Remortgage advice

Pete36

Hi,

So we have been told lenders won't touch us with a barge pole re remortgaging. Current situation, mortgage £188k, property £350k, wife earns £45k plus £15k bonus, been in job 8 years. My situation, work on contract, not worked for 2 months, about to start another 6 months contract. Average earnings over last 3 years £45k p.a.

We can't get a remortgage even though we are coming out of the 2 kids private childcare stage (both in school system next year, one already is) because we have childcare costs and because I am out of work then my wife has currently 3 dependents!

So 8 years into a mortgage, no defaults and we are just about to enter our less financially stressful years plus with rates as low as 2.2% (current lender 2 year offer) and we can't remortgage, is this box ticking madness?

Pete

cavework

No love..
it is how the banks make their money.
Lots of help for people coming into the home owners bracket .. help to buy etc but the way the Government have decided to make mortgages so difficult to obtain has left people like you in never never land.
This will come back to bite them on the bum but in the meantime it's the people like you who are suffering

Pete36

In truth, it's a moan about nothing I guess. I mean a two year fix at 2.2% is nothing to complain about, my previous fixes were 4.39%, 5.99%, 3.54%.

hcb42

To be fair to the banks £188K on £45K with those outgoings sounds completely unaffordable. If they lent on those facts, they would be wrong also...once you get the earnings back, I guess the situation turns round completely as £90K salary and £188K loan seems far safer..

kingstreet

I've just done a lender's affordability calculation;-

application for two adults, I earning £45k basic + £15k bonus, the other £0.

Two kids, childcare £350 per month.

25 year term

The lender affordability output is £192,645.

Is the childcare more expensive than that?

A two year fix at 2.2% is a decent rate from existing lender. A remortgage is possible, although possible unnecessary?

BTW when your new contract starts, there are lenders who will take your daily rate from day one.

Pete36

Chilcare is nil if I am not working as I look after him more i.e. just use Govt free 15 hours, but I'm on a new contract from tomorrow (£50k per annum) so childcare will go up to £500ish a month.

We bump along in the times on one salary in fairness with a 500 quid shortfall each month but the bonus resets that. So I'm surprised mortgage lenders won't touch us just on the one salary with 40%+ equity cushion.

Still as you say, 2.2% is a great rate.

kingstreet

There's no childcare cost while you're not working, so that shouldn't be taken into account and if you are working and there is, your income should more than cover that additional cost.

I suspect you have spoken to the wrong person, as I can see no bar to you remortgaging as soon as your contract starts.

Pete36

Thanks. I'll speak to my mortgage broker again I think after I start work again, it sounds like we should have options opening up. She seemed very negative, almost shaking her head on all bad news e.g. credit card debt 3k whilst not acknowledging savings to pay it down if need be and the fact we flex our costs depending on no of salaries in our house.

kingstreet

£3k of card debt would take £150 per month off affordability, probably making the remortgage while you aren't working a tall order.

Once you start work again, it shouldn't be an issue.