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When it comes to getting on the property ladder, a mortgage is often the key for buyers. However, according to The Money Advice Service, the average mortgage term is 25 years – meaning it’s a substantial regular outgoing borrowers need to commit to.
Cutting unnecessary costs may be a practice people tend to try to employ in their everyday lives, and with the financial impact of the coronavirus pandemic, in 2020, it’s no doubt even more of a priority.
With the end of Chancellor of the Exchequer Rishi Sunak’s furlough scheme looming, online mortgage broker Trussle has offered guidance for those homeowners who are worried about the prospect of redundancy.
Miles Robinson, Head of Mortgages at online mortgage broker Trussle, said: “There are many uncertainties homeowners and house hunters are facing post-lockdown.
“The end of the furlough scheme is fast approaching and the deadline on mortgage payment holidays will also be in sight sooner than we think.
“For those looking to get a mortgage, 70 percent of lenders have tightened their policies on applications from those who have been furloughed.
“As an example, those applying for a 90 percent loan-to-value mortgage with Metro Bank should be aware that customers who have been or are still on furlough will not be accepted, while TSB will no longer be accepting furlough incomes without top-ups from employers.
“Meanwhile, HSBC has toughened its criteria this week, stating that it will no longer accept income from those who have been furloughed without a return to work date, or a return to work date that is more than three months away.
“Although there are challenges during this tricky time, there are ways to prepare for financial bumps in the road.”
Among the money saving suggestions from the mortgage broker is a way in which some may be able to shave hundreds off their monthly expenditure.
“If you’re worried about how your job might be affected by the furlough scheme ending, we encourage you to keep an eye on your mortgage,” Mr Robinson said.
“Mortgages are often the biggest monthly bill that people face, and by remortgaging homeowners could save an average of £326 a month.”
While those who are on furlough leave via the Coronavirus Job Retention Scheme, it may be something of a task – however being furloughed is not necessarily a total barrier when it comes to remortgaging.
“It’s important to note that if you’ve been furloughed, remortgaging might be trickier, but not impossible,” the mortgage expert said.
“If you choose to remortgage with your current lender for a similar loan size you may not need to go through affordability checks.
“However, if you decide to remortgage through a different lender or for a higher amount, it’s likely that you will need to go through affordability checks and that the lender’s decision will be based on your furloughed income only, excluding bonuses and overtime pay.
“Each lender’s criteria varies so it’s important to seek advice from a mortgage broker before progressing with an application.”
Looking into product transfers may also be a cost cutting method which suits some.
“Our data shows that homeowners who go through a product transfer save on average £326.31/month,” Mr Robinsons said.
“To put this saving in perspective, the average UK household spends £60.60 per week on food, so a product transfer could cover more than your monthly food budget.
“Homeowners can check their eligibility for a product transfer with their existing lender to see if they could save money.”
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