Student with a mortgage - FIXED TERM ENDING

confusedmaturestudent

Hi

I am due to start university this September and become unemployed due to the demands of a full time course and 2 children. Myself and my partner have a mortgage which has a LTV of 85%. The mortgage fixed term will end in September and although we can still afford the repayments Im wondering how this will affect the new rate we get due to just living on student finance and my partners income? We have 120k outstanding and earned income of 20k?

Please help!!

kloana

Are you going to attempt to undertake a remortgage (i.e. secure a different mortgage, potentially with a different lender), or are you happy to just revert to your lender's standard variable rate (SVR) in October?

If it's the former, forgetting about the interest rate, your ability to borrow elsewhere may be affected (looks like your partner will be classed as having 3 dependents, instead of 2, plus you've taken a cut in earned income). But to say exactly what deal you'd be eligible for depends on a number of different factors - credit history, other debts, etc.

If you're just going to roll onto the SVR, it is what it is...insofar as I'm aware, your change in circumstances will matter not a jot when it comes to the interest rate you're charged, for better or worse.

bigadaj

Surely no lender will lend six times earnings, even excluding the dependents issue?

Kayalana99

bigadaj wrote: »

Surely no lender will lend six times earnings, even excluding the dependents issue?

If you read the post she had recently left a job so they are now on 20k a year.

addyboy1982

You will automatically go onto the SVR.

The lender won't even know your household income has taken a drop.

However if you were looking to re-mortgage at the end of your fixed term, I very much doubt you will get £120k on a £20k salary.

HTH

Building_Surveyor

can you afford the repayments even on the lenders SVR?? paying £120k on a 20k salary with 3 dependents - have you worked out the figures?

kloana

Building_Surveyor wrote: »

can you afford the repayments even on the lenders SVR?? paying £120k on a 20k salary with 3 dependents - have you worked out the figures?

Student Finance may replace a large chunk of lost earned income. I think the 20k figure relates to earned income (partner's) only. Then there's Tax Credits, etc., assuming eligibility.

bigadaj

Kayalana99 wrote: »

If you read the post she had recently left a job so they are now on 20k a year.

Yes that the point, they were looking at a new lender, not sure you read the post correctly. Also no guarantee that interest rates won't rise and having three dependents on twenty grand isn't easy, patticulalry as the government is desperately reducing benefits, including for those in work.

kingstreet

Establish the follow-on rate for the current mortgage. This is the rate which will apply when the fix ends.

Find out the lender's customer retention offers. These are offered to existing borrowers not moving home at the end of a fix, instead of rolling onto the follow-on rate. These are often granted without further evidence of income or status.

Finally, look at remortgage options with other lenders, but remember the transfer costs involved and the status requirements.