Switching Mortgage

kelp7

Hi,

My partner and I are looking to apply for a mortgage soon. She has done a fair amount of research and looks like the Post Office is our best bet in terms of how many salary multiples we'll get. We are going to get a fixed rate mortage (5 year). Is it possible, after the 5 years are finished, that we can switch to another lender and just carry on switching into further fixed rate deals? Would there normally be a penalty for this?

Thanks!

Dave_the_Ginger_Cat

You can do this as many times as you want -it would be a remortgage. It will depend on what's available at the time, your own employment status, your house value being maintianed, and your credit standing. There are no guarantees of this, but most customers do move about at the end of fixed periods. You'll need to check your own deal to ensure there is no penalty to come away from them but it's unlikely

You'll need to pay fees on this - sometimes to the new lender and some to conveyancers

kingstreet

PO/BoI is not the most generous lender. There are several who will lend upto 5x your gross annual incomes, less any credit commitments/dependents etc.

kelp7

Dave_the_Ginger_Cat wrote: »

You can do this as many times as you want -it would be a remortgage.

Thanks very much for the informative answer!

kelp7

kingstreet wrote: »

PO/BoI is not the most generous lender. There are several who will lend upto 5x your gross annual incomes, less any credit commitments/dependents etc.

Interesting.... out of all the websites we went to for different banks and building societies which allowed you to do a "how much can you borrow" calculator, the P.O. was the only one for us that came up with something like 5x the salary. For instance, my own bank, Halifax, only seem to be giving me 3x the salary.

kingstreet

If Halifax is only offering 3x, there's something in your application data which is causing that. Maintenance payments, credit commitments, shorter term, variable earnings?

It's possible the BoI calculator may not be as reliable, if it doesn't ask about the same things the Halifax one does. TBH you can set your watch by the accuracy of the Halifax and Nationwide calculators, if you use them properly;-

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

kelp7

Not sure. I don't have any commitments, money-wise. I have a thin credit file. One 'loan' (i.e. creditbuilder from Cashplus) and one Orange/EE mobile phone contract. I'm trying to build my credit file up as I don't have anything on there really.

If I go by what you say and what Halifax says (i.e. 3x salary only) then i'll never be able to afford a property, despite our 73% LTV. I don't earn the kind of money that could get us a decent 2 or 3 bed house anywhere.

Lastly, my other half has just had a phone call conversation from Post Office and they still sound likely / positive that we'll get the amount they calculated on their site (the 5x salary amount).

kingstreet

The Halifax affordability calculator knows nothing of your credit history. The fewer credit items you have and lower credit payments you make, the more you should be able to borrow.

I'm curious. Have you used the intermediary calculator I linked to? What are the figures you are putting in?

kelp7

Apologies, I haven't! Am at work at the moment but will try and take a look tonight (sorry that I can't give a quicker response!)

StuC75

Yes in theory, but after the fixed rate period you could then get another deal with the same lender.

I would suggest checking there follow on rate charged.

The reason being that remortgaging to another lender is subject to meeting there criteria and earnings multiple.

In five year time what kind of Loan To Value would you have, and more importantly what would that still be as an earnings multiple.

At 5 Time Salary Now, in 3-5 years time you would still be likely over 4 Times Salary.

this would then limit who you could move onto, and more importantly what kind of deal you would get.

If this is combined with the Lender having a Higher Follow on rate then you would be stuck on a Duff Standard Variable Rate and unable to move on because not meeting criteria on earnings.

Real example being people getting Northern Rock 100% mortgages that no longer have the equity to qualify to move lender...

kelp7

kingstreet wrote: »

I'm curious. Have you used the intermediary calculator I linked to? What are the figures you are putting in?

Okay, passed the link onto my other half who has used it (where does this Halifax calculator come from? We didn't see this on their site). Looks like in fact they'll offer pretty much the same as the P.O. !