Applying for mortgage through broker - help!

ellie27

My husband is a contractor so reckons we go through a broker to hopefully get a mortgage.

We are in Scotland (if that makes any difference?)

I apologise in advance if I sound a bit clueless here!!

We have been doing the numbers and he is going to speak to a broker tomorrow.

We do not know how much mortgage we may need eg we might see a house around £250,000 and therefore need £108,000 mortgage or if we see a house priced around £300,000 then we would need a mortgage closer to £150,000.

I assume we apply for a mortgage of £150,000?

If we are offered a mortgage for £150,000 (are we told the rate/term? What if we find a house and actually want only £100,000 mortgage eg 40% LTV ....surely it will not be on the same interest rate/term as if we borrowed £150,000?

Any advice?

Edi81

You won't apply for the mortgage until you've found a property. What you need at this stage is a mortgage in principle which will indicate how big a mortgage a lender is willing to consider you for.

This will then be subject to full underwriting criteria when you make the full application.

The rate available will be subject to LTV, how lomg you are fixing for. But a good broker will explain all this.

snowscreamer

ellie27 wrote: »

My husband is a contractor so reckons we go through a broker to hopefully get a mortgage.

We are in Scotland (if that makes any difference?)

I apologise in advance if I sound a bit clueless here!!

We have been doing the numbers and he is going to speak to a broker tomorrow.

We do not know how much mortgage we may need eg we might see a house around £250,000 and therefore need £108,000 mortgage or if we see a house priced around £300,000 then we would need a mortgage closer to £150,000.

I assume we apply for a mortgage of £150,000?

If we are offered a mortgage for £150,000 (are we told the rate/term? What if we find a house and actually want only £100,000 mortgage eg 40% LTV ....surely it will not be on the same interest rate/term as if we borrowed £150,000?

Any advice?

Don't worry so much, sounds like you're in an enviable position with your relatively large deposit. Much lower rates are offered for lower LTV but in practice the lowest rate tends to be for up to 60% LTV so with an £150k deposit that means you could go up to a property value of around £375k before you hit higher rates.

At this stage. The best you could do to get more of an idea of what property price to search for is to play with online mortgage calculators across a few different banks - this will give you an idea of how much they would be willing to lend given your income and outgoings, and also an idea of interest rates available and how they translate into monthly repayments.

Good luck!

ellie27

Its all so confusing, as he is a contractor he feels we need to go though a broker and would have no chance of a mortgage if we went direct to bank ourselves.

He had a 2.5 yr contract (initially was a 3 month contract but was extended that many times), then out of work for 4 months, then another 2.5 yr contract, then out for 4 months and he has just started another contract (initially 3 months)

ACG

A contract with 3 months, hes probably right. Not many lenders are going to look at that.
Im sure there will be lenders but you will be limited to a handful, of which maybe 1 or 2 will be high street lenders.

Penelopa.Pitstop

ellie27 wrote: »

Its all so confusing, as he is a contractor he feels we need to go though a broker and would have no chance of a mortgage if we went direct to bank ourselves.

He had a 2.5 yr contract (initially was a 3 month contract but was extended that many times), then out of work for 4 months, then another 2.5 yr contract, then out for 4 months and he has just started another contract (initially 3 months)

Is he working through limited company? In that case bank will be interested in company accounts not actual contracts.

ellie27

Penelopa.Pitstop wrote: »

Is he working through limited company? In that case bank will be interested in company accounts not actual contracts.

Yes, he has his own company and company accounts. He pays himself a salary and dividends from that company.

He has all his company accounts for the last 5 yrs or so.

He says banks do not understand this really and thats why its best to go through a special contractor broker?

ACG

Ohhh completely different then.

Its still a good idea to speak to a broker just to ensure this is submitted correctly - a lot of people answer questions how they think they should be answered rather than how they should be answered - this in itself can cause problems.

I think you will be fine though.