Mortgage broker - ask me anything

NewToThis2021

Hi, I am looking to understand the difference between a Santander “affordability check” soft search and “credit application” hard search. 

What is the difference in the information that is returned? 

I am about 5 weeks in to FTB application, first lot of searches on May 6th incl hard credit search and soft affordability search - have just noticed a second affordability search on June 2nd. 

Any ideas why they might have checked this again? 

K_S

@newtothis2021 This is an educated guess more than anything else - could be to check whether you have taken on any new credit commitments that might impact affordability.

NewToThis2021

Thanks @K_S. They asked for my latest bank statement to check that a payment to my credit card was on there so checking for any new accounts would make sense. I haven’t any new ones and my cc’s are all at zero balance now. Hopefully the search might be a good sign that they’re nearing a decision? 

got-it-spend-it

I have to have recently inherited a substantial sum and have used this to pay off all the debts I had (£20k) and have around £50k remaining for a deposit. Will my previous debt (all now cleared and never in any kind of arrears) affect my ability to get a mortgage in the next few months? I have a well paid, secure job so that isn’t an issue. Thanks for any advice. 

K_S

got-it-spend-it said:

I have to have recently inherited a substantial sum and have used this to pay off all the debts I had (£20k) and have around £50k remaining for a deposit. Will my previous debt (all now cleared and never in any kind of arrears) affect my ability to get a mortgage in the next few months? I have a well paid, secure job so that isn’t an issue. Thanks for any advice. 

@got-it-spend-it Once the credit files reflect that these debts have been paid off, it should have no material impact on a future mortgage application.

Candice-Marie

I've seen in the forum that some lenders will consider furlough pay in a mortgage application.
My husband runs his own business (sole employee, paid PAYE) and has furloughed himself while his business can't operate under COVID restrictions.  Does his furlough pay 'count' in the same way as any mortgage applicant on furlough, or does it make a difference that it's his business?  Whilst he's been on furlough he has taken a min wage job (permanent contract) to supplement his income.

I have a fixed term contract with the Civil Service (to Feb 2022 - hopefully will be extended but no guarantee).

Would the main lenders (or some of them) consider a joint application in our current circumstances?  Approx 25% LTV, I'm 51, he's 56. If so, what's a typical salary multiple at the moment?

Thanks in advance for any insight

K_S

Candice-Marie said:

I've seen in the forum that some lenders will consider furlough pay in a mortgage application.
My husband runs his own business (sole employee, paid PAYE) and has furloughed himself while his business can't operate under COVID restrictions.  Does his furlough pay 'count' in the same way as any mortgage applicant on furlough, or does it make a difference that it's his business?  Whilst he's been on furlough he has taken a min wage job (permanent contract) to supplement his income.

I have a fixed term contract with the Civil Service (to Feb 2022 - hopefully will be extended but no guarantee).

Would the main lenders (or some of them) consider a joint application in our current circumstances?  Approx 25% LTV, I'm 51, he's 56. If so, what's a typical salary multiple at the moment?

Thanks in advance for any insight

@candice-marie Assuming he's a ltd. Co director, he will be considered as self-employed for the purposes of a mortgage. With a business that is not operating currently, lenders will not consider the income unfortunately.

His new PAYE income and your FTC income may be considered depending on the specifics. You will likely be limited to a term of 13 years, so that may have a material impact on your max borrowing.

Candice-Marie

K_S said:Candice-Marie said:

@candice-marie Assuming he's a ltd. Co director, he will be considered as self-employed for the purposes of a mortgage. With a business that is not operating currently, lenders will not consider the income unfortunately.

His new PAYE income and your FTC income may be considered depending on the specifics. You will likely be limited to a term of 13 years, so that may have a material impact on your max borrowing.

Thank you, K_S.  Yes, he's a Ltd Co Director.  That's good to know now (softens the blow!) before talking specifics with a broker,  We did anticipate a relatively short term.

Can I trouble you with one more question?  I paid off my mortgage (Coventry) in December last year, and moved into my husband's house.  I had taken 3 months' payment holiday (COVID) but otherwise no late payments/difficulties.  Is that part of my mortgage history likely to be a factor in any new (joint) application?

K_S

Candice-Marie said:

K_S said:Candice-Marie said:

@candice-marie Assuming he's a ltd. Co director, he will be considered as self-employed for the purposes of a mortgage. With a business that is not operating currently, lenders will not consider the income unfortunately.

His new PAYE income and your FTC income may be considered depending on the specifics. You will likely be limited to a term of 13 years, so that may have a material impact on your max borrowing.

Thank you, K_S.  Yes, he's a Ltd Co Director.  That's good to know now (softens the blow!) before talking specifics with a broker,  We did anticipate a relatively short term.

Can I trouble you with one more question?  I paid off my mortgage (Coventry) in December last year, and moved into my husband's house.  I had taken 3 months' payment holiday (COVID) but otherwise no late payments/difficulties.  Is that part of my mortgage history likely to be a factor in any new (joint) application?

@candice-marie That's a tricky one. But, from my experience, the impact (if any) is limited to that particular lender. Again, this is an educated guess more than anything else

davesbargains

Looking to buy a second house (girlfriend and daughter live in the one we jointly own, no plans to sell) if I can.

I earn a good salary and would pass affordability checks for what I need I believe. Only have a 10% deposit though (that’s a lot of money, we live in London) and can’t move away to a cheaper place because of my child.

Currently renting and would rather spend the money on a mortgage, rent is so high as need a 2 bed.

The kicker? Bad credit from mistakes I’ve made previously . Last defaults over 2 years old, but still there.

Do I have any options with a 10% deposit and bad credit? Who should I speak to?

Cheers