Is it possible to get a remortgage in these circumstances?

jimbob_3

Hi,

I wonder if anybody can help;

a few years ago my mother took out a mortgage to convert her loft into a self contained flat. She now regularly rents this out under the rent a room scheme, but receives less than the £4500 pa threshold.

The mortgage is now only £19000, but my mother is now 68 and has retired. Excluding any money received from letting out the flat, her income is about £20000, mainly made up of various pensions etc.

She is now looking to remortgage and find a cheaper rate than the 7.1% she is now being charged by the nationwide.

So:
1) Is it possible to get a better rate than the one she is on?
2) Does she have to mention the money she gets from letting out the room, especially as it is not a steady regular income.

She is going to see the nationwide later this week, but any suggetions before then would be really useful.

many thanks

homer_j_3

It seems very feasible indeed - in fact a walk in the park!

If she is going to the nationwide, she will need proof of her pensioned income but looking at their lending criteria, it states the following. I would maybe get her to call up just to check that its not going to be a waste of her time.

"Where any client is seeking a loan over a term which extends into their retirement there are additional steps to be taken. The maximum retirement age that will be accepted is 70.

For clients who are more than 5 years from retirement, we expect you to discuss with your client and confirm on the application form how they will afford to repay the loan once they have retired.
For any clients who are within 5 years of retirement, we will need to receive documentary evidence of post retirement income. Please submit this with their application form."

If NW cannot help there are othe banks/building societies that will help and will probably need somewehere in the region of 5k pension icome to be proven.

jimbob_3

Hi,

Thanks for that...

I should have probably made it clearer that she took out the original mortgage with the nationwide a few years ago, but the rate they are now going to charge her is 7.1%.

(I dont know for certain but think this rate might be because they may have given her a buy to let mortage..??)

So are you suggesting that she should not worry about money from the flat and simply show proof of her pension etc income?

beingjdc

jimbob wrote: »

a few years ago my mother took out a mortgage to convert her loft into a self contained flat. She now regularly rents this out under the rent a room scheme, but receives less than the £4500 pa threshold.

I'd be careful how you describe this. It doesn't sound like a room to me!

homer_j_3

I am saying:

1 - call nationwide to make sure she can take a new mortgage out for the number of years she requires. If yes, then good.

2 - Take proof of all income received through pensions so they can check that its affordable. Providing its above 5k a year then it should be sufficient.

By all means mention the rent a room scheme if you want to but if the income fits, I dont see a need to declare that income to them. You may have to declare that she does this as there will be someone living in the property over the age of 17 so you would be best checking this arrangement isnt an issue.

jimbob_3

hi,

thanks again.

with regard to the 'flat'\room - it is basically one room with ensuite bathroom etc, and is an integral part of the house; same entrance, have to go through house to get to it etc. It is not like maybe a 'granny' flat

I suppose because it is integral, then other people do sometimes live in her house. But they tend to be only there for relatively short periods of time.

In terms of the nationwide rate in these circumstances, is what she is being offered reasonable or is there the chance it could be much cheaper going elsewhere?

beingjdc

jimbob wrote: »

with regard to the 'flat'\room - it is basically one room with ensuite bathroom etc, and is an integral part of the house; same entrance, have to go through house to get to it etc. It is not like maybe a 'granny' flat

Fair enough - you're on firm ground there then. Maybe it's just me but if I saw 'self-contained' in an advert I'd expect at least a kitchenette and a lock

herbiesjp

On a £19k mortgage just be careful not to opt for a low rate with high fees, as that would be counter productive

jimbob_3

Hi,

good point about high fees etc.

Just wondered, re the room/flat, what difference it would make if it was more like a bedsit ie with kitchenette, lock etc, even if it were not always being used?

thanks