20th March 2020
Sean Couch from EDUC Mortgages shares some advice on managing mortgage difficulty and buying a home during the current pandemic.
EDUC Mortgages are receiving a large number of calls from members who are concerned about the effect this crisis may have on their ability to pay their mortgage in the event of earnings being affected (for example, if their partner has suffered temporary layoff or they are a substitute teacher not working at present).
All lenders, including subprime lenders, are to put in place a three month payment break.
Customers will have to demonstrate that their income has been affected by the virus, with the thousands who are now facing unemployment expected to avail of the mortgage breaks.
To avail of this break you should contact the bank directly. It is very important that you do not stop paying your mortgage without first calling your lender and getting their permission to avail of this payment holiday.
Some banks have also agreed to a payment holiday for short-term loans and credit cards.
The one important thing to remember is that this is not free money, any missed payments will be added on to the mortgage/loan at a later stage.
Members are also concerned about whether lenders will stand over their current mortgage approvals. Where you have a full mortgage approval and have signed contracts to purchase a property, you shouldn’t experience any issues.
For members who have an approval in principle for a mortgage, in 99% of these cases the banks should stand over their approval. Having said that if, say, you are a couple purchasing and one of you has become unemployed, the banks may look at this application again, but this will be done on a case-by-case basis.
What will happen to the housing market? We are in unprecedented times and no one can predict what will happen to the housing market. At present there is a shortage of houses in large cities and towns and this will not change.
As a result of CoVid-19, we do expect not see much activity in the housing market in the next two to three months.
We will have a better understanding of what will happen to the market in the next two months, so I would recommend that if you are considering purchasing at present that you still apply for your mortgage now so you are ready to purchase when this crisis passes.
Now might be the time for you to look at your current interest rate and switch to another provider.