Mortgage broker - ask me anything

K_S

newlife2016 said:

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.  

@newlife2016 A 475k property with £1,700 of gross monthly rental income may allow you to borrow up to around 350k on an interest-only BTL mortgage, potentially releasing about £285k of cash which can be used as deposit on an onward purchase.

Based on the income details provided, with the right lender who considers the non-salary income, (and depending on how old the kids are, your background debt, etc), you may be able to borrow around 125k, giving you a total potential budget of around £410k or thereabouts. Please bear in mind that these are crude numbers based on the very limited info in your posts.

advice_seeker_95

Hi all,

I hope you guys can help with this…any advise would be very much appreciated. I apologise for the long post in advance but hope that helps rather than boring you out. 

We have applied for a residential mortgage with Santander through a mortgage advisor. 

We were expecting no issues and our advisor was very confident that we should not encounter any problem. 

Excellent credit score. Debts-free. No issues at all with affordability. Less than 50% LTV.

The application initially went smoothly and no issues were flagged with affordability nor credit score nor valuation of the property we would like to purchase. However, during full underwriter review we had a push back. 

My advisor has been trying to open a channels of communication with their BDMs and what we heard so far is that since at Company House I am the only director of the limited company that employs me I should be applying as self-employed. This doesn’t make sense to me as I own less than 20% shareholding in the company (in fact I don’t directly own any share in it…see below for more details) and I only receive a salary through PAYE, no dividends nor other types of remuneration. 

Why would they even mention that? According to their policy the only criteria that should make an employee go down the self-employed route is if the applicant is a director AND owns more than 20% shareholding, which is not my case. 

My company is an high-tech business and I have been employed by it since 2018. My salary has been stable and constant for the whole length of employment.

More details below…

The company that employs me is a wholly owned subsidiary of another company (a parent company), in which I am director and I own a shareholding that is (and never was) anywhere near 20%. 

It seems that the underwriter also raised concern on my company (the wholly owned subsidiary) performances.

Firstly, should an underwriter even consider my company performance given that, based on their own policy (see above), I am to be considered as simply employed? 

I know that, even if nothing like that is mentioned in their lending criteria, they can do what they like. But why would they refuse a perfectly good business?

Also, the actual reality is that it is the parent company who pays my salary and it is responsible for my salary and in general to keep the subsidiaries running. The last account on Company House of the subsidiary shows liabilities exceeding assets (maybe that’s what they looked at??) but the balance sheet of the parent company looks different. 

I have been told that having my company's accountant (which is the same for both subsidiary and parent company) write a letter clarifying that I am an employee and hold less than 20% shareholding and that my direct employer (as for payslip) is actually a wholly owned subsidiary should help. We have also been thinking whether it makes sense to add some sort of comfort statement in which it is said that the parent company has been supporting the subsidiary and the board of directors of the group intend to do so for the foreseeable future.

I can also try to get the directors of the top company to write up something but not sure whether that would help at all.

Do you guys agree? What do you think the accountant letter should say exactly? Is there anything else you guys would advise? Anything we are not seeing here?

Still waiting to hear more but in case they demonstrate to be deaf and unreasonable, the plan B would be to not waste too much time and apply with another lender. The name Halifax has been mentioned and, from what I have been told, their BDM couldn't see any issue, but I heard exactly the same the first time with Santander so would like to consider very carefully every options before doing anything.

If we were to go with another lender, do you advise any other lender in particular? 

I have carried out a lot of research myself and couldn't find any lender at all whose lending criteria we wouldn't fit. I know that, as Adam said, they can do whatever they want (even it it doesn't make any sense to me)...so I was looking for specific recommendation based on your recent experience.

Thank you!

K_S

@advice_seeker_95 Based on the limited info in your post -

- It's not surprising that the underwriter, having picked this up on CH, now wants to treat you as self-employed. Unfortunately it's quite common for ltd.co. Directors to attempt to "game" the system to get an artificially inflated mortgage so even genuine applicants like yourself get caught up in it. I often get PAYE clients who disappear as soon as I bring up their details on CH.

- this comment is not specific to your case, but generally speaking once an underwriter goes down this route, they are unlikely to go back

- as your broker has indicated, in your case, it's a matter of applying and then hoping the new lender's underwriter doesn't pick up the same issue that the Santander underwriter has. If they do, then there will almost certainly be more queries. It's a matter of luck more than anything else.

If I may ask

- what is the % shareholding you have?

- are you listed as a PSC under either company on CH?

- how long have you been at the current salary level?

Niv

What are the lowest rates typically seen out there at the moment for a 5 year fixed? I have been offered  1.23% to stay with my currently mortgage provider - this is as good / better than the top returns on the mortgage comparison tool so my current thinking is that it is up there as a good deal but wondering, in reality, how much lower is a mortgage advisor likely to be able to achieve?

