Mortgage broker - ask me anything

jenni_fer

IAMIAM said:

Which lenders currently offer overpayment/underpayment/mortgage holidays/payback/overpayment reserves etc...
Apart from offset which has ridiculous rates, I cannot seem to find any mainstream lenders offering this to new customers 

I was about to ask if there are any decent offset providers out there at the moment. We currently have one which we love, but there doesn't seem much choice out there when we're looking at a view to move house and borrow significantly more.

K_S

Generally speaking, offsets are a wonderful feature to have and there are a handful of lenders offering offset products out there at present.

However, in my experience, most clients are reluctant to pay the premium associated with the feature and rarely have the amount of cash needed to make the feature worthwhile, so end up plumping for the least expensive product they can get at the time.

ukri

My mortgage fix is ending soon (April) and I'd like to release some equity (around 50k) for building a rear extension and garage conversion.

Trouble is, I can only start the work in the autumn. Are there lenders who will pay out in advance at the point of remortgage in April, or approve but not release until the work is ready to start? Or is that not how these things work? I've never released equity during a remortgage so don't know.

The property is worth around 350k and the current mortgage on it is 190k.

K_S

@ukri Assuming the rest of your circumstances stack up, this should be possible. Given that it's 50k, depending on the lender you may need to provide quotes etc for the proposed work. 

Redwino222

I am currently planning a move.  Income c. £70k and have around £100k equity in my current house.

I would like to buy a house that needs work - but how would this work?  Say, for example, the house is £220k but I would need to spend £75k on the renovations. My deposit would be tiny and I am worried the mortgage deal I would get would be rubbish.

K_S

@Redwino222 When you say a house that needs work - what state are we talking about? Is the house not in habitable condition or are you just talking about decorative work?

Redwino222

1950s style house, I would want new kitchen, new bathrooms and single story extension.

any houses I have views would be habitable, just very dated.  Probably new heating system and electrics as well.  Possible need a new damp course.

K_S

@Redwino222 Taking the numbers you've given as an example, the most straightforward way to do this would be to use 33k equity from the sale of your current house as a 15% deposit on the 220k house for an 85% LTV mortgage with low/no ERC, use the balance cash for the work that needs doing and then consider a remortgage (assuming the work done results in an uptick in the value of the house) after the work is done to get your LTV down and a better rate.

Redwino222

Okay thank you.  It seems odd to have an 85% mortgage at my time of life😊. but I suppose it’s only temporary.  

I know the market pretty well in the area, and the renovations will increase the house value by more than the cost.

Are 85% mortgages difficult to get at the moment?  I have a clean credit record, no debt apart from the mortgage and secure employment.

K_S

@Redwino222 Assuming the rest of the case stacks up, based on the limited information in your posts above, it shouldn't be too hard to get an 85% LTV mortgage to purchase a habitable property with.

If you do decide to go down the quick remortgage route, try make sure the product you pick at purchase isn't overly expensive to get out of in 6 months time. Good luck!