Re-negotiating mortgage

Greenlady

Last year we took on a new mortgage - the mortgage is quite high at £750 month and we borrowed (yikes) 95% of the money. We're paying this without any issues and we can still save. Our net basic income is £2800.

So, anyway...

Our mortgage advisor will re-negotiate our mortgage next year when the fixed rate ends. He says that he will take the mortgage to another bank, if need be. Has anyone been through this process?

I'd like to reduce my official work hours. That is, reduce to 30 hours and then do the rest as overtime because that will allow me to choose when and if I want to go in.

I've had a few medical scares this year which have impacted me a great deal psychologically and I'm not out of the woods yet. Work is also very stressful at the moment and I fear I'm about to have a breakdown (and lose my job as a result - hence wanting to reduce hours).

I just wonder if the banks will just look at payslips or official hours worked. If I work overtime and bring home same money, will they care that my contracted hours are 30 instead of 36 and will that penalise us? I'd like to know your opinions as I know you can't really predict this.

If everything hits the fan we have a mortgage free property abroad as a back up that we can sell to reduce mortgage but this is an absolute last resort.

ACG

All lenders will work off 100% of basic wage (30 hours in this case) and then it starts to differ between lenders with the overtime. Some will work off an average off the 3 months prior, others will work off a P60, some will use 100% others will use 50% etc etc.

How much will your mortgage balance be and how much will your basic be on 30 hours plus the basic of anyone else on the Mrotgage? As a general rule of thumb, if the balance is no more than around 4x that figure then you should have pretty much the pick of the lenders.

AnotherJoe

Greenlady wrote: »

Our mortgage advisor will re-negotiate our mortgage next year when the fixed rate ends. He says that he will take the mortgage to another bank, if need be. Has anyone been through this process?

.

Millions. Literally. Pretty much everyone with a mortgage. It's standard to move to another mortgage when the fixed period you are on ends, otherwise you are moved onto standard variable rate which is much more costly. .

Greenlady wrote: »

I'd like to reduce my official work hours. That is, reduce to 30 hours and then do the rest as overtime because that will allow me to choose when and if I want to go in.

I've had a few medical scares this year which have impacted me a great deal psychologically and I'm not out of the woods yet. Work is also very stressful at the moment and I fear I'm about to have a breakdown (and lose my job as a result - hence wanting to reduce hours).

I just wonder if the banks will just look at payslips or official hours worked. If I work overtime and bring home same money, will they care that my contracted hours are 30 instead of 36 and will that penalise us? I'd like to know your opinions as I know you can't really predict this.

If everything hits the fan we have a mortgage free property abroad as a back up that we can sell to reduce mortgage but this is an absolute last resort.

They wouldn't be "penalising" you. You yourself have said you'd like to work fewer hours. That means less money coming in. So you'd expect to be able to borrow less money. And they can only go on what you are contracted. Some will make an allowance for overtime but usually not the full amount.

Don't take this personally but you seem to want it both ways, you want to work fewer hours ( but possibly not work fewer hours?) , earn less money but not have it affect what you can borrow.

The best bet for you is most likely to move to another fixed period with your current lender because often you can do that without having to put any more documentation in. Change to a different amount borrowed or a new lender or a new term, and most likely you'll have to go through the full procedure including earnings being taken into account based on contracted hours.

And good luck with your health, hope that works out.

Greenlady

Have the cake and eat it. Pretty much.

In my work we can change to a 4 day week. So I'd work the 30 hours over the 4 days. Leaving me three days where I can do my extra 6 hours over those three days off. So, it'd give me more freedom.

But, reading the answers I get now why I have to stick to as I am currently.

Greenlady

Based on your answer I don't think it's worth the risk of reducing to 30 hours at this stage.

The mortgage should have £125,000 left by the time the fixed rate ends. So, we'd still make it based on basic income but... just.

Because I do Sundays at double time and have some bonuses, it'd never be just the basic, but best play it safe at this time.

getmore4less

start living like you are on 30hr and overpay to get the mortgage down into a better LTV range.

if after 2 years you will be £125k paying £750, what did you start with an and what rate/term?

at a typical 95% say 4% that would have been £133k over around 22years new LTV is around 90% you want to make sure you get to that and see if you can get to 85% the rates improve a lot.

ACG

If you are under 4x income on 30 hours, I think you will be fine.
Many lenders work to 4.5x income but I reduced it down to take account of any debts or commitments you may have.

Have a mess around on some lenders affordability calculators, but I do think you will have options when the time comes.