Mortgage broker - ask me anything

Michael_Bear

Why are 2 year tracker rates on mortgages so high? I'm on a +0.64% (0.74%) from Sept 2019 but all the new products seem to be +1.69%ish (1.79%). Why such a big jump?

missyp123

hello, 
we are due to end our 2 year fixed rate in september this year. we were hoping to move this year but with delays on works being done due to covid (was an old house) we cant see it happening until next spring/summer.
will fixing again effect our mortgage when coming to move or do we stay on the SVR?
i dont want to end up with 2 mortgages like a family member had to do, but not sure on how it all works! tyi

we should have about £25-30k equity in this house if that helps but will need it towards the next houses deposit.

K_S

missyp123 said:

hello, 
we are due to end our 2 year fixed rate in september this year. we were hoping to move this year but with delays on works being done due to covid (was an old house) we cant see it happening until next spring/summer.
will fixing again effect our mortgage when coming to move or do we stay on the SVR?
i dont want to end up with 2 mortgages like a family member had to do, but not sure on how it all works! tyi

we should have about £25-30k equity in this house if that helps but will need it towards the next houses deposit.

@missyp123 You have a few options. 

- as you said, move on to SVR and stay on it until you move. This could end up being an expensive option.

- do a product switch (stay with them same lender) to a new fixed rate and port the mortgage when you move home. Porting is rarely as straightforward as it sounds and different lenders have different policies on how it works in practice.

- do a remortgage' (to a new lender) to a new fix and then port

- product switch or remortgage to a low/no fee no-ERC product and then when it's time to move you have full flexibility with regard to your mortgage options.

What works best for you will depend on a lot of different factors. I would recommend getting in touch with a broker 4-5 months before September to see what would be best. Good luck!

missyp123

Thank you for those optionswe did use a broker to get out Mtg so will contact them in a few months. 

Veeo

MFWannabe said:

Veeo said:

K_S said:

Veeo said:

Hi, please I need some advice.

I rented out my property outside London (had a permit to let from my mortgage provider) and moved into a rental property in London. However is am not ready to sell my property and buy something in London to live in.

Please my big question is:

Seeing as the rent I get from my property is classed as "earned income" which I also pay tax on the "rental profit", would the "earned income" I get from the rental property be added to the income I get from my day job to determine my affordability on the property I am looking to buy to live in?

Please help me 🙏

@veeo Unfortunately it's very unlikely. With a rental property on a CTL (I assume it's a repayment mortgage), it's very unlikely that there'll be sufficient "surplus income" as per lender calculations to add to your affordability. In fact it might even work the other way, reducing your affordability. 

Different lenders treat it differently. But you could play around with the Santander calculator here to see the impact of the property in the background. It'll give you a rough idea.
https://www.santanderforintermediaries.co.uk/calculators-and-forms/affordability/

Thank you so much for answering my questions, very much appreciated. 

Yes I am on repayment mortgage on the CTL. Sorry please could you explain what you mean by "surplus income"? 

I think maybe I haven't Calculated my "rental profit correctly because I am having to pay back £3,750 to the tax man for the year on a property I renting out for £975 month

I have used a calculator to see how much I can borrow on my salary but I am just not sure where the "earned income" goes in the calculator or how it will affect my affordability. Hmmm I am so confused.

 

I thought you’d stayed you were going to sell the property? So how can rental income be included in affordability? 

I am selling and buying at the same time which is why I am not sure. 

K_S

Veeo said:

MFWannabe said:

Veeo said:

K_S said:

Veeo said:

Hi, please I need some advice.

I rented out my property outside London (had a permit to let from my mortgage provider) and moved into a rental property in London. However is am not ready to sell my property and buy something in London to live in.

Please my big question is:

Seeing as the rent I get from my property is classed as "earned income" which I also pay tax on the "rental profit", would the "earned income" I get from the rental property be added to the income I get from my day job to determine my affordability on the property I am looking to buy to live in?

Please help me 🙏

@veeo Unfortunately it's very unlikely. With a rental property on a CTL (I assume it's a repayment mortgage), it's very unlikely that there'll be sufficient "surplus income" as per lender calculations to add to your affordability. In fact it might even work the other way, reducing your affordability. 

Different lenders treat it differently. But you could play around with the Santander calculator here to see the impact of the property in the background. It'll give you a rough idea.
https://www.santanderforintermediaries.co.uk/calculators-and-forms/affordability/

Thank you so much for answering my questions, very much appreciated. 

Yes I am on repayment mortgage on the CTL. Sorry please could you explain what you mean by "surplus income"? 

I think maybe I haven't Calculated my "rental profit correctly because I am having to pay back £3,750 to the tax man for the year on a property I renting out for £975 month

I have used a calculator to see how much I can borrow on my salary but I am just not sure where the "earned income" goes in the calculator or how it will affect my affordability. Hmmm I am so confused.

 

I thought you’d stayed you were going to sell the property? So how can rental income be included in affordability? 

I am selling and buying at the same time which is why I am not sure. 

@veeo Well if you're going to be selling the currently rented property then you can completely ignore that for affordability. You can't consider the profit/loss from that property as you won't own it once you complete on the new purchase.

pinkcloud17

On a residential mortgage calculator, when it says "other regular monthly commitments" what does this include?
(other boxes are already there for credit commitments, service charges/ rent/ council tax, maintenance & childcare costs, so it does not include these)
Would this category then include things like food, clothing etc. or just more defined regular commitments like car insurance?
Thanks

K_S

pinkcloud17 said:

On a residential mortgage calculator, when it says "other regular monthly commitments" what does this include?
(other boxes are already there for credit commitments, service charges/ rent/ council tax, maintenance & childcare costs, so it does not include these)
Would this category then include things like food, clothing etc. or just more defined regular commitments like car insurance?
Thanks

@pinkcloud17 Depends on which lender's calculator it is. There should be a help-tip somewhere on the screen which explains what goes in there.

pinkcloud17

K_S said:

pinkcloud17 said:

On a residential mortgage calculator, when it says "other regular monthly commitments" what does this include?
(other boxes are already there for credit commitments, service charges/ rent/ council tax, maintenance & childcare costs, so it does not include these)
Would this category then include things like food, clothing etc. or just more defined regular commitments like car insurance?
Thanks

@pinkcloud17 Depends on which lender's calculator it is. There should be a help-tip somewhere on the screen which explains what goes in there.

 It's this one - https://resources.barclays.co.uk/mortgage-calculators/residential-affordability

There is a help-tip for other monthly credit commitments, but not other regular monthly commitments

pinkcloud17

Sorry I have just seen the quick guide and it does say: Other regular commitments include any childcare tax vouchers, unencumbered property costs and any other regular commitments.
Thank you.