy to do online. Whichever online service you use, your credit report will be created using data from the 3 main credit reference agencies: Experian, Equifax, and TransUnion.

Your credit report contains a score. All reporting organisations have their own scale but you will always be able to tell whether your credit score is ‘good’ or ‘bad’. As the data is always drawn from the same sources, there is no benefit in requesting another report from a different organisation. If your credit score is poor in one report, it will be poor in all of them.

When lenders look at any mortgage application they will take into account any problems you have had with credit in the past. These are shown on your credit report and are used to calculate your ‘score’, while this isn’t the only factor that lenders consider, knowing your credit score will give you a good idea of how lenders will view you.

Try not to make it worse

If you’ve discovered that your bad credit history has given you a poor credit score, there are some things you can do to improve it. You can also make sure that you don’t make it any worse. Some activities will make even specialist bad credit mortgage lenders very cautious about lending to you. The most important thing to avoid is using short-term loans, also known as payday loans. 

You should also make certain that you don’t miss any credit card or loan payments, or use unauthorised overdrafts. Finally, once you have submitted a mortgage application, try not to make any changes to your employment status, for example moving to part-time hours or changing your job role. Showing a consistent long term pattern of employment can help your application succeed.

Can you make immediate improvements?

As well as improving the way you look after your finances, making sure you don’t miss any payments etc, it may be possible to improve your credit report with some quick fixes.

Are you on the electoral register? If you aren’t this can damage your credit score so check, and register if you haven’t already. Also, don’t assume that information on your credit report is correct. Mistakes can happen, and if they do you can apply to have them corrected. Last, but definitely not least, take this chance to ensure that no fraud has occurred. Is there a loan or a credit card application that you don’t recognise? It’s unusual, but identity theft does happen, and if someone has taken out credit in your name it could be damaging your credit score.

Try and increase your deposit

Yes, we know, you’re probably tired of hearing commentators telling you to skip your take-out coffee or take your own lunch to work to save money. The truth is though that a larger deposit can help your chances of securing a mortgage. This is particularly true if you have had financial problems in the past, as lenders will often demand that you put down a larger percentage of the purchase price than buyers with a good credit history.

If you’re thinking of buying your first home, and are under 40, take advantage of the government’s Lifetime ISA scheme, which generates a 25% bonus each tax year on up to £4000 of savings. If you don’t qualify for a Lifetime ISA, at least ensure that any savings you have are in the best place to earn you interest. A potential upside of the cost-of-living increase is an increase in savings account interest rates, so keep an eye out for any changes and take advantage of them.

Organise your paperwork

Problems with mortgage applications can arise for many reasons, including incorrectly completed forms or missing paperwork. If you are already battling against a poor credit history, you want to make the rest of the process go as smoothly as possible. Take some time to get together anything you think you might need such as payslips and bank statements. Knowing what you need can be difficult, which brings us to…

Speak to a bad credit expert

Using a bad credit mortgage service to assist you with getting a mortgage has many advantages. A specialist adverse broker will know what documents lenders want and they’ll make sure forms are filled out accurately and completely, depending on the lender's adverse criteria. For applicants with a really poor credit history, an expert poor credit mortgage broker can be even more advantageous. This is because:

• Every lender has a slightly different set of criteria when assessing applications. Some may be more tolerant of irregular work patterns; others may consider applications from people with CCJs and more serious defaults
• As the financial landscape and customer’s circumstances changes, lenders’ criteria usually also change too
• Specialist brokers build relationships with the best adverse lenders, with over half of the bad credit mortgages not available directly on the high street, this means that they are in the best position to match your circumstances with the most appropriate lender

Conclusion

While applying for a mortgage via a broker won’t absolutely guarantee success, it can certainly improve your chances. We are living in uncertain financial times, but that doesn’t mean you have to put your life on hold. If you are considering buying a property but have concerns about the impact of your credit score, there are things you can do. You don’t have to give up on your dream.

Buying a property at auction brings many benefits - savings of up to 30% on a property’s market value, no agent fees whatsoever and so on. All very appealing, but with the small caveat of coming up with the full payment for the property within the four-week deadline.

With comparatively few exceptions, all auction property purchases must be paid for in full within four weeks. This renders conventional loans and mortgages entirely unviable, which for property purchases can take more than three months to arrange.

Auction finance by contrast is issued and arranged specifically for these kinds of property purchases and investments. An entirely faster and more flexible facility than a conventional mortgage, auction finance makes it possible to pick up low-cost properties at auction in a matter of days.

How Does Property Auction Finance Work?

Property auction finance is a specialist type of bridging finance, designed to help investors make time-critical purchase decisions at property auctions. A loan can be taken out to fund both the purchase of the property and all subsequent renovations required, with none of the delays associated with a traditional mortgage.

A brief overview of how the facility works:

• An investor reviews the properties set to go under the hammer at an upcoming auction and spots a bargain. 
• Prior to the auction, they consult with a specialist broker to arrange pre-approval with an auction finance provider. 
• They attend the auction and if their bid is successful, they pay the deposit on the property. 
• After which, they return to their broker and their auction financial loan is arranged - typically taking just a few working days. 
• The investor uses the funds to pay for the property and to cover the costs of the subsequent improvement work conducted.
• Upon completion, the investor either sells the property and uses the funds raised to repay the loan in full, or the loan is transitioned to a longer-term repayment product (like a specialist buy-to-let mortgage).

