Mortgage broker - ask me anything

K_S

IlonaRN said:

I have just started working as a contractor under an umbrella company.  I currently have a 6-month contract, but believe it is likely to be extended.

We would like to move house at some point (within the next few years if/when a suitable house becomes available).

We have a good LTV (~50% on what we will want to move to)

How much are we likely to be able to borrow?

@IlonaRN Different lenders define 'contractors' differently and that guides their criteria and how they calculate income.

For example, if you're a day-rate contractor, some lenders will calculate your annual income as day-rate x 5 x 48 weeks. Others might use 46 or 47 weeks for the calculation. When being paid through an umbrella company, some lenders will discount the day-rate slightly as well, reducing the income calculated.

As you are paid through an umbrella company, there are also lenders who will treat your income as PAYE income based on the payslips. 

There are other approaches (eg: percentage of gross contract income) as well depending on the terms of the contract and the pattern of earnings, but I hope you've got an idea. 

Once your annual income is established (as per whatever lender is most favourable to your circumstances) then you are subject to similar lti caps as other borrowers, so you may potentially be able to borrow up to 4.75-6x depending on your income levels, the level of background debt, other financial commitments, track record, etc.

I hope I haven't made it sound very complicated. It isn't but there are so many permutations and combinations for the contractor income in the mortgage world that it's hard to cover everything clearly.

You could play around with a few lender calculators and see what kind of borrowing they show.

https://online.accordmortgages.com/public/mortgages/quick_enquiry.do

K_S

babyblade41 said:

@K_S I know plenty about buying but absolutely nothing about mortgages so thought here might be good place to ask re: our buyer 

We have been waiting for our buyers mortgage offer for 3 weeks now . It is with Santanders underwriters now. They have had to answer 5 lots of questions in this time & keep coming back wanting more information.

The problem seems to be with the wife as she is self employed and about to have a baby , they have 25% deposit .

Firstly is this a normal amount of time to wait for the offer to come through & secondly is Santander particularly stringent on the lending criteria 

This is all we are waiting for now but going into a fourth week of waiting it does seem there could be a problem ..any help would be much appreciated as we are getting to the point where we might have to consider putting the house back up for sale 

@babyblade41 Can't say what the eventual outcome will be but 3 weeks is not an overly long time at all. To illustrate my point, until recently, Natwest was swamped with business and their timelines were as follows -

- 9/10 working days from application to initial review (which is where they check if minimum requirements have been met for the application to be passed to underwriting. And then instruct the valuation.

- 6/7 working days from initial review to an underwriter picking it up

- if the underwriter has an queries they send it to the broker. Once the broker responds (can take a day or two depending on what the query is about) it again sits in a queue for 2/3 working days for the underwriter to pick it up. If there are more queries, then there's further delays.

- once everything is satisfied, another day or two to issue the mortgage offer (assuming the valuation has been booked and carried out, which can also incur delays depending on how busy surveyors are in the area).

The time taken and queries raised could also vary depending on how well the case was packaged, whether the right lender was picked, how cautious the underwriter is, whether they are inexperienced or in training, etc.

As you can see, the days can quickly add up with nothing much happening at all.

babyblade41

K_S said:

babyblade41 said:

@K_S I know plenty about buying but absolutely nothing about mortgages so thought here might be good place to ask re: our buyer 

We have been waiting for our buyers mortgage offer for 3 weeks now . It is with Santanders underwriters now. They have had to answer 5 lots of questions in this time & keep coming back wanting more information.

The problem seems to be with the wife as she is self employed and about to have a baby , they have 25% deposit .

Firstly is this a normal amount of time to wait for the offer to come through & secondly is Santander particularly stringent on the lending criteria 

This is all we are waiting for now but going into a fourth week of waiting it does seem there could be a problem ..any help would be much appreciated as we are getting to the point where we might have to consider putting the house back up for sale 

@babyblade41 Can't say what the eventual outcome will be but 3 weeks is not an overly long time at all. To illustrate my point, until recently, Natwest was swamped with business and their timelines were as follows -

- 9/10 working days from application to initial review (which is where they check if minimum requirements have been met for the application to be passed to underwriting. And then instruct the valuation.

- 6/7 working days from initial review to an underwriter picking it up

- if the underwriter has an queries they send it to the broker. Once the broker responds (can take a day or two depending on what the query is about) it again sits in a queue for 2/3 working days for the underwriter to pick it up. If there are more queries, then there's further delays.

- once everything is satisfied, another day or two to issue the mortgage offer (assuming the valuation has been booked and carried out, which can also incur delays depending on how busy surveyors are in the area).

