High LTV mortgages on ~500K properties

lizards

Assuming everything is in order i.e. sufficient salary multiples, no current debt but an excellent history of managing it, nothing negative on the credit record and so on, how tricky is it to get a 90-95% mortgage for around a 400-600K property?

Are lenders extra strict compared to lower value mortgages with lower salaries but the same deposit percentage? For example is there more scrutiny on affordability by having to justify spending to a greater degree, or wanting more paperwork maybe? Or something else?

Thanks!

kingstreet

The HTB - Mortgage Guarantee scheme allows lenders to offer mortgages of upto 95% on property purchase prices upto £600,000.

Criteria and affordability requirements are the same, regardless of the purchase price. It's the loan to value they work on and 95% is 95% - tough.

lizards

Thank you! That is good to know. Obviously I'm aware it's going to be a tough one but in terms of credit history I know that's as good as it probably could be (regularly check files etc just in case too) as we've always been fortunate enough to be in a financial position to be able to be careful. I've always been paranoid over my credit record and made sure my husband is too!

We were homeowners until last year when we finally escaped an NRAM ball and chain of negative equity on a house no longer suited to our needs (understatement..), so hopefully the many years of correct mortgage payments will count in our favour.

My main concern is that they'd be more strict just because it's that much more money e.g. extra scrutiny on our non-essential spending despite the fact we are still able to save this deposit and pay full market rent right now. We're definitely going to need a broker when the time comes as ~50% of income comes from bonuses/overtime/company shares etc but the calculators seem to indicate it will be okay even without the more unusual shares taken into consideration.

We have the 5%+stamp duty/fees already and ideally we're hoping to save the 10% or more within the year but there's a possibility due to circumstances outside our control that we may need to move before we've managed that which is stressing us out rather!

Thrugelmir

e.g. extra scrutiny on our non-essential spending

If you play polo for a hobby or keep race horses for e.g. then it will impact the decision. As the assessment is based on affordability. Lifestyle varies from person to person.

shortchanged_2

Any reason why you want/need such an expensive property?

Did you not learn anything from your previous negative equity issues?

There are still potential risks in the property market (rising interest rates, new mortgage granting conditions) of a squeeze on prices so you could find yourself back in that negative equity scenario again.

lizards

Thrugelmir - Heh, no massively expensive hobbies.. no real out the ordinary spending that a family would do - I was just thinking of things like holidays and so on. For instance we could afford to go on holiday this year and still have the required deposit/make appropriate mortgage payments etc, but would the lender be unimpressed?

shortchanged - We have quite a large family and it's the price of houses that are big enough for us long term round here (SE easily commutable to London, catchment for decent schools) - in fact it's one of the much cheaper areas that ticks those boxes. We can easily afford the mortgage payments on such a property as we're already paying similar in rent on the sort of place we'd like to buy AND saving for the deposit. We would far rather that money going into our mortgage rather than somebody else's pockets.

Much as we do like the house we're in, it is ultimately rented, and it is stressful to say the least as our time here is at the whim of somebody else. It's complicated and out of our control, but we're very aware we could be given our two months at any point through no fault of our own, and there are very rarely any other suitable rental properties locally. Even if we were lucky enough to find one, they'd want a minimum one year contract which would stop us from buying in that time plus the children need stability and not moving house all the time. We're aiming to get at least the 10% if not more, but we may not have that choice.

Whilst I do agree with you that prices could well go down, unlike before which was only ever intended to be a short term place to live, we're looking for somewhere to live for the long term until our young family grows up as a minimum, so probably at least 20 years. And unlike before we are now in a position to easily make overpayments if needs be - it's how we got out of negative equity after all. And we're not starting out in negative equity (Northern Rock 125%) either. It's a very different set of circumstances.