Auction finance is designed to be repaid as promptly as possible and is charged at a monthly rate of interest that can be as low as 0.5%. This makes it a uniquely cost-effective facility when repaid promptly, which is often the goal of investors looking to ‘flip’ properties for profit.

Who Can Qualify For Property Auction Finance?

Unlike traditional property loans and High Street mortgages, qualifying for auction finance is surprisingly straightforward. You simply need assets of sufficient value to cover the costs of the loan (usually your home or business property as security), and a viable exit strategy (how and when you intend to repay the loan).

Even with poor credit, a history of bankruptcy and/or no proof of income, it is still possible to qualify for affordable auction finance. Though in all instances - and particularly when time is a factor - it is essential to seek independent broker support at the earliest possible stage.

1. Consider Your Finances

Most people can get a home loan from most lenders as long as you provide at least a 5% deposit from the house’s price. In general, though, you want to have at least a 20% deposit since the deposit amount impacts your loan-to-value ratio (LVR). From a lender’s perspective, LVR makes up your risk as a borrower and your borrowing power. 

Other than the upfront costs of buying a home, you also need to make sure you can pay your mortgage loan repayment. Thus, it’s important to evaluate your finances before you invest in a property. Do you have enough cash to make a down payment or can you afford to take on the cost of repaying your mortgage? You’ll also want to keep an eye on the interest rates. The impact of your mortgage interest rates will depend on the type of loan you get.

For instance, if you choose a floating-range mortgage, the size of your monthly payments could fluctuate alongside the interest rates. Meanwhile, a fixed-rate mortgage means your rate is locked in, regardless of which direction the interest rates move. Any small differences in your mortgage interest rate can add up quickly, which might cause you to spend too much or save a lot.

Make sure to check for mortgage rates in the area. If you’re looking for a house in New Zealand, then you can compare NZ rates here. Lastly, it’s better to talk to a home loan specialist or your lender about your options and help you find out how much you can borrow. 

2. Check The Market

Depending on current economic situations and other factors, the real estate market can move either to the seller’s or buyer’s favour. A buyer’s market means that there are more houses for sale than buyers. A seller’s market, on the other hand, occurs when fewer homes are on the market than buyers. 

These market conditions can determine how much room you have when making an offer. Talk to a real estate agent who can help you understand the real estate market in your area and how it’s currently affecting buyers. 

3. Think About The Location

Whether you’re moving to a different country or staying in the same neighbourhood, you need to research before spending your hard-earned money. 

Most people want a home close to school, a shopping district, or their workplace. Consider if you’ll have easy access to the main roads and check for traffic flow. Some people want proximity to the city, while others prefer a more peaceful, suburban life. The location also has an impact on the price of a house. For instance, houses in city areas tend to be more expensive than those in the suburbs. Most locations have their own unique advantage. So, make sure to research what suits your needs or budget before deciding which property to settle in. 

4. What Are Your Lifestyle Needs?

Your lifestyle can also help in determining the kind of house you want and can afford. Do you need extra space for accommodating an elderly relative who can’t live alone? Is there a new baby on the way? Do you love to cook? Then you might need a home with a larger kitchen. Meanwhile, getting a home with a bigger backyard can satisfy your habit of planting your own food or accommodating your pets.

In addition, your lifestyle can also impact your budget and mortgage payments. Do you need to take a weekend getaway every month? Do you have a gym membership or maybe working out with a personal trainer? Do you love collectible items? 

In general, you need to give yourself a little financial room by subtracting the cost of your expensive activity or hobby from the payment you calculated. If the balance is not enough to buy the house of your dreams, then you need to cut back a bit or start thinking of getting a more affordable home. 

Endnote

If done right, buying a house can be both a good investment and a smart purchase. It is a contradicting experience of stress and excitement. As a result, it’s important that you keep in mind the above factors before closing a deal on a new house.

If you've been paying student loans back for nearly a decade, you might be wondering if there's an easier way to get out of debt. Many students graduate expecting to hold their balances for decades, and there are parents today whose kids are going off to college while they're still repaying their own dues. Student loan debt may also be preventing you from reaching financial goals, but there are some ways you can take advantage of your age and experience. This guide is designed for 30-something professionals who are looking for easier ways to pay off their loans. If you are in this demographic, you might find that every tip isn't applicable to your situation, but you can still glean some inspiration from the advice.

Use Your Mortgage

If you are a homeowner, which we know is a long-standing dream for many, your mortgage might be even more valuable than you realize. One of the major perks of home ownership is access to additional funding when you need it. Taking out a home equity line of credit (HELOC) can help you pay off expenses, free up room in your personal budget and avoid borrowing more loans. Essentially, this line of credit increases the longer you own your house. The more you've paid off, the more funds you have access based on the value of your ownership percentage. You can read all about the steps to apply for an HELOC and weigh its pros and cons in a helpful online guide.

