Angie2312

Angie2312

My husband declared himself bankrupt 14 months ago. The house we live in is currently mortgaged in my name only. We have an expanding family and wish to move to a bigger house. My credit rating is excellent. Can we get a joint mortgage? I understnad because of his bankrupcy we will have to pay a higher rate, but does anyone have any idea who deals with this kind of mortgage and what sort of rate we might be looking at. We earn 25k each and will have 25k deposit. We would like to get a mortgage for 200k. Any ideas /advice anyone?
We have approached a mortgage broker but they wanted to charge us a £250 fee.

Thanks

HelpWhereIcan

Until your husband is discharged, you will be unable to get a mortgage with him named on it.

With the kind of deposit you will have, you will be able to get a mortgage in joint names; however the rate will not be pretty if you apply in the first 6-12 months after he has been discharged.

Having said that, if you can wait until he has been discharged for between 1-2 years, the options and deals available will be much more competitive.

Another issue you will have is the loan required compared to your income (4x joint assuming no other credit commitments). Very few lenders will do this and you will be left relying on those who will accept a recently discharged bankrupt and that do 4 x joint income at 88% loan to value (% of the property's value you wish to borrow).

As for rates, If you wit until after your hubby has been discharged for 12 months, you could be looking at around 5.65%. I would not be too sure of rate within the first 12 months (due to the income multiple and deposit you require), so will need to check and get back to you when I can, but would expect them to be at least 6.75% mark. Unfortunately, Mondays are always hectic so cannot guarantee to get back tommorow. Think it will be well worth your while waiting 12 months if you can.

Either way, there will be many brokers who will not charge a fee that will be willing to discuss your situation, I would suggest that you have a word with 2 or 3 of them.

Hope this helps

MortgageMamma

There is nothing wrong with charging a £250 fee on a case where it could be difficult to place such as yours. I would charge a similar amount, and a lot of firms would be trying to charge you 1 or 1.5% on top of your mortgage, so I don;t think your advisor is being particularly unfair, he or she is probably just charging it to cover their costs and time for coming to see you and making the recommendation in case you decide to pull out and not purchase when you see the interest rate you will be paying.

I am assuming if your husband made himself bancrupt 14 months ago he has been discharged 2 months, if this is the case then the cheapest I can find you is a 2 year fixed at 6.45% monthly payments for a 175k mortgage on a repayment basis over 25 years is £1176

AndrewSmith

MortgageMamma wrote:

There is nothing wrong with charging a £250 fee on a case where it could be difficult to place such as yours. I would charge a similar amount, and a lot of firms would be trying to charge you 1 or 1.5% on top of your mortgage, so I don;t think your advisor is being particularly unfair, he or she is probably just charging it to cover their costs and time for coming to see you and making the recommendation in case you decide to pull out and not purchase when you see the interest rate you will be paying.

I am assuming if your husband made himself bancrupt 14 months ago he has been discharged 2 months, if this is the case then the cheapest I can find you is a 2 year fixed at 6.45% monthly payments for a 175k mortgage on a repayment basis over 25 years is £1176

Chelsea building society will look at recently discharged bankrupts and offer a current rate of 6.1% 2 year fixed.

Monthly repayments on a mortgage of £200,000 with a deposit of £25,000 are approx £1,300 per month assuming 25 years. Interest only is £1017 per month. This is subject as always however to underwriting and acceptance by the lender. They do have criteria in place that means you may not get 4x joint income. I have merely posted this deal for your information though as an indicator to what is available should you be willing to accept the maximum available from the lender.

The key to it all is how long your husband has been discharged, as said above.

Personally I do not see it necessary to pay a broker fee in such a case unless it is refunded to you at completion as the resulting commission payable to the broker upon completion will tend to be more than with a mainstream mortgage.

You do need to be aware that the rate you pay will not be the best out there. Also although a lender may advertise that they accept ex-bankrupts, do not take it as a foregone conclusion that you will be accepted. It will be based on the intividual positive merits of the case.

