Mortgage broker - ask me anything

roast

Great thread, thoroughly useful 

I was wondering how straightforward my mortgage app will be and if it need expert advice, mainly due to the self employed element?

It’s a joint application with my wife.

LTV 60-70%

I’m employed, salary and consistent annual bonus.

My wife is a sole trader, handmade gifts sold online, mainly via Not on the High Street , she has over 5 years accounts, each year growing in profit.

Her profit for 20-21 wasn’t adversely impacted by Covid, in fact the opposite as her net profit will be up 150% on last year.

Thanks.

Dgardiner

Hi
Need some basic education on mortgage finance please! if you're able to pay off mortgage and own property outright and under 55, is there a way to leverage that equity to get new mortgage on an additional residential property? I'm confused if you own outright but would gets tenants in, why would you need a BTL mortgage and an additional mortgage. for info, eg property value 325k all paid off property wanting to be bought 395k? told need to borrow 225k to include legal fees SD etc
Thanks for advice/education!

K_S

Bucki said:

What's the likelyhood getting a morgatge for a property?

• £240k
• deposit of £70k potentially £100kand
  
• Salary of £28080k

@bucki There's too little information to say unfortunately. With a basic salary of £28,080 you may potentially be able to borrow in the range of 4.5x to 5x your salary, so around £126-140k, though the higher end is less probable.

K_S

roast said:

Great thread, thoroughly useful 

I was wondering how straightforward my mortgage app will be and if it need expert advice, mainly due to the self employed element?

It’s a joint application with my wife.

LTV 60-70%

I’m employed, salary and consistent annual bonus.

My wife is a sole trader, handmade gifts sold online, mainly via Not on the High Street , she has over 5 years accounts, each year growing in profit.

Her profit for 20-21 wasn’t adversely impacted by Covid, in fact the opposite as her net profit will be up 150% on last year.

Thanks.

@roast Hard to say based on the limited information in your post. Low LTV is good, as is your wife's business having a good track record. It also depends on whether you are looking to maximise borrowing or not.

K_S

Dgardiner said:

Hi
Need some basic education on mortgage finance please! if you're able to pay off mortgage and own property outright and under 55, is there a way to leverage that equity to get new mortgage on an additional residential property? I'm confused if you own outright but would gets tenants in, why would you need a BTL mortgage and an additional mortgage. for info, eg property value 325k all paid off property wanting to be bought 395k? told need to borrow 225k to include legal fees SD etc
Thanks for advice/education!

@dgardiner Sorry it's not clear to me what you are looking to do. Is the £325k property (owned outright) your residence or is it a BTL property?

roast

K_S said:

roast said:

Great thread, thoroughly useful 

I was wondering how straightforward my mortgage app will be and if it need expert advice, mainly due to the self employed element?

It’s a joint application with my wife.

LTV 60-70%

I’m employed, salary and consistent annual bonus.

My wife is a sole trader, handmade gifts sold online, mainly via Not on the High Street , she has over 5 years accounts, each year growing in profit.

Her profit for 20-21 wasn’t adversely impacted by Covid, in fact the opposite as her net profit will be up 150% on last year.

Thanks.

@roast Hard to say based on the limited information in your post. Low LTV is good, as is your wife's business having a good track record. It also depends on whether you are looking to maximise borrowing or not.

Thanks for the reply
We are looking at no more than 4x our income
Thanks

BabyStepper

K_S said:

@babystepper This is all a bit of a grey area at the moment. In principle, lenders will not consider one off grants as income for affordability purposes. Having said that, sole traders who are now doing their 20-21 SA302s are expected to include the SEISS as income so they can be taxed on it.

It's not yet clear what approach lenders will take in general to this. I asked a few lenders for a client in a similar position and they said that the SEISS grants will need to be taken off the net-profit but others also say that they will go off of the 20-21 SA302s but may require a declaration re Covid and latest accounts.

Once there starts to be a steady stream of sole-traders coming in with their 20-21 SA302s which include SEISS grants, lenders will start clarifying their approach in a better manner.

Thank you so much for you reply - this is incredibly helpful. We will proceed assuming affordability without the grant income, and wait to hear what the banks say as others apply.  

newlife2016

Good Evening, would greatly appreciate any advice regarding my situation.  I own a residential property which is valued at £475,000 and the outstanding mortgage on it is £63,000.  I wish to remortgage this into a BTL property and release the max equity from it to purchase my forward residential home.  My basic salary is £20,226.72 per year, with child benefit of £140 and universal credit of £375 per month respectively (£6,180 per year).  

I understand that most BTL mortgage conditions are that you must earn £25,000 in your salary to qualify for them but are there any lenders out there that would offer me what I am looking for?

K_S

newlife2016 said:

Good Evening, would greatly appreciate any advice regarding my situation.  I own a residential property which is valued at £475,000 and the outstanding mortgage on it is £63,000.  I wish to remortgage this into a BTL property and release the max equity from it to purchase my forward residential home.  My basic salary is £20,226.72 per year, with child benefit of £140 and universal credit of £375 per month respectively (£6,180 per year).  

I understand that most BTL mortgage conditions are that you must earn £25,000 in your salary to qualify for them but are there any lenders out there that would offer me what I am looking for?

@newlife2016 What you are looking to do is called a let-to-buy. So in one simultaneous transaction you remortgage your current residence to a BTL, release equity and use the released equity as a deposit on an onward residential purchase. Completion of both transactions happens on the same day.

25k is the most common minimum income requirement but there are lenders who have a threshold set at 20k, 18k or even no minimum income.

How much you can release from the current residence will depend on the estimated rental income.

With regard to affordability for the onward residential purchase, 100% of your basic income will be considered, plenty of lenders will consider the £140/month child benefit for 2 kids (though the 2 dependents will also count as an ongoing commitment). How much of the UC will be considered depends on what the components are.

newlife2016

K_S said:

newlife2016 said:

Good Evening, would greatly appreciate any advice regarding my situation.  I own a residential property which is valued at £475,000 and the outstanding mortgage on it is £63,000.  I wish to remortgage this into a BTL property and release the max equity from it to purchase my forward residential home.  My basic salary is £20,226.72 per year, with child benefit of £140 and universal credit of £375 per month respectively (£6,180 per year).  

I understand that most BTL mortgage conditions are that you must earn £25,000 in your salary to qualify for them but are there any lenders out there that would offer me what I am looking for?

@newlife2016 What you are looking to do is called a let-to-buy. So in one simultaneous transaction you remortgage your current residence to a BTL, release equity and use the released equity as a deposit on an onward residential purchase. Completion of both transactions happens on the same day.

25k is the most common minimum income requirement but there are lenders who have a threshold set at 20k, 18k or even no minimum income.

How much you can release from the current residence will depend on the estimated rental income.

With regard to affordability for the onward residential purchase, 100% of your basic income will be considered, plenty of lenders will consider the £140/month child benefit for 2 kids (though the 2 dependents will also count as an ongoing commitment). How much of the UC will be considered depends on what the components are.

Thanks so much for replying.  The rental income would be £1700 per month.  The UC is based on my current income levels so the basic allowance for my two kids and myself.