Refinance with a Private Lender

Student loan refinancing is one way to lower your monthly payments, although you will have to slightly extend the duration of your loan. There's a silver lining here, however. For those who are able to make their lower payments more easily, they may be able to pay off debt sooner. Refinancing can also be a way to create more flexibility in your budget, especially if you're trying to save up for other investments. When exploring private lenders, make sure you compare quotes and research each one extensively. Request estimates from at least three to four lenders before accepting any offer.

Snowball Your Other Debts

The snowball method of debt repayment shifts your focus from big bills to smaller ones. By paying off as many dues as you can in a short period, you free up more room in your budget. This allows you to pay off the bigger debts that are weighing you down faster. Another major reason to consider taking this approach to debt management is reduced interest. Many credit cards and small loans gather unnecessary interest because borrowers settle for paying the minimum. Although it may be convenient on a monthly basis, it could actually be costing you hundreds, if not thousands, in the long-run. For this strategy to work, you should first sit down and write out all of your outstanding debts. Organize them from the lowest amount to the highest. Make a plan to pay off at least one per month, or multiple if you can, so you can dedicate your extra expenses to repaying the bigger debts.

With careful consideration, the answer to this question becomes crystal clear. Homeowners insurance is often overlooked by people who don’t think it would be worth it for them to get homeowners insurance, but this often isn’t the right way forward. In this article, we will be discussing the topic of whether or not getting homeowners insurance is right for you, and all the variables you'll need to consider when making that decision.   

Secure Your Future 

By opting to get homeowners insurance, you are not only financially taking care of yourself and your family's future, but you are also getting safety and security. No matter what happens, you know you and your loved ones will be covered. Homeowners insurance is likely to save you from a variety of unpleasant situations.  

So, what does home insurance actually cover? Well, The Insurance Bulletin states that it covers a wide range of possible damages to your home, as well as potential damages to other structures on your property such as a shed, fence, garage, and many others. Because of this, homeowners insurance can turn out to be a financially sound decision. Due to the extensive list of things homeowners insurance can cover paired with the relatively affordable costs, homeowners insurance is able to provide a whole lot of bang for its buck. Even in the case that you never do need to claim through homeowners insurance, the sense of relief and security it can bring can certainly outweigh the costs.   

It’s Required If You Plan On Getting A Mortgage

For most people, the decision of whether or not to get homeowners insurance isn't actually a decision; it’s a requirement. If you are planning on getting a mortgage, you will have to get homeowners insurance. There is no choice in the matter.  This is due to the fact that sellers just are willing to take the potential risk of having damage come to their property in the case you can't go through with the mortgage for one reason or another. It's just too risky.  So, good news for those of you who were really struggling to decide if getting homeowners insurance was the right move for you, you no longer have to worry as it's not even an option.  

Is Homeowners Insurance Worth it?

Homeowners insurance is a great investment you can make to not only protect you and your family, but also an investment that has the potential to give you great returns. Educate yourself on the subject of homeowners insurance and learn everything you can on the topic, and it will become evidently clear that homeowners insurance isn’t just set up to profit off some weary people, but aims at helping people who are in need of help. 

On top of this, the amount of headache and stress that homeowners insurance is able to negate in the event of a disaster is truly invaluable. Instead of having to worry about how you can come up with the required money as well as getting hold of the right people who will be able to fix whatever damages may occur, you can sit back, relax, and rejoice in the fact that you have homeowners insurance.In particular, homeowners insurance often goes overlooked by first-time homeowners. 

Buying your own home can be a scary venture, and it’s more than logical for people to try and reduce certain costs where they can, and a popular one people tend to think they can skip is home insurance. But, for most, they come to regret this decision. Paying a fee that seemingly has no immediate benefit can seem like an easy cost to get rid of, and at the time, it may save you some money. However, once you take a look at things from a long-term perspective you will see that all of the extra money you saved by not getting homeowners insurance will have to spend on something that homeowners insurance would have just outright covered.  In all likelihood, you will end up paying much more than you would have if you just opted to purchase homeowners insurance in the first place. All in all, home insurance is more than worth having. In the event of a catastrophe, homeowners' insurance may just save you and your loved ones. In contrast, even if said catastrophe never happens, you can rest easy knowing that you have done everything in your power to ensure the safety of your family's future. 

Homeowners insurance tends to be something that is widely overlooked by people in the hopes of saving a few bucks. Although, it shouldn’t be that way, and just by opting to get homeowners insurance there will more than likely be thousands of families that are saved from difficult situations. All the evidence shows that opting to get homeowners insurance is in most cases the best decision both in terms of finances and security. 

The likelihood that you will regret buying homeowners insurance is close to none. On the other hand, the consequences of not getting homeowners insurance will surely make you rethink your decision in the future if you opted not to get it.   

Alpa Bhakta, CEO of Butterfield Mortgages Limited, explains below why HNWIs often have trouble with their mortgage applications. 

Applying for a mortgage can be a stressful and time-consuming experience for many buyers who find themselves in a complicated situation. Deal with the wrong lender, and the risk of a mortgage application being delayed or ultimately rejected becomes extremely high. This can have significant consequences, particularly if the buyer in question has reached the critical closing stages of a sale.

