The issue of mortgage valuations during coronavirus has been widely discussed in the last few weeks. In just a few short months, the coronavirus pandemic has turned life upside down – and across the globe, people are adjusting to a new reality. Without a real framework for navigating our current situation, it can be tough to know how to carry on as normal.But given we have no clear sense of how long the pandemic will last, it’s clear people must find ways to get on with both our personal and working lives. The finance and mortgage industries, like many others, have pivoted rapidly to a work from home model; fortunately, we work in an industry where it’s mostly possible to carry on business as usual, using mobiles and laptops.
Yet while we are still able to serve our clients in many regards, there is one obvious barrier for those looking to remortgage or purchase property during this period. For a mortgage application to progress, lenders typically need to carry out a physical valuation, a step that simply isn’t possible for a nation under lockdown.
So does this mean mortgage applications in the UK have ground to a halt? Not quite. As always during a crisis, people are finding innovative and unusual ways to carry on with their work and keep the wheels turning. And many in the mortgage industry have stepped up to ensure they can continue to serve clients and carry on with mortgage valuations during lockdown.
Mortgage valuations during coronavirus: how are lenders responding?
Every lender has different capabilities and resources at their fingertips, so responses have varied. For some lenders, physical valuations continue to be the only option and cases are being put on pause until valuations can take place.
However, if you are urgently trying to refinance or purchase a property, and do not want to wait for the crisis to subside, many lenders are finding ways to carry out mortgage valuations during lockdown – meaning would-be borrowers can still proceed with their applications.
Many lenders have embraced remote capabilities to do this, either by using an automated valuation model (AVM), a drive-by, a ‘desktop’ valuation or a combination of approaches to make a judgment on a property’s value. This means that in many instances, it is still possible for a mortgage application to proceed.
There are caveats within this. A lender’s willingness to value remotely will be influenced by the property and the loan size in question. The lower the loan to value (LTV), the lower the risk from the lender’s perspective; some are therefore willing to do desktop valuations, but only up to a certain LTV limit. This figure varies, with some prepared to issue mortgage offers LTVs up to 85%, whereas others have capped this out at 60%. Some have published their guidelines on this clearly, whereas others have not; a broker can help you to navigate the market appropriately.
Some lenders have capped their willingness to value remotely depending on property value, as well as LTV. Many Articus Finance clients are looking to purchase or refinance high value property, often in excess of £1 million. Some banks have said they are prepared to carry out desktop valuations for residential purchase and remortgages up to £1 million, but beyond this, will need to wait until physical valuations can resume. If your case fits into this category, a broker can help to advise the best course of action.
Where is the best place for advice about mortgage valuations during coronavirus?
The situation is changing day-by-day, so expert advice is important. In the early stages of the crisis, for example, many lenders paused activity simply because they had a huge amount of admin to process. They have since returned to the market, albeit with a modified offering, and begun to carry out mortgage valuations in a new way.
Ultimately, every lender is different – so if you are hoping to either purchase a property or refinance your existing asset, your best chance of success is to seek professional guidance. At Articus, we are keeping fully informed of what different lenders are doing in regards to mortgage valuations, so we will be able to advise on the best course of action.
As always, our brokers are available at your convenience to answer any questions at this time. Contact a broker today to ask any questions you might have.