Andy

MortgageMamma

Must be quite steep on the fee's side of things to be £1,300 a month on 6.10%.....but they are a decent lender to use if you can get with them due to their mainstream status

To the OP be wary of applying for too many mortgages and being credit checked as this can have a negative impact on your credit file - if you are well aware of your individual credit ratings and have possession of your reports it would be a good idea to give these to your broker when the time comes to make sure you get it right first time

AndrewSmith

MortgageMamma wrote:

Must be quite steep on the fee's side of things to be £1,300 a month on 6.10%.....but they are a decent lender to use if you can get with them due to their mainstream status

Not steep, in fact are similar to the Unity Homeloans deal that you quote.

I just used the correct mortgage amount of £200,000 as the OP stated with a deposit of £25,000 thus Purchase price of £225,000. This is subject to underwriting and acceptance though as these amounts are outside the 'normal' criteria for both this product and the Unity deal.

Worked out on the figures you have used of PP of £200,000 with £175,000 mortgage it works out at £1138.25 per month repayment over 25 years.

Even accounting for the fees the Chelsea mortgage is still approx £36.60 cheaper.

dunstonh

We have approached a mortgage broker but they wanted to charge us a £250 fee.

Seems very fair considering the amount of extra work your mortgage would involve.

AndrewSmith

dunstonh wrote:

Seems very fair considering the amount of extra work your mortgage would involve.

I agree, but would suggest that the fee is refunded at legal completion of the mortgage as the resulting commission for such a case will be in the region of 0.75 - 1.5% of the loan.

The two examples above carry commission of 1% (Chelsea) and 1.5% (Unity).

To keep the fee of £250 when a commission of approx £2,000 may be paid is, in my opinion, not necessary and may only add to the hardship faced by the client with the potentially increased interest rate they are likely to pay anyhow.

Just my opinion, each to their own.

:beer:

MortgageMamma

I would not refund the commission, the reason the comission rates are higher for adverse credit mortgages is because they require extra work in most cases. For the amount of work thats put in, client visits etc etc, and the fact that clients with past adverse credit are more likely than those with good credit to stop paying premiums on life assurance before the end of the clawback period, I don;t think rebating upfront charges is a good idea.

That said, each to their own, most of my clients are quite happy to pay my fee's upfront and never grumble

AndrewSmith

MortgageMamma wrote:

I would not refund the commission, the reason the comission rates are higher for adverse credit mortgages is because they require extra work in most cases. For the amount of work thats put in, client visits etc etc

Agreed, neither would I refund commission.

and the fact that clients with past adverse credit are more likely than those with good credit to stop paying premiums on life assurance before the end of the clawback period

Can happen yes, but is a risk you take with any insurance policy sold to any client. Covering the potential loss of insurance commission in this way for clients with Adverse Credit seems a little elitest to me. I don't normally have a problem with policies being cancelled to be honest. Think I only had 2 in the last year. If you have concerns over the strength of the recommendation then take a shorter clawback period with a slightly reduced commission.

I don;t think rebating upfront charges is a good idea.

I will agree to dis-agree with you on this one.

Neither way is right or wrong as, having adopted both methods of remuneration over the years, I beleive the individual broker or adviser will use a way that they find more comfortable and profitable. For me personally I find non fee charging or refunding any upfront fees the way that works best for my clients and my business, and as you know MM, I am very busy most of the time so it must be a choice that is popular with clients also.

I do however accept that location and type of mortgage will also play an important part in whether a broker charges a fee or not, due to the size of the average mortgage. If your average mortgage size is low then I can see a reason to charge a fee to make the case viable.

I think it is all down to experience and deciding which works best for your individual business model.

To the OP

Apologies, this has been dragged of topic a bit.

Hope the earlier posts were of some use to you.

Andy

Xbigman

If you could wait another 22 months and get the deposit (or current equity) up to 25% you can go straight to the Cheltenham and gloucester (AKA Lloyds TSB) and get a high street mortgage. You will need to see one of their mortgage arrangers face to face and you will be expected to have all the paperwork of the bankruptcy. IE They wanted a letter from my previous mortgage holder from before I went bankrupt, 12 years earlier, confirming there was no liability. Once I had this it was straight forward.
Regards



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