Importantly, these experiences are not confined to a certain type of prospective homebuyer. In reality, all buyers need to overcome certain hurdles to ensure they successfully receive the finance needed to complete on a property purchase. This is particularly true when it comes to high net worth individuals (HNWIs).

For many, this might come as somewhat of a surprise. After all, there is some truth in assuming HNWIs are better placed to take on debt due to the value of the assets they own. The challenge, however, is that the income structures and financial portfolios of wealthy individuals are anything but simple.

Having worked closely with HNWIs for the best part of two decades, I can say that the wealthier an individual is, the more complicated their financial circumstances are likely to be. There are plenty of reasons why this is the case.

First off, HNWIs tend to have their capital locked up in illiquid assets. These can range from residential and commercial real estate to stocks with low trading volumes. It is also common for wealthy individuals to have their capital tied up in hedge funds which have strict lock-up periods and only a handful of withdrawal intervals.

A second reason has to do with their income structures. Whereas the majority of mortgage applicants regularly receive income payments from their employer, some HNWIs are not employed, or otherwise rely on income being generated from their existing investments. All of this makes incredibly difficult for high street banks to assess the applicant’s ability to regularly pay off existing debt.

Whereas the majority of mortgage applicants regularly receive income payments from their employer, some HNWIs are not employed, or otherwise rely on income being generated from their existing investments.

The fact that mainstream lenders have become risk averse in recent years only makes things more complicated. As a consequence, HNWIs are forced to comply with rigid application processes that do not effectively cater to their needs or unique circumstances.

The mortgage struggles of HNWIs

As a prime property mortgage provider, Butterfield Mortgages Limited (BML) has sought to understand just how common it is for wealthy individuals to be denied credit. To achieve this, BML surveyed a sample of HNWIs living in the UK in January 2021, asking them about their experiences when applying for a mortgage.

There was a standout finding from the survey – just under a fifth (18%) of HNWIs said they have been denied a mortgage in the last 10 years. What’s more, 51% of those who have successfully or unsuccessfully applied for mortgages in the past decade have been rejected at some point. These statistics reaffirm the points I made earlier in this article – namely, that HNWIs are not immune from the complications that could arise from a mortgage application.

What then were identified as the common reasons why mortgage applications were being rejected?According to BML’s research, many of the frustrations arise from the rigid application processes in place. Four-fifths (78%) of wealthy individuals feel that banks rely too much on “tick box” methods when reviewing applications. On top of this, 63% said their complicated income structures ultimately led to their mortgage application being rejected.

These experiences have led to a general sense of frustration among HNWIs who feel that mainstream lenders are simply not equipped to meet their needs. For this reason, 62% of the respondents told BML they have lost faith in their high street bank’s ability to cater to the needs of buy-to-let landlords and property investors more generally.

Looking beyond the high street

BML’s research has uncovered the extent of the problems being faced by wealthy individuals. No doubt, the additional complications posed by COVID-19 would have only exacerbated the issues raised in the survey. While it is not likely to deter investor appetite for bricks and mortar, high street banks are at risk of losing potential clients to competitors.

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While property is likely to remain a popular investment opportunity in the UK, the challenge for HNWIs is ensuring they have the necessary finance in place. This means seeking out and dealing with lenders who have experience dealing with wealthy individuals and are willing to work with the clients to deliver a mortgage best suited to their circumstances. Doing so reduces the chances of a mortgage application being delayed or rejected, thereby ensuring the buyer in question can act with confidence.

John Ellmore, Director at NerdWallet, outlines the current state of the UK housing market and the things a homebuyer should keep in mind in 2021.

A study from Halifax in 2019 revealed that 57% of renters aged between 18 and 34 believed they would buy their own home in the foreseeable future. However, a recent survey of over 2,000 UK adults, commissioned by NerdWallet, revealed that 38% of people had put their long-term savings goals, such as a deposit for a house, on hold due to COVID-19. This figure jumps to 60% among 18- to 34-year-olds; the “first-time buyer” demographic.

This trend is understandable. Millions of people have been put on furlough or made redundant, in turn shifting their financial priorities. Without the guarantee of a regular salary, Britons will be more likely to concentrate on the short-term – affording basic necessities or making credit card payments, for example – as opposed to planning for the long-term.

Positively, throughout the pandemic the Government has stepped in to offer both short- and long-term supports. The 2021 Spring Budget on 3 March included further initiatives – prospective homebuyers will no doubt have welcomed measures such as extending the stamp duty holiday and ensuring access to 95% mortgages.

At face value, these are all strong support mechanisms from the Government. However, such generosity may not be as beneficial to first-time buyers in the long-term.

Stamp duty holiday extension 

The stamp duty holiday was originally introduced on 8 July 2020. It had the aim of reigniting the property market after several months of inactivity and it has been largely successful.

According to the Office for National Statistics (ONS), average UK property prices grew by £20,000 last year to reach £252,000 at the close of 2020. Similarly, transactional activity has surged in recent months.

A study from Halifax in 2019 revealed that 57% of renters aged between 18 and 34 believed they would buy their own home in the foreseeable future.

