Mortgage Market Review

jiggy2

Hello,

We are planning on moving house (selling existing property and increasing mortgage amount) in the new year.

Beginning to prepare for the new mortgage process which has changed since I last had to apply - how many months bank statements are required by the banks typically - is it 3 or 6 months?

Also anyone with recent experience of First Direct in particular?

Thanks

ACG

Typically 3 months.
I can not answerabout FD however, they do not deal with brokers.

dunstonh

First Direct are known to cherry pick. If you are conservative in your lending requirements then no problem. If you are pushing limits or have potential issues then you may struggle.

jiggy2

ACG wrote: »

Typically 3 months.
I can not answerabout FD however, they do not deal with brokers.

Thanks for the response. Helpful to know general position with other lenders.

Re FD - i am hoping someone who has recently been through the process will be able to confirm that part (sorry i should have said in my opening post that I am currently with FD and therefore was aware they didn't deal with brokers).

thanks once again.

jiggy2

dunstonh wrote: »

First Direct are known to cherry pick. If you are conservative in your lending requirements then no problem. If you are pushing limits or have potential issues then you may struggle.

Thanks for responding.

I think we should be quite conservative in terms of limits.

Property value c. £650k - mortgage required c. £250k
Combined income - just over £95k

Credit card debt c. £15k of which £5k will be cleared down this month as coming to an end on the 0% interest. Balance is on 0% which doesn't end till late 2017 / early 2018.

Planning on starting to look at houses and applying for mortgage at end of March - until December 2016 had significant salary sacrifice into pensions - nearly 30% - which has been reduced down now to 6% w.e. from 1 January 2017.

So should have 3 months payslips and bank statements supporting the higher pay. But if 6 months were needed then that may need a bit of an explanation as a minimum.

Childcare cost and car leases are the only other things which could be problematic - it is £1200 and £700 per month respectively.

jamesd

First Direct are one of the fussiest lenders around and the (HSBC) fraud team they use are the worst security team I've dealt with.

Debt can be fine, though. At an income multiple of not much over one I was able to have fairly close to the mortgage value in stoozing credit card debt, told them about that, and they also said that with another lender they would be content for me to take out another mortgage of similar value for a family member if needed. On the negative side it took them three or perhaps four tries to get me a correct contract.

Mainly because of the security team I'd say try not to use them if another lender offers you a comparable deal.

Three months of pay slips is what they wanted form me. And another set of three a few days before completion due to the time it took, so don't relax until the deal is final.

Your situation would be a lot more of a challenge than my very conservative level of mortgage borrowing.

Don't get rid of the debt before the deals end, just include a note with the application that explains the situation and your plans for it and ask them to let you know if they want you to reduce it before advancing money.

kingstreet

Assuming;-

two adults
two kids
25 year term
Non-HTB
Joint incomes £95k
No ground rent & service charges
No student loan payments
No maintenance payments going out
£1,200 monthly childcare
£700 monthlyother credit/HP/PCP
£10k remaining card debt

Halifax will lend £212,410. With only one child, it's £220,190.

Suggest you enter your financial details into your chosen lender's online affordability calculator.

jiggy2

jamesd wrote: »

First Direct are one of the fussiest lenders around and the (HSBC) fraud team they use are the worst security team I've dealt with.

Debt can be fine, though. At an income multiple of not much over one I was able to have fairly close to the mortgage value in stoozing credit card debt, told them about that, and they also said that with another lender they would be content for me to take out another mortgage of similar value for a family member if needed. On the negative side it took them three or perhaps four tries to get me a correct contract.

Mainly because of the security team I'd say try not to use them if another lender offers you a comparable deal.

Three months of pay slips is what they wanted form me. And another set of three a few days before completion due to the time it took, so don't relax until the deal is final.

Your situation would be a lot more of a challenge than my very conservative level of mortgage borrowing.

Don't get rid of the debt before the deals end, just include a note with the application that explains the situation and your plans for it and ask them to let you know if they want you to reduce it before advancing money.

Thanks Jamesd - some good info there. Only planning on getting rid of the debt that expires shortly - the rest i was planning on keeping as is unless FD made it a condition of lending that it needed to be repaid.

Currently we are on a lifetime tracker with FD for a large part of the current borrowing - of base + 0.79% so would want to port that rate across to the new property. So going to be difficult to get anything comparable.

thanks for sharing your experience.

jiggy2

kingstreet wrote: »

Assuming;-

two adults
two kids
25 year term
Non-HTB
Joint incomes £95k
No ground rent & service charges
No student loan payments
No maintenance payments going out
£1,200 monthly childcare
£700 monthlyother credit/HP/PCP
£10k remaining card debt

Halifax will lend £212,410. With only one child, it's £220,190.

Suggest you enter your financial details into your chosen lender's online affordability calculator.

thank you for taking time to run some numbers.

Other than the student loan (which my wife does have - around £40 a month paid via payslip) the other assumptions are all correct. Which will bring the lending down further. The £700 car lease costs are on salary sacrifice - so the net after tax effect is a bit lower - and that may increase the lending a bit.

The lending figures above from Halifax are lower than I was expecting. As you say looks like I do need to enter details on the FD affordability calculator (if i can find it!). But looks like I may need to adjust expectations or consider a different lender.