Porting a mortgage

kernewek

We are in the process of trying to buy a new house. We have had an interest only mortgage with Nationwide for about 10 years that we over pay and I am simply looking to port the mortgage over as is. The new house is larger and more expensive but I do not need to borrow more.
The issue we have is that we were employed when we took out the initial mortgage but have since become company directors (my wife and I)

Our salary is much lower, and although we now take home a similar amount to when we first took out the mortgage proving it is difficult.
Our accounts also show a dip in profits in the year ending 17, which is where we carried out a change of business premises and incurred the costs of 2 premises as the old lease had not expired, business rates and fitting costs of the new premises, which obviously hit the bottom line. This just affected that financial year. We are now back to one premises and no business rates. so when we get the year ending 18 it should show a nice jump in profits again. Yet we still only take out the maximum tax free dividend.



I have been through an AIP with them and been told it is unaffordable, but however, as our credit scoring was excellent, it has been passed to manual underwriting as we are just looking to port.


The silly thing is, if they say no, we still have to pay the mortgage anyway, just in a less valuable property. There's no point in trying to re-mortgage and I have spoken to a mortgage advisor that the max would not be enough to cover the existing mortgage based on what the accounts show. Obvs if we could get year ending 18 certified it would help but probably not in the timescale we are working to.



Question is do the underwriters have common sense as we are more than easily affording the mortgage currently. We have cleared all our credit card debt and so just have general living costs. We don't bother taking extravagent holidays or anything like that. I could if I needed to pay us both a lot more, but don't as would rather re-invest it in the business rather than hand it to HMRC.

kingstreet

kernewek wrote: »

Question is do the underwriters have common sense

Maybe, maybe not.

No hard and fast rules here. They can apply affordability checks and would normally do so; but are also discouraged by the FCA from making mortgage prisoners.

Thrugelmir

kernewek wrote: »

Question is do the underwriters have common sense as we are more than easily affording the mortgage currently.

In terms of common sense have they heard similar stories before. Yes. Are borrowers naturally optmistic. Yes they are. Can underwriters assume that affordability is ok based on the borrowers say so. No they can't. As in the majority of cases they'll be proved right in the longer term.

jdanthony

I would say they won't look at your company profits as it is I assume a private company. They will be taking in to account your personal income and director dividends from the last three years.

kernewek

Yes, but we have the mortgage anyway. If they say no, we still have the mortgage, if they say yes, we still have the mortgage but on a lower LTV.

I guess it would help to get the most recent year accounts sorted so we can prove what I am saying.