In light of this success, the Chancellor has extended the holiday by three months until 30 June 2021. The measure means that homebuyers do not need to pay any tax on the first £500,000 of a purchase, which could save homebuyers up to £15,000. Between 1 July and 30 September, the Government will lower the threshold to £250,000. From 1 October, the stamp duty threshold will return to its usual level of £125,000.

Even now with the extension, the looming end to the stamp duty holiday will encourage thousands of Britons to push ahead with plans to purchase a property in the months ahead. But I would urge buyers not to make any impulsive decisions.

As stated above, there are tax savings to be made in the short-term. However, unless time is taken to conduct careful due diligence, people may find themselves worse off in the long-term. For instance, buying a property that needs considerable repairs work, paying above the market rate for a house or flat, or not spending time to search for an appropriate mortgage provider could cause serious financial issues in the long-term.

The arrival of 95% mortgages

The recent Spring Budget also saw the Chancellor announce the availability of 95% mortgages. This scheme means that the Government will offer guarantees to banks, encouraging them to offer homebuyers mortgages even when they only have a deposit of 5% the value of the property.

Again, this will be viewed as a positive move by many first-time buyers. Particularly during a period when house prices are rising, the opportunity to get onto the property ladder without needing to have as much money in savings will open up homeownership to many more people.

That said, savers should consider the potential drawbacks of 95% mortgages before committing to a lender. Firstly, they could have a knock-on effect on monthly repayments. This is because borrowing a large amount to pay for the property will result in more interest having to paid over the term of the loan. Lenders could also charge higher interest rates for 95% mortgages.

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Additionally, the concept of negative equity must also be considered. This occurs when the value of a property drops, and the owner ends up owing more money than the property is actually worth. This can make repaying the mortgage in full when the owner sells their home particularly problematic. However, the higher the percentage of a property an individual owns, the less likely this becomes – so, savers might want to consider saving a bit longer for a larger deposit.

Of course, the Government’s measures to boost confidence among first-time buyers and reignite activity within the property market are largely positive for UK savers. Indeed, the extended stamp duty holiday and 95% mortgages will help many more people buy a house than otherwise could.

However, savers would be wise not to rush into a house purchase or make any snap decisions. While they may feel like they are making savings in the short-term, it could cost them more later down the line.

Instead, I urge Britons to conduct careful due diligence on their homes of choice and carefully research various mortgage lenders to find one that suits their requirements. Doing so will mean people can take their first steps onto the property ladder and buy with confidence.

Mark has a passion for providing exceptional customer service and teaching others the art of real estate investing. He often provides training and educational presentations to groups interested in real estate investing. Below, we speak with him about the way the pandemic has affected lending and whether now’s a good time to get a loan or not.

From your experience, in what ways has the current pandemic affected loans?

Initially, the COVID-19 pandemic put the industry on high alert. No one was sure what would happen. And widespread unemployment can certainly be a factor. That said, Texas has strong employment and a low cost of living.  We tend to weather such storms well. Right now, our local real estate market is experiencing a very low inventory. It’s an excellent time for real estate investors who can find a property to fix and flip because demand for the finished product exceeds the supply. And there has actually been an increase in demand this past year; particularly for refis due to the low-interest rates.

Have you been busier during the past twelve months and if so, how have you navigated this?

All lenders have struggled a little with those third-party vendors on which we rely; particularly appraisers who as you can imagine had issues with inspecting properties in person. However, Zeus is the leader in online real estate lending™ and that has positioned us very well during the pandemic. We can complete the entire loan process with all our usual personal and friendly service without the borrower ever having to leave their home.

Do you think that getting a loan during the current uncertain times is a good idea?

This is a question we’ve received time and time again since the COVID-19 pandemic began: Is now a good time to get a home loan or mortgage? Unfortunately, there’s no one, single answer that applies to everyone! Every potential borrower has a different set of circumstances, including credit score, financial assets, income, and other factors. For most people, however, the experts at ZeusLending would say ‘yes’ - now is a great time to get a loan!

Here’s why:

Lenders are still lending money during the pandemic, and borrowers are still buying homes and investment properties. Interest rates are super low as the economy struggles under the weight of the crisis. Perhaps counterintuitively, the demand for homes and property has not dipped a bit. For many, it has proven to be relatively easy to qualify for an affordable loan in 2021 thanks to the influx of deals and properties purchased during the pandemic. The number of people seeking a great deal has increased competition not only for homebuyers but for lenders as well. That competition results in great terms for many borrowers!

During the pandemic, some lenders are being very careful to closely examine borrowers’ credit histories. Due to the uncertainty regarding the future that the pandemic has caused, banks are tightening up on lending to homebuyers who are credit-challenged. The market instability caused by COVID-19 and the higher risks that instability poses make lenders a little more cautious.

Another factor many lenders may scrutinise during the pandemic is a homebuyer’s income. Verification of employment will likely weigh heavily in determining the likelihood of a borrower’s employment continuing. Borrowers need to make sure all their income is accounted for and will be reflected in the verification of employment.

Borrowers need to be prepared to strategise their best approach: If they need non-traditional lending, having a loan officer and mortgage company that is able to customise solutions for you and your specific scenario is key. Innovative lending solutions are ZeusLending’s speciality! Because we offer so many different loan products, our borrowers have more available options to prove their ability to repay.

