Help with remortgaging

50_per_cent_off

We are coming to the end of our two year fixed deal at the end of September. I have been on the case for a few months to secure a new deal. We currently have an interest free mortgage with A&L and want to switch to a repayment mortgage. Mortgage is 188040 and property value about 280000. We went through L&C but the deals they came up weren't as good as the one we could find ourselves so we have gone it alone. We have now been turned down by First Direct and HSBC on affordabililty grounds. They say our outgoings are too high. We don't have loans and have a small credit card balance. I am getting really worried now. Do you think we would fair better if we stick with the interest only mortgage (would banks be happier with the smaller monthly payment and then we would remove the affordability problem?). We could then overpay the difference of what the monthly repayment style would have been? We have also been fretting whether to go for a fixed or a tracker but to be honest anything at the moment would be good! Very stressed about it.

sdooley

Can you clear the credit cards before September?

50_per_cent_off

Yes. Would doing that make real difference as the balance isn't that big?

happybroker

50_per_cent_off wrote: »

Yes. Would doing that make real difference as the balance isn't that big?

probably not but if you have the cash and it's not on 0% it needs clearing anyway.

failure on affordability is a common problem at the moment and is something that a broker would be able help with as they often have access to underwriters etc who can help.

If you go interest only you are going to be asked how you intend to repay the loan and may have to provide proof of investment vehicles etc.

Options are to extend the term and then overpay or just overpay and go interest only. FD and HSBC being the same firm they will have pretty similar affordability models but they do vary wildly throughout the industry.

You need to be careful of how many credit searches you are getting done as this will affect your score which in turn can affect how much a lender will lend you based on your income. You were obviously not that impressed with L&C but you would find this process less stressful I'm sure if you used a decent whole of market broker.

50_per_cent_off

Thanks Happy Broker . Yes, one of the key concerns I have is what all these applications are doing to my credit rating. The next application I make I want to be the best position possible that I might be able to get it. Don't get me wrong, L&C were fine apart from they didn't have access to some of the better rates as they are not available through brokers. It looks like my circumstances are such that I can't get access to these better rates. You say I will be asked how I am going to make up the difference if I go for an interest only, would the bank accept me saying I am going to overpay or would they not like this?

happybroker

some are ok with that but not all as it's not all that structured. The daft thing is that once you have the mortgage what's to stop you paying into the ISA/ Pension etc but that's they way they look at it.

From their point of view, if they think that you can't afford a repayment mortgage (usually the cheapest way of repaying a mortgage) how are you going to afford to overpay sufficiently to repay the loan which is fair enough, I'm sure you would agree.

If you want to post income, ages, no of dependants and remaining term I can tell you if it is possible and if so you can go back to a broker for them to find the best deal for you. If you don't want to post that sort of info pm me

50_per_cent_off

ages 35 and 41. 23 years remaining. 33425 and 13541 salary. Also get about 3k overtime. Also family benefit and money towards childcare.

happybroker

It's certainly possible and HSBC and FD must be really tightening up if they are knocking you back at that income multiple (4x without overtime and benefits) at less than 70% lending.

A decent broker will be able to come up with a range of options and also give you some solid advice in the fixed rate v tracker dilemma (though imho and based on this limited info 4x income is still quite a lot and if you are looking at the higher payments of a repayment style mortgage a fixed rate will give you more control over your budget, of which the mortgage payment will form a pretty large part)

Good luck, I don't see that you wil have any problems getting a decent deal

50_per_cent_off

Thanks Happy Broker.