Existing Woolwich customer looking to increase borrowing

edinburgher

Hi all, meeting with Woolwich (Barclays) to discuss a house move and extra borrowing next week and would appreciate any input from mortgage brokers etc. who deal with them/anyone who has moved house with them with vaguely similar circumstances.

• Flat sold, we will realise about £55k from the sale (sale price - existing mortgage)
• Existing mortgage of c. £100k is a 2 year fixed rate @ 3.15%, offer period finishes next March
• Looking to borrow a further c. £94k to take us to c. £194k total (90% LTV mortgage on a £215k house)
• Combined earnings of c. £54k
• Wife on maternity leave, reduced earnings until March, hours on return not agreed
• Minimal outgoings, no other debts bar student loans

Questions that concern me (Barclays staff have been helpful so far, but a few contradictory messages):

• Is the amount that we wish to borrow likely to be considered affordable?
• Will we be expected to port/let our current mortgage run until it expires, or will we be able to 'consolidate' onto a single mortgage?
• If we would be able to consolidate, would we be liable to pay the ERCs associated with mortgage 1? (£3k or so)
• How will maternity leave affect our affordability? Will my wife's typical full-time salary be considered, or a proportion of it etc. etc.?

LeoTLion

I have just ported a mortgage and taken additional borrowing with Woolwich.

In terms of affordability try plugging all your numbers into the residential affordability calculator at http://www.woolwichintermediaries.co.uk This should help.

When porting I believe the mortgage is redeemed but the rate is transferred to a new loan. In effect you get two loans, one for the existing amount on the existing rate and a separate one for the additional borrowing at the rate selected from their currently available products.

When the tie in period of your original product finishes you will revert to BBR. At this point your ERC's cease and you can select a new product for that portion of the loan.

I can't help with the maternity leave sorry, but I'm sure one of the brokers will.

Also, can I ask you are only putting 20k of your 55k equity into the new house? I don't know for certain, but I'd imagine that a lower LTV would make you a more attractive prospect to any lender.

LeoTLion

Sorry, also should have said. If you try to consolidate you will effectively be redeeming your mortgage and will be liable for ERC's and final repayment charge. As only have to wait till March, seems daft to take the hit when porting is possible.

edinburgher

Thank you for the replies, much appreciated.

I have played with the affordability calculator before and have an AIP for £185k, my concerns largely relate to wife's temporarily reduced income.

Also, can I ask you are only putting 20k of your 55k equity into the new house? I don't know for certain, but I'd imagine that a lower LTV would make you a more attractive prospect to any lender.

Of course. The house is generally sound and in a very nice area, but is dated throughout and needs some minor structural changes and refurbishments to bring it up to scratch (same owners for 30+ years). In addition, it's basically 2.5 bedrooms and we need to add an extra bedroom.

As we have been paying our mortgage on a reduced term (effectively overpaying), we have ended up with more of our money tied up in equity than is practical at this step of the ladder.

minimike2

1. Is the amount that we wish to borrow likely to be considered affordable?

You will need to complete an application / DIP to get the full answer to that. There is a calculator on the intermediaries site but it is only a guide really.


2. Will we be expected to port/let our current mortgage run until it expires, or will we be able to 'consolidate' onto a single mortgage?

If your mortgage deal is portable you can take it with you as long as the portability conditions are met.

3. If we would be able to consolidate, would we be liable to pay the ERCs associated with mortgage 1? (£3k or so)

By consolidate I assume you mean ditch the rate and take all the borrowing on one new rate? If so and the sale/purchase is simultaneous then yes you would have to pay the penalty costs to break your current mortgage deal.

4. How will maternity leave affect our affordability? Will my wife's typical full-time salary be considered, or a proportion of it etc. etc.?

Your best bet would be to agree the return hours and get a letter from the employer stating the return date, hours and salary, as this puts you in a much better position of certainty. If you don't have that it makes it a much more difficult application to underwrite. The approach varies between lenders.

Thrugelmir

Wife on maternity leave, reduced earnings until March, hours on return not agreed

Does your wife intend to reduce her hours?