What are the biggest mistakes people make when buying real estate?

Finding the lowest interest rate is not always the best deal. 

Some loans have very attractive interest rates (also known as teaser rates) but you may be hit with higher upfront charges.

Points and or origination fees are the most common ways to lower the rate and charge upfront costs. Points and origination fees are calculated as a percentage of the loan amount. For example: Often the difference in monthly payments from a slightly higher interest rate takes 10 years to equal these upfront costs. Many people will have refinanced or purchased another home before this occurs.

Adjustable Rate Mortgages (ARMs) and Balloon Mortgages.

ARM rates will adjust depending on the loan. The ARM rates may adjust as often as every six months, but in most cases, they adjust after 1,2,3, and 5 years. Those rates are far more likely to go up when they adjust. The Balloon Mortgage requires the borrower to pay the loan off when it matures, usually between two - seven years.

There are many lending tactics to sell the borrower on a low rate and then charge outrageous fees and costs. Borrowers need to watch out for the “bait and switch” lending ploy.

Buying FHA, VA, or IRS repossessed homes may be a mistake.

I am not against purchasing a repossessed or discounted property. In many markets, especially those that are having financial trouble, a repossessed home may make good sense. But keep in mind:

• Many VA, FHA, and IRS repossessed homes are sold with virtually no warranty. Also, the borrower may be limited on how much they can inspect the property prior to purchasing it. Often these houses need repair work. Not being able to thoroughly inspect the property puts the purchaser in a risky position.
• Purchasing this type of property requires bidding for it. The people borrowers would be bidding against rehab houses for a living; so, they may be at a disadvantage from an experience standpoint.
• In addition, most homes that are for sale under these conditions require a substantial upfront deposit that may not be refundable should their loan not close within a specific period.
• And, once the seller of the home accepts their offer on these properties, the bank that owns the current mortgage generally has to agree to everything as well. This can sometimes be a lengthy process that many homebuyers are not aware of. It is always important to set realistic time expectations for yourself.

Making large purchases before purchasing a home. 

It is very common to get so excited about buying a new house that homebuyers go out and buy new furniture or even a new car before closing on the house – this is a big mistake. Doing so can radically change the credit profile and the debt to income ratio. Too many otherwise good applicants end up rejected at the last minute because of a big spend during this window.

Working with a mortgage lender who only has one product to sell may not meet everyone’s specific needs.

Most lenders only have one source of funds. This type of lender is forced to “fit” the customer into a pre-fabricated loan program. They only have one or two different ways to handle the many different loan situations that occur. It is important that customers research lenders with multiple products and the ability to customise their loans. We feel an educated borrower has the ability to make the decision that is best for them.

Not getting a pre-approval from your mortgage company before you start shopping for a home. 

Having a pre-approved loan can be very important. A pre-approval has two major benefits. First, there is the peace of mind before getting serious about buying a home. Homebuyers will know how much of a house they can afford, what the payments will be, and how much of a down payment is needed. Secondly, having a pre-approval may give homebuyers bargaining power when negotiating a price for the home. Getting pre-approved could save homebuyers a lot of time and money.

What are your predictions for the lending sector in 2021?

As I mentioned, currently there’s a low inventory market for homebuyers. But there are also supply off-market properties including foreclosures, bank REO and wholesale properties. The trend I see is that the residential real estate investors will take advantage of this low-inventory created demand and will snap up these properties, renovate them, and re-market them.

Those operating in the mortgage and specialist finance industry have felt the squeeze in recent weeks and many bridging lenders have had to turn down any new business during the coronavirus lockdown.

With over 50 bridging lenders and hundreds of intermediaries, the industry has seen very slow growth with hundreds of staff put on furlough and limited funding due to no construction work, surveys or auctions taking place.

However, with restrictions easing, the thousands of households and property developers that use bridging finance each year will start to purchase properties again and getting their businesses back on track.

Bridging finance is often seen as an alternative to traditional mortgages, allowing those to avoid traditional property chains and access funds in a matter of weeks, rather than months.

“It has been a testing time for the bridging industry,” explains Dan Kettle of Octagon Capital, a bridging loans broker based in Moorgate.

“Our products are often used as a quick way to buy properties and avoid mortgage chains, but the lockdown has meant that almost all deals were put on hold and we could not acquire any new business.”

“However, with restrictions easing, we are in a good position to resume funding again. Many people and investors will be excited to start building and buying property again and with mortgage lending even tighter than before, we could see positive growth and a good Q4.”

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During the 10-week lockdown period, bridging providers were in suspense over whether they could offer mortgage holidays to their customers and what the terms they could offer to customers.

Bridging finance is often used for a maximum of 24 months, but with so many construction jobs halted, this increased the chance of deals expiring and challenges for customers in terms of repossession or refinancing.

Nicholas Wallwork of the Property Forum explained: “The vast majority of building sites have come to a standstill. As a consequence, those working against tight bridging loan finance repayment dates will struggle. The property/project, if work does not restart very soon, would likely be worth nowhere near their target value. As a consequence, they would not be able to raise as much traditional finance as expected which would usually be used to pay off the bridging loan. Indeed, when you also factor in the potential reduction in property prices on the whole there could be a huge shortfall.”

