Are mortgage brokers interested in sub £25k mortgages?

BrummieL

Hi
I am planning on downsizing and aim to reduce my mortgage to approx £25k on a £150k property from the current £55k on a £200k property. (I'm also trying to release some equity hence the continuing desire for a mortgage albeit a small one).
My initial approach to my current lender, Coventry BS, to port my existing product has run into problems under the affordability rules as I am currently self-employed but don't yet have 2 years of verifiable trading figures. (I am still pursuing this with them).
However, even before this, I emailed a couple of local mortgage brokers and financial advisors about my situation and received zero response. Are brokers/advisors just not interested in small mortgages for the same reason its hard to find a tradesperson to do a small job - it's simply not worth their while?
Are there any recommedations for brokers who might be interested in a sub £25 mortgage for someone who's been self-employed for 12 months?
Any advice welcomed.

AnotherJoe

From reading here it seems most lenders aren't interested, let alone brokers, at that size.
Isn't £30k the minimum for most lenders?

ACG

Are you looking for fee free brokers? The commission on £25k is about £85 gross. By the time you take out all of the costs, it would mean the broker is working for about half the minimum wage.

There will be brokers who will take it on, but you may find their fees go up to cover the lack of commission.

misswansea

I ran into this years ago buying a very cheap house;

The consumer credit act prohibits taking out new mortgages less than £25K

this is protect people from risking their house for small personal loans etc.

If you can't port your current loan one way around this is to borrow £25001 then immediately make a one off "overpayment" to reduce the balance to the amount you need (make sure there are suitably generous penalty free overpayments allowed).

I was lucky enough to have a stable job so i easily found a high street lender with a reasonable interest rate (and used an offset mortgage so I could stick the money in the offset savings account so didn't pay interest on that bit).

If you need a broker to find a mortage for your situation then you may have to pay a fee as the commission probably won't be wont their time.

You may be able do your own research to find lenders who consider self employed people and approach them yourself, but be sure to ask for at least £25001.

minimike2

misswansea wrote: »

The consumer credit act prohibits taking out new mortgages less than £25K

No, it doesn't. (Nor does it govern most mortgage lending taken since M-Day in 2004). Whilst you may be trying to help, your post is full of inaccuracies. I am not sure how you were led to believe what you have stated, but you were ill-informed.


Mortgage lending is available in the market from as little as £5k loan sizes. As said above, expect to pay a fee to a broker due to the lack of commission on a small loan.

rtho782

Or, take out a big mortgage with no early repayment charges, then overpay most of it on day 1.

E.g. port your 50k mortgage, downsize, and repay half the mortgage from the 50k equity you release going from a 200k house to a 150k house.

JimmyTheWig

misswansea wrote: »

If you can't port your current loan one way around this is to borrow £25001 then immediately make a one off "overpayment" to reduce the balance to the amount you need.

Not necessarily possible if they failed on affordability for a smaller loan.

silvercar

The costs of selling a 200k property, buying a 150k property: legal costs, survey costs, search fee, survey costs, stamp duty, moving costs....
If you need to then get a mortgage at a higher interest rate than you are paying at the moment (due to self employment for a short time) I do wonder whether it is all worthwhile.

ACG

Ignore missswansea - Here is an example of one lenders current lending criteria:

£5,000 for a new residential mortgage

That has been copied and pasted.

BrummieL

ACG wrote: »

The commission on £25k is about £85 gross. By the time you take out all of the costs, it would mean the broker is working for about half the minimum wage.

That's pretty much was I was realising - and as a self-employed person I've discovered there are some jobs that really aren't worth doing. I wasn't necessarily expecting to find a fee-free broker - but obviously an issue I hadn't considered fully was that there may not be many products out there for such a low value loan that even a broker would find it hard to locate one.

BrummieL

silvercar wrote: »

The costs of selling a 200k property, buying a 150k property: legal costs, survey costs, search fee, survey costs, stamp duty, moving costs....
If you need to then get a mortgage at a higher interest rate than you are paying at the moment (due to self employment for a short time) I do wonder whether it is all worthwhile.

I'm beginning to wonder - but concerned about struggling on for another 15 months or so with a mortgage that is more than I can afford and also not being able to release equity that I have a moral obligation to pay to my ex. Add to that the fear of rising interest rates and I want to retrench and feel on a day to day basis that I am living within my means - and can afford a few extras like a holiday and provide occasional financial support to my son who is off to uni soon.