Mortgage lenders wont lend what we need: where to get further capital?

emp_3

Hi

We've seen a house to buy but our mortgage lenders whom we are tied to (we have to port our existing mortgage) will not lend us enough :0( We know we can afford the property as we have spent the last 5 years overpaying £900 a month and never had a problem. However the bank wont lend us over the standard 4x

The maths are: house £400k, deposit £110k, mortgage £232k.

So we are obviously short by £58k.

Is there any normal route that people go down to get extra money? There always seem people who get extra on grand designs and location location!!

many thanks in advance x

ACG

Try a different lender?

Many lenders will allow you to lend over 4x your income. I use that number to be on the safe side. If you are overpaying by such a large amount then i would presume you have no early repayment charges to worry about? So there is nothing stopping you switching lenders.

Go and see a mortgage advisor, they will hopefully be able to find something for you.

EDIT - just to clarify, there are lenders who base it on affordability. So whilst they may be more lenient theyre not going to get you a £300k mortgage if your on an income of say £30k.

kingstreet

emp wrote: »

our mortgage lenders whom we are tied to (we have to port our existing mortgage) will not lend us enough

You can't port if your current lender won't lend you what you need. The whole idea of porting is taking a rate from an old mortgage with your current lender to a new mortgage with your current lender.

You have to qualify for that mortgage first. If you don't, you can't port the rate.

As ACG says, you're going to need a new mortgage from a new lender and will need one with slightly more generous lending limits.

DannyboyMidlands

Maybe you could stop watching so much property !!!!!! and lower your sights a little?

emp_3

ACG wrote: »

Try a different lender?

Many lenders will allow you to lend over 4x your income. I use that number to be on the safe side. If you are overpaying by such a large amount then i would presume you have no early repayment charges to worry about? So there is nothing stopping you switching lenders.

Go and see a mortgage advisor, they will hopefully be able to find something for you.

EDIT - just to clarify, there are lenders who base it on affordability. So whilst they may be more lenient theyre not going to get you a £300k mortgage if your on an income of say £30k.

Hi ACG, thanks so much for replying. We are tied as we have a 2 year fix, and are still within that period. I think the penalty to leave is £15k. We are allowed to overpay without penalty as long as it doesn't mean the account is paid up within that 2 year period.

emp_3

kingstreet wrote: »

You can't port if your current lender won't lend you what you need. The whole idea of porting is taking a rate from an old mortgage with your current lender to a new mortgage with your current lender.

You have to qualify for that mortgage first. If you don't, you can't port the rate.

As ACG says, you're going to need a new mortgage from a new lender and will need one with slightly more generous lending limits.

Hmmm, thanks for your response kingstreet. I don't get it though!? Because we are taking the current tied in fixed rate element of the mortgage as it is and then taking almost like another mortgage to make up the remaining amount at a new rate and as another account?

shortchanged_2

When you say you can afford it by overpaying £900 a month. Is that on a repayment or IO mortgage?

kingstreet

emp wrote: »

Hmmm, thanks for your response kingstreet. I don't get it though!? Because we are taking the current tied in fixed rate element of the mortgage as it is and then taking almost like another mortgage to make up the remaining amount at a new rate and as another account?

That isn't how porting works. The mortgage on your current property ends on the day completion of the sale takes place.

If you complete your new purchase on the same day, a new mortgage starts. If you take that new mortgage with the previous lender, you may be able to port the rate from the old mortgage to the first part of the new one, with any extra borrowing being offered on one of the lender's current products. You have one mortgage with one lender, split into two sub accounts to represent the two rates which are included in the mortgage deal.

As I said, if the lender won't lend you enough, your only option is to take a whole new mortgage with a new lender and repay the old one when you sell, including any early repayment penalties.

Dave_Ham

Ok so here goes....

The Early Redemption penalties do not appear accurate from term of tie in and mortgage size. These may be worth checking?

We see a lot of people here asking about 5 and 10 year fixed as their head tells them a good thing to do and here you are with a 2 year fixed and ERC issue mid way through. Either something has significantly changed or you took a bad call on your last product or received bad advice if not DIY and broker led...

Onto your question about what you can do. You have requested from your bank rightly what they would charge you and will not extend further credit, meaning either you are at your borrowing limit (as this would be a new mortgage) or something has changed within your circumstances. Or given your large overpayments, one of you are not declaring all of the income you are earning and therefore we are where we are...

It may be worthwhile considering to approach an external bank or broker for an agreement in principle (once talking with a broker or checking their affordability calculator online) about what they would lend as to sell your home and buy another and form part of a chain is typically going to take you at least 3 months.

So depending upon what your ERC's are then you can calculate how much you want/need to move. Give consideration to the fact 2nd mortgages are out there, although likely to be an expensive alternative and furthermore they are non highstreet banks in many cases. You will also have different end dates on products and always likely to get hit for 2 product fees and make any onward movement tough.

Rambled on for a bit now, food for thought for you....

ACG

What your saying doesnt seem right...im not saying your wrong it just doesnt sound correct

Why not pay all of it off bar £10?

Thrugelmir

Is the £232k your current mortgage or the amount your lender will advance?