However, with restrictions easing and the Prime Minister looking to open all non-essential retail by 15 June, there is more confidence in the specialist finance and bridging industry and many will be delighted to hear this news.

The COVID-19 virus is a global pandemic. With countries worldwide reporting cases, it is no wonder that it has greatly affected economies on a huge scale and reach. With more and more people confined in their homes, investors are now scrambling to come up with contingency plans to make sure their assets remain safe from it all. Of all the industries, the real estate sector seems to be the most affected. Hotels, restaurants, and retail stores are now empty.

Effect on Commercial Real Estate

In Asia, particularly in the hardest-hit areas, retailers are closing up shop. Retailers are being forced to send their workers home and stop operations. Restaurants, in the absence of customers, are left with no choice but to offer door-to-door deliveries or close as well. With travel bans in place, the usual busy areas of tourist spots are now deserted. With no sales, companies are forced to hold their wages and figure out how they will cover their monthly rent payments.

Rent Relief

Many businesses are now asking their real estate brokers like the Jeff Tabor group to negotiate rent relief and other forms of support to keep their businesses afloat. In Singapore, their restaurant association already requested shopping mall landlords to cut rents by at least 50% for the next three months. Some retailers have already granted relief measures including marketing assistance programs, flexible rental payments, and a rental rebate.

Effect on Residential Real Estate

Many think that the impact of the coronavirus should not extend to residential real estate. However, the effects are now felt within the residential sector as a number of home buyers are skeptical over fears of uncertainty - which is an expected outcome whenever something unusual happens in the markets. Fears about the virus caused the stock market to drop by over 1,000 points.

Real estate agents, however, believe that this is a good time to list their properties on the market. Uncertainty can sometimes equate to opportunity. Those who already have existing mortgages can negotiate to get the best deals possible. Based on the data provided by Black Knight, as many as 11 million homeowners can move to save more money through refinancing.

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Preparing for the Worst

Some of the malls in Singapore are slowly opening up shops despite the few numbers of buyers trickling in. Many believe that they have better chances of recouping what they have lost by continuing to operate. Nevertheless, they are still wary and are constantly finding ways just to break even and still provide goods and services. Restaurants are now offering food deliveries to doctors and nurses. Some of them are opening only when healthcare workers need to go out, take a break, and eat out. Right now, it is a give-and-take scenario.

The Bottom Line

Uncertainties can happen in the market. As we are experiencing, one crucial factor can affect the economy on a grand scale. In this case, the coronavirus or the COVID-19. With no known cure yet, real estate investors, home buyers and sellers have nothing to do but wait and see what comes of the virus and the real estate industry. For now, people should expect the worst and pray that their assets don’t turn into liabilities. COVID-19 could very well be the next Great Recession that we should brace for.

After weeks of being put under stringent lockdown measures due to the COVID-19 pandemic, people will be bracing for difficult days (or even weeks) ahead even as these measures are gradually lifted.

Even then, people need to make ends meet in one way or another. And while it is difficult to know how and when this crisis will actually end, it is important now more than ever to make good financial decisions.

Let's take a look at a few important tips for how you can keep yourself from going under in these difficult times:

1. Keep a Level Head

The coronavirus, which causes the deadly disease known as COVID-19, has permeated local and international news since it was first detected in China. Now, it has become a crisis that governments are desperately trying to contain.

If you have been following the news lately, chances are you have been on a spending spree for essentials. With quarantine measures in place, many are now finding it hard to stock up on the essentials like toilet paper.

It is easy to be confused with all the information out there regarding the pandemic. If you let your guard down and make unnecessary purchases as a result, you can do yourself a lot of harm.

Whatever happens, it's best to remain calm and follow government advisories. At this point, the best you can do is to prevent the spread of the virus and get updates from trusted news sources. This will help you gain clarity as you figure out what to do with your current resources.

Whatever happens, it's best to remain calm and follow government advisories.

2. Call Up Your Credit Card Company

Having a credit card is convenient, but when you are in the middle of a serious health crisis, you have to do what you can to get by.

Luckily, consumers in the US can breathe a sigh of relief as major credit card providers have agreed to waive payments for March and possibly beyond. All you have to do is to contact the number on the back of your card and ask your bank about how you can get relief.

It’s important to note that providers such as American Express and Capital One have allowed cardholders to skip payments without interest. Other banks such as U.S. Bank and Wells Fargo have also announced that they are offering to waive fees and provide other forms of hardship assistance. Again, you will need to contact your bank and see what they are offering.

3. Use Your Savings

This is a reasonable time to dip into your savings account.

Whether it's a time deposit account, notice accounts or a fixed rate savings account, it would be practical to use this money as a buffer to get you through the entire quarantine period. At any rate, ensure that you can withdraw the amount you need without any penalties.

4. Spend Less by Scaling Down or Discounting

So long as this crisis lasts, it is important to keep your spending to a minimum. This may mean scaling down on non-essential expenses such as streaming subscriptions and luxuries bought online. These are sacrifices you may need to make to keep yourself financially afloat in the next few weeks or until the crisis passes.

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Another way you can slow down the depletion of your hard cash reserves is to make full use of gift cards, loyalty points, and discount vouchers. These will really come in handy if you are going out shopping for groceries.

