Consideration of investments in mortgage eligibility

dc19v0

Hello, I have been unable to find information online or through friends on this question as a first time buyer with investments seems to be a rare thing. All of my friends have put everything towards saving for the deposit and don't invest. I have been doing both. I am curious, are my investments a consideration in how much of a mortgage I can take out?

My particulars:
- about 150K in instantly available savings ready to be used as deposit
- about 100K in ISA S&S investments which I prefer not to sell and use for house purchase
- earn 50K/year
- first time buyer
- single, no debts, no major monthly costs

How will a mortgage provider see my 100K ISA? Is it relevant in calculating how much I can borrow?

Cheers

kingstreet

No impact either way.

amnblog

Agreed. Lenders do even not ask about current assets on the vast majority of occasions.

hoc

The mortgage is a secured loan against the property and in the case of non payment the lender seizing the property to collect as outstanding debt is simple enough. And this certainly works, assuming the property isn't in negative equity. Unfortunately, the banks employ a very simplistic borrowing model based on income and outgoings, not savings or investments. So, someone with significant savings/income on the side is not rewarded as a more safe pair of hands compared to otherwise identical person who has no savings/investments. The income measurement is also fairly simplistic, somebody with a stable 40K income e.g. in continuous full employment with same company 5 years would be given less to borrow than otherwise identical candidate who may go in and out of employment as contractor/self-employed maybe earning 60K most recently now but averaging less than 40K in general.

It doesn't pay to be a responsible borrower and we know the lenders aren't the most responsible bunch. Saving/investing is never foolish, even when saving to buy in the over inflated UK property market. Just don't expect the banks to value what you're doing.

ACG

I reckon some lenders may look at the interest earned and use that as an income, but I could be wrong and the chances are the lenders who would allow you to use it probably would not lend as much as the main players anyway.

How much you can lend is based on income, not how much you have saved up.

AnotherJoe

dc19v0 wrote: »

How will a mortgage provider see my 100K ISA? Is it relevant in calculating how much I can borrow?

Cheers

No. For two reasons, firstly if you don't wish to sell them then they can't be taken into account by definition, and second your investment might have been in (say) BHS shares and become worthless overnight.

Thrugelmir

dc19v0 wrote: »

How will a mortgage provider see my 100K ISA? Is it relevant in calculating how much I can borrow?

No , as you can do whatever you want with these assets at anytime. They offer a lender no security.

dc19v0

No, they are not junk shares. It is a mix of global government and corporate bonds, AA or better.

If instead the 100K was in a fixed asset like property it would be considered?

What besides property offers the lender this "security"?

ACG

You could potentially use the rental profit as an income once you have at least one years accounts, possibly 2. Not all lenders accept rental income.

How much do you want to purchase a home for?
How much do you plan on putting down as a deposit?

Thrugelmir

dc19v0 wrote: »

No, they are not junk shares. It is a mix of global government and corporate bonds, AA or better.

If instead the 100K was in a fixed asset like property it would be considered?

What besides property offers the lender this "security"?

Residential mortgage lenders aren't in the market for additional security. Not their line of business. Mortgage lending is a low margin high volume activity. Micro managing individual applications is too expensive to be commercially viable for main stream lenders.

AnotherJoe

dc19v0 wrote: »

No, they are not junk shares. It is a mix of global government and corporate bonds, AA or better.
You missed the point. It's not up to the lender to validate your shares, and you could sell them and put them all on red in Las Vegas anyway.

If instead the 100K was in a fixed asset like property it would be considered?
Considered for what ? If you owned a property you could raise a mortage on that property which would release some cash you could put into your new house but the repayments on that loan will count against you.

What besides property offers the lender this "security"?

If you mean that that is used to allow the lender to loan you more than they would normally, no since it doesn't affect your ability to repay. They want you to be able to repay rather than focus in seizing your assets. . Now if a property you owned was rented out its possible the rental income could be allowed.