Remortgaging & tight affordability

edited 27 February 2019 at 10:13PM in Mortgages & endowments
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martypmartyp Forumite
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edited 27 February 2019 at 10:13PM in Mortgages & endowments
Hi all,


I seem to be finding that remortgaging might be getting harder than in previous years as I recall 2 fixes ago I could get a new deal despite being on a very low income as unemployed.
My remaining mortgage is just over 2.5 times my annual salary yet it seems the most I might be able to get on the 18 year term I currently have is about twice my salary but the broker is saying I can remortgage if I increase to a 25 year term...
What's frustrating me is that I'm coming to the end of a 2.29% 2 year fix and have been paying £227 + £50 overpayment for well over a year now and they're questioning the affordability. I have no debts, loans, credit cards and a good credit rating (999 on MSE credit club) and my outgoings are minimal.
Is it the broker's commission that's affecting my affordability? The same lender when I went direct and asked said I would need a 21 year term to get the amount needed.
I just don't get why it's proving difficult when I'm already over[aying on a shorter term and higher interest rate and new lenders are imposing a longer term to get a lower rate?!

Also, the interest rates don't seem as great as I'd hope now I've got under 60% LTV, brokers are suggesting a 2.94% deal for 2 years...

Replies

  • JonathanBFSJonathanBFS Forumite
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    Just do a product switch with existing lender? No more affordability required..
  • martypmartyp Forumite
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    Just do a product switch with existing lender? No more affordability required..


    That's the thing, the best deal with my existing lender is 2.94% so a £10 a month or so increase from my current amount. Have been hoping to get around 2% or less so don't know why lenders are being reluctant to take me on to pay less when I'm currently able to afford more and overpayments on top. I really wanted to secure as low an intrest rate as possible to pay off the mortgage quicker.
    I'm holding out a bit longer as well to see if my lender might drop its rates, that happened 2 years ago straight after I changed my deal so am holding my fingers tightly crossed...
  • ThrugelmirThrugelmir Forumite
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    martyp wrote: »
    What's frustrating me is that I'm coming to the end of a 2.29% 2 year fix and have been paying £227 + £50 overpayment for well over a year now and they're questioning the affordability. I have no debts, loans, credit cards and a good credit rating (999 on MSE credit club) and my outgoings are minimal.

    Lenders are required under regulatory guidance to assess affordability on a "what if" basis. This is 3% above the rate that will apply when the introductory offer ends. The reversion rate then becomes SVR plus 3%.

    Mortgage interest rates aren't going to remain low indefinately. Cheap BOE funding to the lenders has ended. Lenders are now in a position of starting to repay these funds.
  • martypmartyp Forumite
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    Thrugelmir wrote: »
    Lenders are required under regulatory guidance to assess affordability on a "what if" basis. This is 3% above the rate that will apply when the introductory offer ends. The reversion rate then becomes SVR plus 3%.

    Mortgage interest rates aren't going to remain low indefinately. Cheap BOE funding to the lenders has ended. Lenders are now in a position of starting to repay these funds.


    Useful to know, thanks. Based on the SVR for both current and proposed lenders being 4.24% I worked out my payments on 7.24% as being £329 a month on my current 18 year term which isn't much more than the £277 I'm paying now.
    I must admit I was earning about £5k or so a year more when I bought the house on a 6.14% mortgage 14 years ago.
  • getmore4lessgetmore4less Forumite
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    under 60% LTV should be getting better rates than 2.94% close or under 2% should be available on 2y fixes

    How big is your mortgage?

    Sounds like another borrower in the Halifax trap.

    Halifax are a dodgy lender for small mortgages people should be getting warned away from them.

    You can also in most cases ignore the term that just sets the min payment.

    The amount you pay determines the true cost/term of your borrowing.

    As an example Barclays have
    Great Escape: No Product Fee, Free Legals, Free non-disclosed Valuation & £300 cashback)
    2 year fix 1.97% min loan £50k.
  • martypmartyp Forumite
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    Thanks getmore4less, glad to have someone know the situation with Halifax. I want to refuse the brokers suggestions to stick with Halifax more out of principal than anything and fight for a better rate.
    My house is valued at £140k but it's 50% shared ownership so £70k for my half. My remaining balance is £39699.
    It just seems daft the idea that I should pay more for my mortgage payments with my existing lender as I'm on a lower income.
    I'd need a 26 year term with the new lender which would drop my payments from £227 to about £169...
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