Coming to end of fixed rate deal, but income has dropped. Can we remortgage?

tonylord

Hi there,
I'd be very grateful for some advice from the forum.

We're 2 years through a 3 year fix with the Co-op and our house price has gone up by (we think) about £55k. This (and the payments we've made over the last two years) takes our LTV from 95% to about 72%.
At the end of our fixed rate in May 08 we will revert to the bank's SVR, which is ludicrously high, so we'd like to go on to another fixed rate ASAP. We also might want to take advantage of the equity in the house and borrow some more money. We don't mind moving banks if necessary and have an excellent credit history. We've also had significant sums in the overpayment fund for the last few months.

However, our income will be substantially lower next year than it is now (and it was when we took out the mortgage), as my partner will not be working: he will be starting a business instead. We will still be able to cover the mortgage costs with my salary without any problems, but I'm worried that we wouldn't meet the affordablity criteria for the bank.

What do you guys think? Will the bank want to assses us for affordability again? Will our desire to drawdown make a difference to this? I'm really keen not to go onto the SVR if at all possible.

Thanks very much for your help: our data are below.

Tony

Bought at £195k, with a mortgage of £185k and combined income of £75k
Current value £250k, with outstanding mortgage of £178k.
Overpayment fund stands at £29k, but this will go on the business and our civil partnership next year, so I guess shouldn't be counted.
Additional drawdown would be £20k to help with business and improve house: although we haven't firmly decided on this yet.
Guaranteed income at end of fixed rate £46k.

herbiesjp

If you saty with Co-op and ask them for a new fixed rate deal, without increasing your borrowing, they will not normally ask for any proof of income

If you leave C0-op you will need to provide proof of income, however you should be able to find lenders that will agree that level of borrowing for you based on the £46k sole income. Any income your partner will bring in from the new business will obviously be a bonus and improve your monthly affordability

HTH

JoeK_3

Based on your post, the CO-OP will request proof of income when your fix has finished and you want to draw down more money.

As you will require a minimum of 5 x incme at the time (depending on the extra amount required), you will need to consult a whole of market mortgage broker to find the most suitable mortgage lender at the time.

JoeK

herbiesjp

tonylord wrote: »

Additional drawdown would be £20k to help with business and improve house: although we haven't firmly decided on this yet.
Guaranteed income at end of fixed rate £46k.

Hi Joe
If not decided yet - then they may not need to verify income is how I read it