And considering that this is a national health emergency, you should consider making use of cards that help you pay less for prescription medicine. Check out prescription discount card details for where and how to find the best deals.

5. Leverage Mortgage and Rent Holidays

One good thing right now is that mortgage providers are offering different types of mortgage relief interventions for homeowners who can defer making payments through a 90-day period.

If you are in a difficult situation, it is best to contact your lender and see if you can strike up a forbearance agreement.

If you're renting an apartment, make sure to talk with your landlord to discuss new payment terms and see if you can avoid paying late penalties. Local governments are prohibiting evictions from taking place. This could give significant relief if you have been displaced as a result of the pandemic.

In such extraordinary times, you need to keep your finances from dwindling. This might take simple sacrifices or leveraging government aid efforts. In either case, your financial survival will depend at least partly on the measures you take.

The unprecedented series of measures announced by the Chancellor in March were designed to give the UK economy a soft landing from the sheer collateral damage being sown by COVID-19. Some of the most far reaching measures included loans for businesses affected by the pandemic as well as mortgage payment holidays and a near halt on repossession activity, among many others. Whilst these measures were well received by businesses and lenders, it still left many questions unanswered and sometimes raised more questions. Under these circumstances, the FCA has published guidance to reassure businesses and lenders and clarify key issues in the Chancellor’s measures which deserve closer attention. The FCA hopes that the guidance will ‘help firms support consumers’ and reassure both borrowers and lenders that they will receive the support they need. Alexander Edwards, partner at Rosling King LLP, illuminates the pertinent details of the guidance for Finance Monthly.

Central to the Chancellor’s measures are loans to thousands of small businesses across the country, known as the ‘Coronavirus Business Interruption Loan Scheme’. The FCA has made clear that it wants small businesses to be confident that access to the funds promised by the Government will be based on the question of “how their business has performed in the past and its future prospects – not its position today,” acknowledging that applicants for these loans will likely be experiencing exceptional financial pressures when applying for the loan.

This means that lenders must assess the applicants in a new way. Lenders must take into account a range of evidence when approving loans, which will not necessarily be based on the current conditions of a borrower. Such evidence can include historic trading figures and future forecasts.

The FCA has clarified that it is reasonable to expect a borrower’s income to increase in the future and its expenditures to decrease as the effects of the COVID-19 pandemic come to an end. The terms of the loan will also be a relevant factor. Importantly, if the forecasted income does not materialise for any reason then lenders should consider deferring repayments until such time the forecasted income does materialise.

Lenders must take into account a range of evidence when approving loans, which will not necessarily be based on the current conditions of a borrower.

Another central pillar of the Chancellor’s measures is ‘Mortgage Payment Holidays’. The FCA’s guidance makes clear that lenders should be granting borrowers payment holidays for an initial three-month period if they are experiencing payment difficulties as a result of COVID-19. Such payment holidays will also be extended to those borrowers who have suggested that they may potentially experience payment difficulties or indeed to those borrowers who have simply indicated to their lenders that they wish to receive one. Lenders are not expected to investigate the circumstances surrounding a request for a payment holiday.

The FCA has clarified that there should be no fee or charge applied to a borrower’s mortgage account as a result of the payment holiday, except for the additional interest which will be applied. The guidance also makes it clear that lenders may decide to put in place options other than a three-month payment holiday and there is nothing stopping lenders from providing more favourable forms of assistance to the borrower – the FCA suggests that one alternative could be reducing or waiving interest.

Other clarifications by the FCA pertaining to mortgage payment holidays include:

• Lenders shouldn’t be automatically granting payment holidays to all mortgage customers, given the impact payment holidays have on the total amount payable under the mortgage, the term of the mortgage and/or the amount of contractual monthly payments.
• Lenders should be keeping their TCF obligations in mind and engage with borrowers at this difficult time to help borrowers avoid financial hardship as a result of COVID-19.
• Lenders must also ensure that the payment holiday has no negative impact on the borrower’s credit score.

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The final set of core guidance issued by the FCA pertains to repossession. The FCA has made it clear that no responsible lender should be considering repossession as an appropriate measure at this time as it is not going to be in the best interests of the borrower and expects all lenders to stop repossession action. The FCA has also emphasised that this applies to all borrowers, not just those whose income has been affected by COVID-19.

Lenders are advised not to commence or continue with possession proceedings at this time unless it can clearly demonstrate that the borrower has agreed it is in their best interest. Lenders should therefore be reviewing all ongoing possession proceedings and those which it intends to commence carefully to ensure that it could clearly demonstrate to the FCA that the proceedings are in the best interests of the borrower.

The FCA has also made clear that lenders must ensure borrowers are kept fully informed and discuss the impacts of suspending any possession proceedings or any moves to commence possession proceedings.

These are uncertain times and it is clear that lenders should be working with borrowers and taking steps to support them during a time of unprecedented financial pressures. The FCA will review its guidance in the coming months as the situation develops and will issue amended guidance as appropriate. Lenders and businesses alike should play close attention to any newly issued guidance in order to protect their interests and ensure that they are sticking to government’s extraordinary programme.