Remortgage due in 14 months. Dramatic salary decrease since remortgage. Advice please

Aruman7735

Hi,

I am curious to get the opinions of yourselves on the board here with regards to what will be an upcoming concern for me.

I remortgaged on a 2 yr fixed last November 2007 at a rate of 5.59%.

At the time the valuation survey(Sept 08) was carried out priced my property at £270,000. My current outstanding balance is £224,100.

I got this remortgage completed before I switched jobs from where I was a contractor to a permie. My annual gross earnings have now dipped 40% £30K. This was due to my belief that I am now on a better career path and will hopefully in future have more stability and better prospects.

However I am now curious as to how my situation is going to look come next year and if there is any particular advice that could ready myself better for remortgage application time.

I now believe the property is worth in or around £240,000 to £250,00 max.

With the current outstanding balance I am sure the maths would not add up in any lenders mind well in the current market.

However would the likes on my payments always being on time for the past 2.5 years have much of an affect or at what stage if staying with the same lender would they tell me to get lost as your multiples of earning will not permit us(the lender) to offer anything reasonable.

I know many things can change between now and then but hopefully advice from this forum may at least raise my awareness of what likely options will be offered to me coming closer to the date of remortgage.

Thanks for reading my post and thanks in advance for your opinions.

sarkin

You will have to do what everyone else does and lie

Dick_here

About what ?

Paul_Herring

sarkin wrote: »

You will have to do what everyone else does and lie

--
I am a Mortgage Adviser[...]

I do hope that's not the sort of advice you give to your customers...

koexelek

If anything, income multiples with lenders have gone down rather than up recently, so it might be that you won't find a lender prepared to lend you what you already owe.

However, the good news is that lenders are more interested in trying to hang on to their borrowers at the end of their incentive period, rather than just letting them remortgage elsewhere.

Your best bet might be to ask for another deal with your current lender ( in which case, proof of income will not be required)

happybroker

if the mortgage is in your sole name then you are going to find it difficult if not impossible to remortgage unfortunately and given the level of income against your existing mortgage debt I struggle to see where the money would come from to reduce the balance sufficiently for it not to be a problem....to be honest you must be leading a pretty quiet life to afford the mortgage at all.

Things can change between now and then but for any lender to start accepting 7.5 times income would be a miracle frankly. You need to work out what your payments would be on svr and prepare for it should your lender not be able to offer another deal.

space_rider

Well time does fly but I think the best thing would be is to make sure that you don`t take on any other debt and start penny pinching just in case you do end up on the SVR. I did manage to get a decent deal with my existing lender and they never asked about my income.

Aruman7735

thanks for the replies so far.

Clarification on some points mentioned; I am making the mortgage affordable due to renting out two room I have which accrues 65% of my monthly mortgage payments. Living in london and beside the tube does have some good points.

Yes penny pinching will be the way I expect to live for the forseeable future, but if in the end I have a possiblity of retaining the property I will gladly accept a quieter life.

Also on a positive point I will be expecting for my gross income to increase above 40K by the time my remortgage is due. Albeit still not a favourable multiple to receive a competitive mortgage it will be in the right direction.

Thanks for the advice so far people....

sarkin

Paul you missed part of the disclaimer

Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

looks like you had a sence of humour bypass today

dunstonh

You dont have to remortgage. You can stay with the existing lender. Some lenders may have an issue with you letting out two rooms. One is a lodger. Two could be seen as a business. The mortgage advisers should know if that is an issue or not and will be better placed to comment.

Wutang_2

sarkin wrote: »

Paul you missed part of the disclaimer

Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

looks like you had a sence of humour bypass today

Sarkin - that IS funny man...really really funny