Dual Income down to Single Income and Maternity Renewing Mortgage advice needed

Ezekieljm

My wife and I got our mortgage on our first house a couple of years ago. (Its a three year fixed mortgage with Nationwide) My wife is now pregnant and we are thinking of the possible options were she not to return to work. The baby is due in September 2012 and the 3yr fixed deal runs out Feb 2013 so she would be on maternity leave regardless at the point of renewing the mortgage or re - mortgaging or whatever and with whoever. We have not decided for sure if she is going to go back to work full time or part time or at all and I need a bit of advice on how I should go about researching what to do when the fixed period ends. I work for a large UK based company and have done so for 6 years with a stable well paid job in IT, the mortgage payment would use up 40% of my salary in any one months pay and we have been living off just my salary (and saving hers towards building work in the house (which will be done before the baby is born)) for some time. So we know we can live off just my income. (not to mention that without having to pay for her travel, Child Tax credits, less takeaway we would be a bit better off (I hope)).

My question is this; do I need to declare when applying to renew my mortgage with A,B or C bank a definite answer on whether she is going to return to work ? If I did not have a definite answer or were we to decide she did not want to return to work would I still be able to get another mortgage or renew my existing one for the house ? Would this cause it to be much harder to get a mortgage based on the fact that it is single salary now rather than dual and uses 40% of my pay rather than 23% of our combined pay? If she were to return to work full time but shortly after decide she wanted to be a mommy full time (and by then I already had the mortgage which at the time of applying and getting it was based on dual income) would this cause problems?

Any advice on the above or any topic I have missed out linked to the above would be appreciated.

Winky,_The_House_Elf

I don't recall being asked about my plans, just current employment details (I did volunteer that I was on ML) when we were in the same situation last year

If you did decided to apply based just on your income, I think it would depend on what the amount of mortgage was as a multiple of your single salary, as well as your overall level of financial commitments elsewhere.

We ended up staying with our current provider last year, on a better rate, which was also less hassle as didn't require re-valuation of the house, full financial statements etc

If there had been significant monthly savings to be made, of course
I would have gone else where but they where on par with some of the lowest rates in the market.

Good luck! It sounds like you are thinking carefully about the future, and well done for living on just your salary as it will really help when your wife is on Mat Leave.

Ezekieljm

Thanks for the above, Very helpful. Additional information when we got the mortgage (its our first home) I had a job (within IT of the same company) that paid Half (literally ) of what I am on now. If I was to apply based on my current income alone it would be 4.32 X my salary is it worth the risk of applying with just my income or should I apply with both incomes as the original mortgage we got was rubbish but was one of the only ones available to us at the time 5.88%

Thanks again.

kingstreet

If you return to your current lender for a customer retention product, you shouldn't be asked for any further income or employment information.

If you decide to remortgage to a new lender to repay your current mortgage, it will be assessed like any new application. Lender approach to the issues you have raised varies.

MissMoneypenny

Ezekieljm wrote: »

So we know we can live off just my income. (not to mention that without having to pay for her travel, Child Tax credits, less takeaway we would be a bit better off (I hope)).

Child Tax Credits wages limit for 1 child, is about 26K. Or did you mean Child Benefit (going to be capped at about 60k earnings)?

It all changes when Tax Credits goes and is then put into the pot with the other income based welfare payments, to becomes the new Universal Credit (all the income based welfare payments, together).

Ezekieljm

I meant Child Benefit. Sorry for the confusion.

Dave_Ham

Be mindful that the world may well be a different place by the time of your new addition.

You cannot do anything for another 6 months, so do not get hung up on what may or may not be available then.

Always ask your existing provider first what is available, as that may be your best option.

Your goto product with Nationwide may be worthwhile, not sure on dates whether you will be on the lower SVR tier? - Kings will know I am sure...

Aside from that, you can then start to have a look across the marketplace.

Many lenders will accept confirmation that your Wife is going back to work on whatever terms, although some may request employer confirmation so be aware..

Good luck!

kingstreet

Pre or post 29 April 2009, Dave.

Any mortgage products reserved on or before 29th April 2009 will revert to the Base Mortgage Rate (BMR). If you choose to switch to a new Nationwide mortgage product, the new product will currently revert onto our Standard Mortgage Rate (SMR).

Ezekieljm

So SVR of 3.99% it is. Which in itself is nearly 2% cheaper than we currently pay. Might even do that and overpay a bit as then we will have decided on what my OH is doing whether full time mummy etc etc. Is staying on the SVR for a year or so a bad idea?

kingstreet

It certainly gives you flexibility, if not the lowest possible rate.

I'd check with Nationwide to see what retention products they have available for you closer to the end of the fix, just so you can compare rates.

If there's a tracker product with a lower rate and no early repayment penalties, that might be a better option than SVR.

alinwales

i just applied to brittania for a remortgage, with the oh on mat leave, plus a year off after that. We have 130K mortgage on 160K house so 85%ltv bracket. They were happy to accept my income as the sole income, and lend up to 4.25x salary. They did ask about outgoings, which afterwards said would affect the amount lent. We both have excellent credit scores (i think), and hopefully this week we will hear that our application has passed the final hurdle.

I did think about remortgaging last year before OH had the baby thinking it would affect our mortgage now, but never got round to it. Doing it now though has saved 0.6% over the 5 years compared to what was available last year, so happy bunny here!

(oh, and I am paying an ERC as part of the mortgage is fixed for 2 more years, the ERC is less than the additional payments over that time)