Worried about remortgaging

niikk

Hi all,

I've been a lurker for some time, and now the time has come for me to ask for some assistance. Just want to say thanks to all of you who do read and comment - I've learnt so much from other threads on this forum!

My partner and I are about to agree to a £290'000 mortgage, (at around 4x salary) £100'000 downpayment. However, both of us are looking to set up a new business, so we'll quit our full-time jobs to give this venture a go - after the mortgage deal is done. We are currently opting for a 2-year fixed rate (25-35year) to keep our monthly payments as low as possible, as we're starting up.

I'm a bit worried what will happen when it's time to remortgage. Both of us will do temp-work on the side to cover all monthly payments (and/or take a low salary from outside investment in our new business) and/or take from savings, so no there will be no uncertainties in regards to these payments. Could the lender rake up the rates, decide not to deal with us anymore, or force us to sell the house - with the above in mind? Is our income relevant when we remortgage, if it's with the same broker, or someone else? Do they do checks? If it's considerably lower - what are the scenarios? The SVR for this lender is quite high, between 5.5% - 6.0%.

I think that we, within the next two years, it's most likely that we'd either run a 'successful' business or will have put it down and gone back to a full-time job, which should generate at least a similar salary as today. Would the banks/mortgage lender accept that the past two years were quite inconsistent (i.e. 1.5y without/relatively low salaries)?

If you have any other inputs that might be relevant, we'd be super grateful to hear them! If everything seems OK, we're going to close the deal asap.

Thank you so much! :beer:
Niikk

AnotherJoe

You should work with a broker who will know what companies will let you move to another deal without checks at the end of the term, and which wont. No guarantees they will be the same in two years time of course.
Or, why not look at a longer term than 2 years, and bite the bullet on an ERC if necessary.

Verix

If you are paying the mortgage a lender isn't going to kick you out just because you have changed your job. As has been mentioned lenders may well not do any further searches if you just do a product transfer with them, however not all lenders offer product transfers all the time.

You might find it difficult to remortgage in say 2 years time if you only have 1 year of self-employment accounts under your belts each. I think it is worth explaining your concerns to your adviser; just explaining that you are thinking about the self-employment option and wondering about the implications. They then might look at a lender with a lower SVR, recommend a longer fixed term or place you with a lender more likely to offer product transfers.

Good luck

Thrugelmir

niikk wrote: »

However, both of us are looking to set up a new business, so we'll quit our full-time jobs to give this venture a go - after the mortgage deal is done.

In essence you are prepared to lie on your mortgage application form. Not the way to build a relationship with a lender. No trust no relationship.

niikk

Verix wrote: »

If you are paying the mortgage a lender isn't going to kick you out just because you have changed your job. As has been mentioned lenders may well not do any further searches if you just do a product transfer with them, however not all lenders offer product transfers all the time.

You might find it difficult to remortgage in say 2 years time if you only have 1 year of self-employment accounts under your belts each. I think it is worth explaining your concerns to your adviser; just explaining that you are thinking about the self-employment option and wondering about the implications. They then might look at a lender with a lower SVR, recommend a longer fixed term or place you with a lender more likely to offer product transfers.

Good luck

Thanks Verix!

Great points - I will discuss these with our mortgage broker. You say that 'your lender is not going to kick you out only because you've changed your job' - what can they do/do they usually do? What's a worst-case scenario one could expect if checks are done and income is considerably lower than before (and no problems with previous payments)? Thanks!

niikk

Thrugelmir wrote: »

In essence you are prepared to lie on your mortgage application form. Not the way to build a relationship with a lender. No trust no relationship.

Thanks Thrugelmir,

Well, I should clarify that this is only one of several possible outcomes/plans. I just want feel a sense of control and am trying to find out how different outcomes might impact our mortgage I wasn't particularly interested in discussing the any moral dilemmas, but appreciate you taking time to reply. However - banks, in general, don't seem to be super keen and transparent, sharing how fees and costs are calculated without asking them specifically, in my experience.

Niikk

getmore4less

With your plans I would be looking at lenders with better followon rates in case there are no options when your fixed deal finishes.

What is so compelling about the deal to be taking on one that has such a high followon?


Whith such an uncertain future a low rate lifetime tracker may be an option, as long as you keep paying you keep you rate.

foxy-stoat

niikk wrote: »

Thanks Thrugelmir,

Well, I should clarify that this is only one of several possible outcomes/plans. I just want feel a sense of control and am trying to find out how different outcomes might impact our mortgage I wasn't particularly interested in discussing the any moral dilemmas, but appreciate you taking time to reply. However - banks, in general, don't seem to be super keen and transparent, sharing how fees and costs are calculated without asking them specifically, in my experience.

Niikk

Only difference is that the Bank is not the one who wants to borrow money off of you.

There are questions on the application form along the lines of, do you who of any personal changes in circumstances that may affect your ability to pay the mortgage?

If you are going to apply for a re-mortgage then both leave your full time jobs to start up new businesses, I would say this is a material fact, moral or not.

getmore4less

6% £290k
£1450pm interest only
£1654pm 35y
£1869pm 25y

Thrugelmir

niikk wrote: »

Well, I should clarify that this is only one of several possible outcomes/plans. I just want feel a sense of control and am trying to find out how different outcomes might impact our mortgage I wasn't particularly interested in discussing the any moral dilemmas, but appreciate you taking time to reply.

Moral dilemma ? Good luck if that's your attitude. I'll move on now as not one to waste my breath. However will leave you this link to illustrate how seriously lack of good faith is taken in the industry.

http://www.nhunter.co.uk/

Verix

niikk wrote: »

Thanks Verix!

Great points - I will discuss these with our mortgage broker. You say that 'your lender is not going to kick you out only because you've changed your job' - what can they do/do they usually do? What's a worst-case scenario one could expect if checks are done and income is considerably lower than before (and no problems with previous payments)? Thanks!

At the end of your fixed rate you will drop on the lenders SVR (you mentioned at the top that the lenders rate is 5.5-6% at the moment). A competitive SVR at the moment would be something like 4% but even the lowest you can find won't be as low as you'd be able to get from a half decent fixed rate product. If you apply for a remortgage in 2 years, for example, and things have changed to make it no longer affordable you will just be stuck with that SVR.