The time taken and queries raised could also vary depending on how well the case was packaged, whether the right lender was picked, how cautious the underwriter is, whether they are inexperienced or in training, etc.

As you can see, the days can quickly add up with nothing much happening at all.

Thank you for the swift response, survey was completed 10 days ago but I think the queries were about self employment ..

The timelines are very helpful thank you 

roast

Morning - after some advice please.  I am pretty sure it will be fine but I thought I would ask the experts.

I applied for a mortgage with CBS, they down valued by 7% but this didn't impact offer.  However, before I was told it wouldn't impact the offer I applied for another mortgage with Natwest. 
When I found out the CBS mortgage was proceeding I immediately cancelled the Natwest application, unfortunately Natwest ran a hard search on me 2 days after I received an offer from CBS.  Natwest were terrible at actioning my cancelation request.

Will this be an issue with CBS if they hard search me before completion?  Should  I let them know now?
Thanks

K_S

roast said:

Morning - after some advice please.  I am pretty sure it will be fine but I thought I would ask the experts.

I applied for a mortgage with CBS, they down valued by 7% but this didn't impact offer.  However, before I was told it wouldn't impact the offer I applied for another mortgage with Natwest. 
When I found out the CBS mortgage was proceeding I immediately cancelled the Natwest application, unfortunately Natwest ran a hard search on me 2 days after I received an offer from CBS.  Natwest were terrible at actioning my cancelation request.

Will this be an issue with CBS if they hard search me before completion?  Should  I let them know now?
Thanks

@roast Based on the limited info in your post, I don't see anything to be overly worried about. With regard to lender credit-footprints, generally speaking, they are registered when you click on the submit button on the application (irrespective of when they show up on your reports). Good luck!

roast

K_S said:

roast said:

Morning - after some advice please.  I am pretty sure it will be fine but I thought I would ask the experts.

I applied for a mortgage with CBS, they down valued by 7% but this didn't impact offer.  However, before I was told it wouldn't impact the offer I applied for another mortgage with Natwest. 
When I found out the CBS mortgage was proceeding I immediately cancelled the Natwest application, unfortunately Natwest ran a hard search on me 2 days after I received an offer from CBS.  Natwest were terrible at actioning my cancelation request.

Will this be an issue with CBS if they hard search me before completion?  Should  I let them know now?
Thanks

@roast Based on the limited info in your post, I don't see anything to be overly worried about. With regard to lender credit-footprints, generally speaking, they are registered when you click on the submit button on the application (irrespective of when they show up on your reports). Good luck!

Thank you, makes sense.  Appreciate your speedy response.

Sk1990

My Mortgage broker wants to do a hard search himself to see where I would be best placed.
I do have a default for £107 and a payday loans however is it a bad idea to have the hard search?

silvermountains

Good afternoon.

Another CBS question - in your recent experience, are they down valuing a lot at the moment? In my area it is such a heated market that properties are regularly going 10%+ over the 'offers over' price.  This is normal for here but just a bit concerned that CBS won't know the local market? Thank you.

K_S

Sk1990 said:

My Mortgage broker wants to do a hard search himself to see where I would be best placed.
I do have a default for £107 and a payday loans however is it a bad idea to have the hard search?

@sk1990 Are you sure it's a hard-search? Most lenders have soft-footprint DIPs. The only mainstream exceptions are Barclays, Virgin and Coventry.

I can't say whether it's bad idea or not to do a hard-search DIP, but generally speaking I wouldn't be likely to do a hard-footprint DIP simply to check where a client could be placed, and especially if they already have adverse data on their file. 

I just want to stress here that I'm not saying that what your broker is doing is incorrect, as they have all the information while my comment is based simply on the limited info in your post.

K_S

silvermountains said:

Good afternoon.

Another CBS question - in your recent experience, are they down valuing a lot at the moment? In my area it is such a heated market that properties are regularly going 10%+ over the 'offers over' price.  This is normal for here but just a bit concerned that CBS won't know the local market? Thank you.

@silvermountains What's happening in your area is happening in lots of places across the country. Like all mainstream lenders, Coventry instructs a third party surveyor panel (which is often shared by other lenders as well) who will then send out a local (or relatively local, depending on availability) surveyor to do the valuation or do a desktop valuation remotely.

I wouldn't worry too much as there isn't always a lot of logic to valuation outcomes Down valuations are not unusual in the current market, it's quite common for lender 1 to down-value the property significantly and then when I place it with lender 2 (that uses a different surveyor panel to lender 1) it comes back at the purchase price. I personally couldn't really say that any one lender is better/worse than the other tbh.