Mortgage question and advice

Caps_4444

I currently have an offset mortgage with FD.
My flat is worth arounf 450k and the outstanding mortgage is 150k.
I'm looking to sell and to buy a bigger property.
The flat I'm looking to buy will cost in the region of 650k
so I'm looking to put a deposit down of 300 and look to get a mortgage of around 350-375.
hence my max LTV will be 58%.
Now my current income is in the region of 65k (I'm not including bonus), so according to FD's calculator they would lend me 290k.
I'm single, no other loans, credit card debts etc. I do have savings around 30k + another 30k, but I want to use these to offset and for a rainy day.........

Questions:

1 - How likely is it for FD to give me the loan I need, with the fact that I'm not earning enough to meet the multiple, but I'm putting down a hefty deposit.

2 - My mother owns a flat outright that is being Let and there is no mortgage on it, she is willing to give me 1k every month from the rental income, would they take this into consideration?

3 - If no to the above, can I put my name on the deed of the flat and then use that as a source of my own income?

4 - I'm looking to do an offset mortgage, so the interest payments without the offset are £750 on my current rate (my net income is around £3,600. I will be using the £1k from my mother's flat to put into savings in order to be able to reduce the mortgage etc......

If interest rates were to go up by 2%, my payments would go up to £1375, again this is without offsetting £60k......

Hence I believe it's affordable, quite comfortably.
Just wanted to see what are my chances....worst situation I can put my savings to increase my deposit......just don't want to right now.
Cheers.

Thrugelmir

First Direct (part of HSBC) are amongst the tightest for underwriting criteria. So the quick answer to your question is no.

If you can afford to service a mortgage of £350k plus. Then it shouldn't take long to build up your deposit/repay existing mortgage to fund the difference.

GMS

If you do not meetcriteria for income they will not do it. Simple as that.

Could your mother not remortgage the unencumbered Buy to Let and provide the funds to you to increase deposit? You also have savings. Why not use these and if like you say you could afford higher payments make the difference in payments to yourself in the form of savings.

Caps_4444

Thank you.

I just thought they also look at how affordable the mortgage is.
My mother is 66, so she will not be able to get a mortgage, and we always wanted to keep that flat mortgage free.....in case of an emergency etc.

Do they take into account any bonus that I get, savings etc......

Absolutely, I can save money.....but looking to move in the next 6-9 months, so limited in the amount......but anyway..just wanted to see.

So I take it if I have my name also on my mother's flat, I can't use the rental income towards getting a larger mortgage?

Thanks.

GMS

Some lenders will allow rental income but only include a percentage of it.

Your mothers age will not prohibit a Buy to Let mortgage. BTL rely on rental income not earned income so a remortgage is possible.

Bonus would be taken into account but as rental income each lender views differently and will allow different amounts.

Speak to a good broker to see possibilities.

Caps_4444

Trying to avoid brokers.......as I won't be able to get a good rate. Good to know.....we'll see what FD say in January........
Hoping that the fact that I have been with them for the past 2.5 years will give me some credit.....
Thanks again!

GMS

Not necessarily true about brokers.

You are correct with regards to HSBC/FD but if they will not offer you what you need then their rates are irrelevant.

For Buy to Let a broker would be able to find at least as good a deal if not better.

getmore4less

Caps_4444 wrote: »

Thank you.

I just thought they also look at how affordable the mortgage is.
My mother is 66, so she will not be able to get a mortgage, and we always wanted to keep that flat mortgage free.....in case of an emergency etc.

Do they take into account any bonus that I get, savings etc......

Absolutely, I can save money.....but looking to move in the next 6-9 months, so limited in the amount......but anyway..just wanted to see.

So I take it if I have my name also on my mother's flat, I can't use the rental income towards getting a larger mortgage?

Thanks.

If you have BTL on the place then you won't need to count the income because you will have the capital(the income will be paying thaty mortgage)

Why would it matter where the equity is "in case of emergency".

The problem you might have is convincing HMRC to give you tax relief on the interest, it should be possible but you need to do it right.

It will be a lot easier to get this offset loan from FD if you borrow less cuurent target of 350 at over 5 times base might be pushing it, how big are these bonuses?

Caps_4444

I had a look at Natwest and they "in principal" would give me £340k, based on 65k salary and an average bonus of £8k, so it's not too bad. I just need to see if I can use FD, as I want to have the offset facility.

I agree, I would have the capital if I did a BTL, always wanted to keep a flat mortgage free.

I suppose if FD also look at affordibility, then possibly could get up to 350.

I'll have to chat to them in January an see where I stand...as their rates tend to be very good.

Thanks!

GMS

First Direct have looked at your affordability and will not lend the amount you want. You say in original post their calculators say 290k. Adding the bonus of 8k is unlikely to make enough of a difference.

You seem to think affordability is what you think is affordable. It is down to what the lender says and their calculators are set to work this out.

Caps_4444

With regards FD, I used their calculator....did not call them. When I used Natwest's calculator I got 320, omn the phone it went up to 340.

Also adding rental income of 1500 a month took it up to 420k.

So perhaps putting my name on the deed would get me to where I need to be.

Thanks