Mortgage broker - ask me anything

MidCentury

Hi,
Could you please give your opinion on our situation? My basic salary including car allowance is £72k, regular overtime £2k per month, annual bonus last 2 years was £8.5k, so about £105k all in. Wife earns £11k but has been on and off furlough the last year. £25k cc debt out of £65k available credit. Looking for 95% mortgage on a flat utilising latest government guarantee scheme, purchase price £300k, £15k in savings account, 20 year term required. All the affordability calculators seem to indicate that what we are looking for is well below the maximum theoretically available  I am concerned that even with the government guarantee though that lenders are still reluctant to lend up to this LTV on flats? Unfortunately no houses around here for less than £300k...

Thanks in advance!

K_S

MidCentury said:

Hi,
Could you please give your opinion on our situation? My basic salary including car allowance is £72k, regular overtime £2k per month, annual bonus last 2 years was £8.5k, so about £105k all in. Wife earns £11k but has been on and off furlough the last year. £25k cc debt out of £65k available credit. Looking for 95% mortgage on a flat utilising latest government guarantee scheme, purchase price £300k, £15k in savings account, 20 year term required. All the affordability calculators seem to indicate that what we are looking for is well below the maximum theoretically available  I am concerned that even with the government guarantee though that lenders are still reluctant to lend up to this LTV on flats? Unfortunately no houses around here for less than £300k...
Thanks in advance!

@midcentury Not all of the 95% products are available for flats but there are a decent number of lenders who will consider. With flats there may be other criteria that is relevant as well. Based on the limited info in your post, your numbers seem fine.

MidCentury

K_S said:

MidCentury said:

Hi,
Could you please give your opinion on our situation? My basic salary including car allowance is £72k, regular overtime £2k per month, annual bonus last 2 years was £8.5k, so about £105k all in. Wife earns £11k but has been on and off furlough the last year. £25k cc debt out of £65k available credit. Looking for 95% mortgage on a flat utilising latest government guarantee scheme, purchase price £300k, £15k in savings account, 20 year term required. All the affordability calculators seem to indicate that what we are looking for is well below the maximum theoretically available  I am concerned that even with the government guarantee though that lenders are still reluctant to lend up to this LTV on flats? Unfortunately no houses around here for less than £300k...
Thanks in advance!

@midcentury Not all of the 95% products are available for flats but there are a decent number of lenders who will consider. With flats there may be other criteria that is relevant as well. Based on the limited info in your post, your numbers seem fine.

Thanks for your reply 👍🏻 That is reassuring to hear

mat2021

Hi.

I am wondering about let-to-buy as we are considering what options we might have if we can't sell our current property, or can't sell it in our timescales.

How does affordability get calculated? Is the rental income on our current property taken into account? If not we would not be able to borrow enough to cover both mortgages. If it is, then is the amount based on 4.5 times our combines salary + annual rental income? Or is it done in another way?

Also, what would we have to provide to the lender to "prove" the rental income? For let-to-buy do you have to have a rental contract already signed up ready for the mortgage agreement? That sounds complicated!

Thank you!

K_S

mat2021 said:

Hi.
I am wondering about let-to-buy as we are considering what options we might have if we can't sell our current property, or can't sell it in our timescales.
How does affordability get calculated? Is the rental income on our current property taken into account? If not we would not be able to borrow enough to cover both mortgages. If it is, then is the amount based on 4.5 times our combines salary + annual rental income? Or is it done in another way?
Also, what would we have to provide to the lender to "prove" the rental income? For let-to-buy do you have to have a rental contract already signed up ready for the mortgage agreement? That sounds complicated!
Thank you!

@matt2021 First off there are no black and white answers as approaches differ based on lender and the specifics of your scenario will also matter. Quick thoughts

- Generally, the future rental income will not be considered for affordability

- you give an estimate for the monthly rent, the lender's valuer will assess the rental income as well

- you don't need a rental contract signed prior to completion

mat2021

K_S said:

mat2021 said:

Hi.
I am wondering about let-to-buy as we are considering what options we might have if we can't sell our current property, or can't sell it in our timescales.
How does affordability get calculated? Is the rental income on our current property taken into account? If not we would not be able to borrow enough to cover both mortgages. If it is, then is the amount based on 4.5 times our combines salary + annual rental income? Or is it done in another way?
Also, what would we have to provide to the lender to "prove" the rental income? For let-to-buy do you have to have a rental contract already signed up ready for the mortgage agreement? That sounds complicated!
Thank you!

@matt2021 First off there are no black and white answers as approaches differ based on lender and the specifics of your scenario will also matter. Quick thoughts

- Generally, the future rental income will not be considered for affordability

- you give an estimate for the monthly rent, the lender's valuer will assess the rental income as well

- you don't need a rental contract signed prior to completion

Thank you for your swift response! Am I correct in understanding then that because the rental income is not considered for affordability (generally), we would need enough income from our salaries to cover both mortgages? And if that test passed, the potential rental income is additionally assessed to make sure it covers the rental mortgage (e.g. 145%)?

K_S

mat2021 said:

K_S said:

mat2021 said:

Hi.
I am wondering about let-to-buy as we are considering what options we might have if we can't sell our current property, or can't sell it in our timescales.
How does affordability get calculated? Is the rental income on our current property taken into account? If not we would not be able to borrow enough to cover both mortgages. If it is, then is the amount based on 4.5 times our combines salary + annual rental income? Or is it done in another way?
Also, what would we have to provide to the lender to "prove" the rental income? For let-to-buy do you have to have a rental contract already signed up ready for the mortgage agreement? That sounds complicated!
Thank you!

@matt2021 First off there are no black and white answers as approaches differ based on lender and the specifics of your scenario will also matter. Quick thoughts

- Generally, the future rental income will not be considered for affordability

- you give an estimate for the monthly rent, the lender's valuer will assess the rental income as well

- you don't need a rental contract signed prior to completion

Thank you for your swift response! Am I correct in understanding then that because the rental income is not considered for affordability (generally), we would need enough income from our salaries to cover both mortgages? And if that test passed, the potential rental income is additionally assessed to make sure it covers the rental mortgage (e.g. 145%)?

@matt2021 Generally speaking, with most BTL lenders, the rent has to cover the costs of the BTL property (as per lender calculations) and so is disregarded for affordability purposes for the residential purchase. Besides meeting minimum requirements, and whether you are a basic/higher rate taxpayer (which may impact the stress testing), your income will not usually come into the picture for the BTL part of it.

AmexReferrals

Hiya, I had another question. Do you know if Santander offer BTL mortgages for FTB? Thank you. 

K_S

AmexReferrals said:

Hiya, I had another question. Do you know if Santander offer BTL mortgages for FTB? Thank you. 

@AmexReferrals No. At least one applicant must own the residential property which they live in.

AmexReferrals

K_S said:

AmexReferrals said:

Hiya, I had another question. Do you know if Santander offer BTL mortgages for FTB? Thank you. 

@AmexReferrals No. At least one applicant must own the residential property which they live in.

Brilliant, thanks for the info. I thought as much!