Second Mortgage

MoneyGeoff

Hi, I'm looking to obtain a mortgage on a second property. The amount will be £240K. I approached my existing lender and they gave a mortgage in principle of up to £280K based on affordability of having this second mortgage on top of my existing one.

However now I have come to proceed with the application they have realised they can't lend me that amount. Even though it's affordable, the combined borrowing of the 2 mortgages is 5 times my income so it doesn't work if I have both mortgages with the same compancy. They advised I should take the new mortgage with a different company, since I can meet the affordability criteria but won't fall foul of the income multiplier issue.

I tried Barclays but they also factored my exising mortgage into the total lending amount so it didn't work. Are there some lenders out there that will lend just based on the affordability without considering my existing debt as part of the income multiplier?

foxy-stoat

If the first mortgage is a BTL and self funding, then you may have a chance. Best engage a broker rather than trying high street lenders directly.

kingstreet

MoneyGeoff wrote: »

Are there some lenders out there that will lend just based on the affordability without considering my existing debt as part of the income multiplier?

No. But they will treat the existing mortgage payment like a loan in affordability calculations and not add together the two capital balances.

As suggested, speak to a broker or get your sleeves rolled up and start the research process yourself.

MoneyGeoff

kingstreet wrote: »

But they will treat the existing mortgage payment like a loan in affordability calculations and not add together the two capital balances.

Yes that's what I was trying to get at. However, when I enter my existing mortgage as a debt payment during online applications then the application gets approved based on affordability. I have £1200pm of disposable income and am applying for a mortgage of £1000pm.

However if I then call them to confirm that my existing debt payment is a mortgage then they advise they cannot proceed. They add the capital balances together. So despite affordability being fine, the second mortgage application cannot proceed as total mortgage borrowing becomes a high multiplier of salary.

Of course if I replaced my existing mortgage payment with loan or credit cards it would not be an issue. Very odd.

I'll try a broker.