Renting somewhere new while looking to buy bad for mortgage offer?

Jack535

Hi all

Will renting a new property during our house hunt hurt our existing mortgage offers?

We're currently renting and have been house hunting for around six months. We've offered on a few properties that we've liked but then, unfortunately, had to pull out due to bad survey or other issues. We had hoped we'd have found a place before our current lease runs out (in 8 weeks), but it doesn't look like that's going to work out. We are now considering moving to another rental property closer to the area we are house hunting to cut out our current lengthy commute when arranging viewings. We lived in the area previously but moved away to try somewhere else, and now we want to go back.

I worry that moving to another rental property will affect our existing mortgage offers? Which so far have been good as we have good credit and highish income but due to the expected changes of electoral role switch over and likely increased rent outgoings affecting our affordability (rents are higher in the area we want to buy), I'm thinking banks will look on this negatively and offer us less than we can currently borrow?

Has anyone dealt with this? I'm also curious whether banks factor in your current rental outgoings when calculating affordability, as surely they know once you buy a house, you will no longer be renting?

Any advice appreciated, thanks in advance!

hazyjo

Can't you just go onto a rolling contract where you are? Appreciate you'd like to be nearer for viewings, but you'll prob have to sign up for 6-12 months.


What you spend now won't be relevant (unless it's an ongoing commitment like travel, childcare, etc. Your current rent is irrelevant).

Jack535

The lettings agency is only offering a 6-month minimum lease at our current place which we don't want to commit to.

I wouldn't mind committing to a 6-month lease at a property in the area we are looking to buy as it makes life easier being closer and even best case scenario it will likely take 8-12 weeks to complete when we do finally find the right house to buy.

I'm more concerned about any potential impacts to our "creditworthiness" after changing home address in the middle of house hunting with existing decisions in principle after switching electoral roll details and potential increase of rental costs affecting earlier affordability calculations made by lenders. Do you think the rent outgoings are irrelevant, that's good news if that's true.

hazyjo

They can't force you to sign. Just ignore them. By law, you will be on a rolling contract.

Jack535

I'm happy to move. I just wanted to know if it will impact our existing creditworthiness in the eyes of lenders?

Jack535

I think I should have posted in the Mortgages section maybe, I'll move it over there.

pinkteapot

To clarify, you don't have mortgage offers, you have agreements in principle. The offer isn't issued until you do your full application after having an offer accepted.

Signing a tenancy agreement in itself won't affect your credit rating - it's not a credit agreement. If the letting agent or landlord run a credit check as part of their application process then it'll show up as a check being made on you, but I can't see that making a difference unless you were borderline for lending.

If you want to avoid having any credit checks run you could only look at properties direct through private landlords and ask if they run credit checks, but it might make them suspicious that you don't want to be checked...

Jack535

I actually do have a mortgage offer on one of the properties but we have decided to pull out of that. The offer was valid for 6 months and we were told when we find the *right* property to switch the offer to that property, but we're not there yet.

sal_III

Lenders generally don't look at your current rent to establish affordability - you aren't goign to pay rent once you buy the property are you...

Changing address and this getting on your credit file should be your main concern.

Why move at all? As other have said ignore the greedy LA demand for 6m, just go to a statutory rolling tenancy and if the LL kicks a fuss, explain your situation and that he is welcome to server s21 notice and go to court to evict you in like 3-6m or chillax and keep getting your money hassle free.

MovingForwards

Perhaps you should ask for advice on the property reports to see if they are as bad as you think they are rather than just standard surveyors covering their bums reports?

Jack535

sal_III wrote: »

Lenders generally don't look at your current rent to establish affordability - you aren't goign to pay rent once you buy the property are you...

Changing address and this getting on your credit file should be your main concern.

Why move at all? As other have said ignore the greedy LA demand for 6m, just go to a statutory rolling tenancy and if the LL kicks a fuss, explain your situation and that he is welcome to server s21 notice and go to court to evict you in like 3-6m or chillax and keep getting your money hassle free.

We like the idea of moving closer to the area we're looking to buy so don't need to play hardball to stay here. If it won't impact our chances of getting similar mortgage offers we're happy to do it.