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Foundation pauses pre-offer apps on withdrawn deals and pulls short-term let offers

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  • 27/03/2020
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Foundation pauses pre-offer apps on withdrawn deals and pulls short-term let offers
Foundation Home Loans has paused mortgage applications yet to reach offer on its withdrawn products, and has pulled all short-term let mortgage offers up to the point of exchange of contract.

 

The moves follow coronavirus guidelines from the government, suspension of physical valuations and wider market conditions, it said.

Foundation confirmed it is accepting applications from new borrowers on a limited product range up to a maximum 75 per cent loan to value (LTV), although it is unable to instruct valuations.

Addressing a series of questions on its website, Foundation explained it was making the changes to ensure its lending was responsible given the current situation.

“We must lend responsibly. Applicants will now be borrowing in extremely uncertain times,” it said. “Everyone may be directly or indirectly affected by the Covid-19 crisis. We are actively reviewing how we can ensure that we lend responsibly.”

 

Pipeline cases and product overhaul

The lender’s website said that for products which have now been withdrawn, pre-offer pipeline cases will not be progressed to offer until market conditions have improved.

“The customer may choose to keep the case on hold or request a refund of application fee and a valuation fee (where a valuation was instructed),” the website said.

“Post-offer cases will proceed unless it is a short-term let product.”

Like many other lenders, Foundation is offering a more limited product range for new applications and all rates were increased by 30 basis points on 24 March.

It too is restricting buy to let products to 75 per cent LTV, having withdrawn all short-term let products and it will no longer lend to first-time landlords.

The lender also withdrew several products across the residential range and lowered the maximum LTV to 75 per cent.

 

Short-term lets

Foundation said it was taking the step of pulling short-term let offers as it did not believe it was possible to operate a short-term let property without breaching government guidelines at present.

In a note on its website, the lender said: “For short-term let products, the case will not proceed unless it is a purchase case that has exchanged contracts.

“This is because in the current circumstances, we do not believe it is possible to operate a short-term let property without breaching government guidelines.

“The customer may choose to keep the case on hold or request a refund of application fee and a valuation fee, where a valuation was instructed.”

 

Mortgage payment holidays

Foundation admitted it was being affected by requirements to offer a three-month payment holiday to borrowers on residential and buy-to-let mortgages, noting it was seeing “very high take up”.

“As things stand today, a borrower may ask for, or require, a payment holiday immediately upon completion,” it said.

“We are seeing a very high take up of the mortgage payment holiday scheme. We are actively reviewing how we can address this situation on a case by case basis.”

It noted that it does not require evidence from borrowers, but it will have a conversation with each customer to understand their circumstances and explore the most appropriate solution is.

Payment holidays will not have a negative effect on the customer’s credit file but it added that a zero-pay three month payment holiday may not be the most appropriate option.

And it is only taking calls to request holidays.

“We do not intend to offer an online mortgage payment holiday facility, as we believe it is important to have a conversation with each customer,” it said.

 

 

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