Bizarre mortgage calculations

mel19632

We are in the process of remortgaging. i am very keen on an offset mortgage as we tend to need large cash floats and so upon finding Chelsea BS offset at 3.79% I thought we were onto a winner.

As a first step, I have input out income into their full online calculator with some weird results. Basically, I have employment, self employment and rental income and my OH has self employment profits from 12/13 (loss from 11/12 as a new business) and rental income.

Now, if i put all of the income in, we are told we can borrow £18k!

If I take out my self employment (modest) profits, it goes to over £200k and if I take out OH self employment, it goes to £281k.

Strange. I would have thought that more income = more mortgage but apparently not.

Now, my question is, can you pick and choose what income to disclose to a mortgage company or are you obliged to give them everything? Gut instinct says you can do as you like (as long as you are no adversely affecting them?) but I'm really unclear. I can't see any guidance (but doesn't mean there isn't any).

Anyone else had a similar experience? What did you do?

Conrad

Well first thing to bare in mind is Chelsea is a difficult lender to deal with. Your details do not fit the bog standard mould so I would suggest you sit down and talk to someone rather than doing this over the net.

For example a loss in a recent year may cause a decline by a Human underwriter later on even though 'computer says yes' initially.

Also dealing with rent income needs care as lenders have rules about the existing let out property which might cause them to discount any rent income, or worst still ignore the income but include the buy to let mortgage as an outgoing.

Furthermore different types of income and multiple income streams need careful handling.

So pop down to your local Building Society, Bank or broker. Make sure you satisfy yourself they know what they're doing as this is just the type of scenario that catches out an inexperienced or overly positive individual.

Good luck

mel19632

Thanks - that is very interesting to hear about Chelsea. Perhaps thats why their rates are so favorable! I am beginning to think that we will need to speak to a mortgage advisor as I have heard stories about each lender acting in a very different way. What happened to the good old days of just checking affordability.... oh wait....

in your experience are there any lenders out there who might be "better" for us than others? I want to get an idea. We are not on a dreadful rate (4.74%) so it may be well best to leave things alone as they stand. Ideally we would remortgage, get funds out to investment in a project and get a better rate, but if its not practical then I don't want loads of searches all over our credit history.

We have "perfect" credit history in that we hav never missed a payment but we have very large credit card balances available (not used) to us as we like to have buffers in case things go wrong with SE.

Conrad

Well some lenders do tend to be a little easier on average and I would imagine a rate of around 3.5% (perhaps even closer to 2%) would be achievable but yes I think you should talk this one through with someone because there are many potential stumbling blocks.

Don't bother with those larger call centre type brokers - they will just write everything down parrot fashion and end up finding themselves down a cul-de-sac from which there is no escape.