Mortgage broker - ask me anything

K_S

anxioussquirrel said:

I have a few questions - I'm on furlough at the moment, I'm currently applying with my partner (employed full time) for a joint mortgage. It's been a loooooong ride due to some issues with the paperwork of the building (developer's negligence). It is getting sorted now and he was using surveyors approved by the lender so we are hoping the valuation would be OK. 

I'm on flexible furlough and work a little bit from home too so it's not been an issue to provide letters from my employer or payslips or anything, and I don't intend to change jobs. However, in the free time I started a business last summer more as a hobby but I'm not turning over £1000 so I have put off registering with HMRC. However, I've been advised that if I don't do it this year, and still declare next year that I started taking money in in 2020, I could get fined. So I was strongly recommended to do it in April.

If I do it now, would it be somehow found out by the lender (Santander?) And would it affect the application? There is another thread where the same lender withdrew their FORMAL offer after a head office audit, once they were about to exchange. I'm absolutely terrified of this happening and I'd be devastated if we couldn't move - we've held onto it since middle of last summer and our current flat is in a messy state - I cry about it all the time and I don't think I can think rationally about this anymore lol that's why I'm hoping for an answer. 

For further information, it's a second property for my partner (he's not putting his current one on the market yet but we want to once we've done some work to it.) We are applying in Scotland for 75% LTV on a property that's worth 3.6x my partner's full-time income (2.6x our combined income if you count with mine being on 80%). So the mortgage amount is a little less than twice our combined income. Neither of us have any other debt, never had car finance, loans, mobile contracts, overdrafts, nothing. I'm from the EU but I have a permanent residency document and I've been living my partner at his place for many years. However, I think I was put on the electoral roll only in 2019, I'm not sure why! 

Can we expect issues / can someone give us any hope? 

@anxioussquirrel Generally speaking -

- I'm not a tax-adviser by any means but as per my understanding and as the HMRC website "You do not need to be registered as self-employed if you earn £1,000 or less in a tax year as a sole trader." So do make sure you actually need to do it before registering as self-employed.

- I've never had a mortgage application questioned/declined because a client had a small side business pulling in less than £1,000 a year. Unless it reflects on your bank statements in some way, I'm not sure how Santander would know that you newly registered as a sole-trader

- I can't really comment on the affordability part as the information on your post is very limited and it could be construed as advice

- If you're on the electoral roll at your current address, that should not be a problem

anxioussquirrel

Thank you! I read today that I have to let HMRC know about my business within the first 3 months of trading however I don't have to fill in anything further than telling them it's under £1000 at this point, but to avoid a late fine I should have already done it .... fixing this is probably better for the tax forum though and I'm actually more okay with paying the fine than losing the house lol. Thanks for your insight though it's a bit of a relief that the lender wouldn't really pick up.

I am on the electoral roll now so that's also a bit of a relief! 

As for affordability, I'm not looking for advice I was just asking whether generally speaking we'd have any issues but I guess we'll find out soon from our own broker - it's been going on for way too long.

Thank you for your reply! I feel a bit calmer. 

clueless_but_curious

Hi!  I am due to remortgage in Dec '21.  I'll be at 79.5% LTV after my Dec '21 payment and I intend to remortgage at 75% LTV.  So that would require a payment of £xx,xxx to get the principle down to 75%.
Q1.  Are there any valuation issues that need to be considered that may affect the %
Q2.  How would this work in practice?  (Cheque / bank payment / overpayment?  On last day of initial term?)
My rationale is because the mortgage rates I can enjoy at 75% are much better than the rates at ~80%.  My credit rating is 'excellent' and at either percentage it would be borrowing <4x salary.  I have no borrowings or car etc and I plan to have paid down credit cards by Dec '21.
Q3.  For someone in my position; what are the lowest rates you are seeing for a repayment mortgage of 20-25 years at 75% LTV currently?  Assume I am just looking for the lowest rate and therefore a two year fix.  Please also quote fees
Q4.  What are the rates for an offset mortgage relative to the rates in Q3.  Please also quote fees

K_S

@clueless_but_curious
1. Whatever value it is that you're assuming when calculating the LTV, that will be tested by the lender valuation.
2. The simplest way would be to overpay (assuming you have a penalty free quota left) prior to the remortgage.
3. and 4. Based on the limited info in your post, you may be eligible for most lenders so could check the best rates on the MSE mortgage finder.

scoey8

Is it possible to find out high street lenders criteria in regards to defaults? Had a search online but I can't find anything? The mortgage criteria of my current lender (Vida) was set out clearly and said how many defaults in a certain time period etc. Thanks 

K_S

scoey8 said:

Is it possible to find out high street lenders criteria in regards to defaults? Had a search online but I can't find anything? The mortgage criteria of my current lender (Vida) was set out clearly and said how many defaults in a certain time period etc. Thanks 

@scoey8 High street lenders are more opaque than adverse/semi-adverse lenders. And all of them will caveat their adverse criteria saying it's subject to "credit-scoring".

You probably already know this, what's there can be seen by searching for "xxx for intermediaries" on Google.

BjB

I've heard that Santander and Halifax don't require bank statements from employed UK nationals during the mortgage process, is this still the case?

K_S

BjB said:

I've heard that Santander and Halifax don't require bank statements from employed UK nationals during the mortgage process, is this still the case?

@BjB They (and some other lenders as well) don't require bank statements for PAYE income at the initial packaging stage to make an application. They might still ask for it during underwriting.

Marvel1

I have £21,500 left on my mortgage.
12 years left but dropping to 10 years.
Cannot decide on a 5 year or 10 year fixed.

5 year fixed 1.49%, total payment is £11,577

10 year fixed 2.39, total payment is £24,192

Let's say fixed rate stays at 1.49% for 5 years after the first 5 year ends, this is a total of £23,134

£24,192 - 23,134 = £1038 extra

What I'm trying to work out is when the first 5 year ends, having paid £11,577. How much mortgage would I have left?

I can then try and adjust the interest rates for the last 5 years (fixed rate) to see what it is if they do go up, and work out the risk then.

Thank you 

MFWannabe

Marvel1 said:

I have £21,500 left on my mortgage.
12 years left but dropping to 10 years.
Cannot decide on a 5 year or 10 year fixed.

5 year fixed 1.49%, total payment is £11,577

10 year fixed 2.39, total payment is £24,192

Let's say fixed rate stays at 1.49% for 5 years after the first 5 year ends, this is a total of £23,134

£24,192 - 23,134 = £1038 extra

What I'm trying to work out is when the first 5 year ends, having paid £11,577. How much mortgage would I have left?

I can then try and adjust the interest rates for the last 5 years (fixed rate) to see what it is if they do go up, and work out the risk then.

Thank you 

Personally I’d go with the 5 year deal anyway 
with that small amount left to repay I wouldn’t want to be tied into a 10 year deal with ERC, I’d choose 5 year and overpay to get it paid off in less than 10