New mortgage and affordability rules

lunny_2

Good morning all!


I am hoping to apply for a mortgage within the next 3-6 months and am going through our monthly expenses and looking to see where savings can be made.


There are a couple of bills that we have mobile and tv/bb/phone where I could reduce down.


On the mobiles, we are on an anytime upgrade deal, so the phone element and the call package are separate. If I was to settle the phone element it would reduce the bills from £64 a month to £15, but would reduce the amount of savings we have by some £750.
Would this be beneficial to do?


On the tv/bb/phone, I have spoken to our provider and renegotiated our package to reduce by some £15, but would require a new 12 month contract.
Again would this be beneficial, despite signing up for an additional 12 months [at a lower amount] and possibly running the risk a new property isn't served by them, and having entered into a new commitment shortly before applying for a mortgage?


Is my thinking sound?

kingstreet

It depends on your incomes and the rest of the case.

Many lenders don't ask about stuff like this, so it may well be wasted effort, unless you go to one of the more "exacting" lenders who analyse every penny you spend each month.

lunny_2

Oh OK, thank you. Somewhat scaremongering by the press as usual then is it?

kingstreet

To a degree, yes.

At one end of the scale, you have lenders who use the ONS averages for outgoings and who only ask about bigger issues like childcare, student loans, school fees, ground rent & service charges etc.

At the other end, you have those who analyse everything from a budget planner you complete yourself. However, many "default" to the ONS average if you enter a figure lower than what it expects.

Your issues are only going to be a problem if you choose one of the latter lenders and are close to the maximum loan for your income/outgoings.

Thrugelmir

lunny wrote: »

Oh OK, thank you. Somewhat scaremongering by the press as usual then is it?

Sensible to check ones outgoings. As the money saved can be channelled into saving more for a deposit or overpay the current mortgage.

There's no scaremongering in the fact that interest rates will rise. Over the next decade quite significantly. So paying down debt with an eye on the long term will be a wise move.

jimmyinin

About to go for a remortgage next month and my main concern is whilst scrutinizing my application, my biggest outgoing is the mortgage and childcare which I cannot avoid ?? I do not any debt on CC apart from a car loan which is below £2K.
Agree the press is portraying a ho ha of these new rules.

kingstreet

Regardless of the balance, the car loan monthly payment will be factored-in to affordability if it has more than six months left to run.

Childcare can be a mortgage-killer from what I've seen in the last few months.

Thrugelmir

jimmyinin wrote: »

Agree the press is portraying a ho ha of these new rules.

The danger lurking beneath the surface is interest rates. Yes, everything is affordable at record interest rate lows. No so , once rates do begin to rise.