K_S

Niv said:

What are the lowest rates typically seen out there at the moment for a 5 year fixed? I have been offered  1.23% to stay with my currently mortgage provider - this is as good / better than the top returns on the mortgage comparison tool so my current thinking is that it is up there as a good deal but wondering, in reality, how much lower is a mortgage advisor likely to be able to achieve?

@Niv For the "best rate", just look up the MSE mortgage finder here https://www.moneysavingexpert.com/mortgages/best-buys/?currentCircumstances=REMORTGAGE

While there are a few "broker exclusives" out there, generally speaking a broker is unlikely to be able to get you a lower rate than you can see there.

Niv

K_S said:

Niv said:

What are the lowest rates typically seen out there at the moment for a 5 year fixed? I have been offered  1.23% to stay with my currently mortgage provider - this is as good / better than the top returns on the mortgage comparison tool so my current thinking is that it is up there as a good deal but wondering, in reality, how much lower is a mortgage advisor likely to be able to achieve?

@Niv For the "best rate", just look up the MSE mortgage finder here https://www.moneysavingexpert.com/mortgages/best-buys/?currentCircumstances=REMORTGAGE

While there are a few "broker exclusives" out there, generally speaking a broker is unlikely to be able to get you a lower rate than you can see there.

That's where I meant when I said 'mortgage comparison tool' so happy that I am good to stay with my current provider as i do like nationwide, app is easy to use, 10% overpayments on original sum (even after remortgage its based on what I originally took out with them).

Thanks for your help.

ihaveaquestionplease

haras_n0sirrah said:

Thought I would start a thread where people can ask the brokers opinion on things @ACG @LRmortgage @kingstreet @Deleted_User (any other brokers want to chip in - these were the main other brokers who came to mind.
It is definately an interesting market - probably the busiest I have ever been but at the same time lenders are sooo slow. 
Anyone got a question? Ask away

Hi, I am not sure if this is the right area or thread so apologies in advance if not!
Do you know if a DiP can be submitted to Aldermore without the broker doing their affordability calculator online first?

I received news this afternoon that I have a DiP with them, however, I am nervous about my affordability based on their online calculator which I found on the intermediary bit of their website. I am wondering if my broker has bypassed that and done the DiP anyway - or whether he would have to have done the affordability check first and its different because he's the actual broker.

Any thoughts on the above would be useful, thanks.

K_S

ihaveaquestionplease said:

haras_n0sirrah said:

Thought I would start a thread where people can ask the brokers opinion on things @ACG @LRmortgage @kingstreet @Deleted_User (any other brokers want to chip in - these were the main other brokers who came to mind.
It is definately an interesting market - probably the busiest I have ever been but at the same time lenders are sooo slow. 
Anyone got a question? Ask away

Hi, I am not sure if this is the right area or thread so apologies in advance if not!
Do you know if a DiP can be submitted to Aldermore without the broker doing their affordability calculator online first?

I received news this afternoon that I have a DiP with them, however, I am nervous about my affordability based on their online calculator which I found on the intermediary bit of their website. I am wondering if my broker has bypassed that and done the DiP anyway - or whether he would have to have done the affordability check first and its different because he's the actual broker.

Any thoughts on the above would be useful, thanks.

@ihaveaquestionplease If you have an accepted DIP, the affordability check has been passed.

Fkhan95

Hi,

Would appreciate some clarity on the following:
HSBC have asked for business/personal bank statement covering last 60 days due to part of my income deriving from self employment(tuition). It’s not a very large amount (6k a year). 

I’ve got an arrangement where I get paid in cash from my clients and I just save it. Will the bank look at this in a negative light since there won’t be any transactions coming into my account. Would depositing the cash i have or filing my 20/21 accounts be something tangible in the way of proof? I’ve already submitted 17/18 - 19/20 accounts but i understand this is a new requirement due to CV19.

Thanks
F

Studio150

Hello

I wondered if someone could please offer some advice.

We have just received a DIP from Natwest (via a broker) and are now at the stage of progressing to a full application.  The Experian report we have provided shows one negative result relating to me not being registered on the electoral roll.  I have spoken to the council who confirmed that this was done shortly after I moved in December 2020.  They have agreed to send a confirmation email though he seemed a little vague as to what information he was able to share in it.
My question is, will Natwest conduct their own search and be able to verify that I am registered on the roll, or will they go off the Experian report which is inaccurate?  Prior to this, I was last listed on the electoral register up until June 2019 - from that point onwards (June 2019-Nov 2020) I was lodging with a family friend. Will this have an impact on mortgage edibility?

Thank you