Remortgage affordability tests

Lizling

In about 6 months, I'll come to the end of my fixed term mortgage. At the moment I pay 4.2% because when I bought 2 years ago, it was at 90% LTV. Now I'm down to around 50-60% LTV it should work out a lot cheaper if I can remortgage.

I'll need to borrow about 4 times income, which I'd have thought would be ok under new rules, but maybe not? No kids, no other debt, clean credit history etc. and can easily make the repayments.

Problem no. 1 is, I'll very likely have just changed jobs.

Problem no. 2 is the block of flats has just been re-roofed and I'll need to start paying instalments of about £250/month towards that starting 2 months before I'd be remortgaging. I've got a savings pot that'll cover about 60% of the full cost before the instalments actually start, but I'm not sure if savings are taken into account and if not, that'll have a huge impact on affordability.


How tough is this likely to be?

kingstreet

Enter the data into different lenders' online affordability calculators and see what outputs you get.

The additional monthly costs will be taken into account for affordability, so include it if you will be paying it.

The job thing shouldn't be a big problem to most lenders.

Think about asking your current lender for its customer retention options as the above will be avoided if you do.

audigex

Definitely put the numbers into affordability calculators.

The other thing to do is grab Excel and make a spreadsheet of EVERYTHING you spend (excluding current mortgage), add it up and subtract it from your net income.

As far as I can tell lenders seem to be happy enough if you can show that you have enough money to pay the mortgage, all bills + food, put £100 in savings and still have £100 of your wages left. Whether they're happier with tighter budgets than that, I'm not sure, but I had no issues at that level of mortgage to income ratio.

Lizling

I haven't found any affordability calculators that take into account savings. Does that mean they're not considered? This is potentially going to be difficult if the roofing costs are taken into account but not the money I've set aside to cover them!

Thrugelmir

Lizling wrote: »

I haven't found any affordability calculators that take into account savings.

Lender has no control over savings i.e. what you do with the money. Therefore they are disregarded.

Lizling

Thrugelmir wrote: »

Lender has no control over savings i.e. what you do with the money. Therefore they are disregarded.

Ouch. £250/per month is going to be a big hit to affordability then. Seems quite unfair since it's not actually money I'll need to find each month. The only other options are to pay off the full lump sum early, which I won't quite have the money to do, or put a charge on the flat, which I imagine wouldn't look great either.

Looks like I might just scrape through, but unless I get a decent payrise it's quite likely that I'll be caught in the stupid scenario where I 'can't afford' a mortgage that's £200/month cheaper.

The lender doesn't really have any control over what I do with any of my income, but they don't disregard that, do they? :mad:

Beckyy

Could you ask the roofing company if you can make an upfront payment for the first few months then start paying monthly after your remortgage, or something similar?

amnblog

How has the loan to value dropped so markedly in two years?


Have you been overpaying.

Lizling

It would be up to the council who are the freeholder, rather than the roofing company I think, but yes, paying a lump sum up front and then smaller installments is definitely something I could ask about. Thanks!


The LTV has dropped because I'm in a part of London that's suddenly become trendy. Flats like mine on my street have gone from a bit under £200k to a bit over £300k since I bought. It's easy to compare because this is an estate with lots of near-identical flats.

I've also been making modest overpayments and spent a lot on renovation, but it's really all down to what's happened to the housing market.