Mortgage broker - ask me anything

heston2014

K_S said:

heston2014 said:

Hello,

Sadly, the previous occupant was a hoarder and the agent said the property is sold as is. Structurally sound but unfortunately, won’t know what issues may be hiding underneath all the stuff.  It is an ex council 3-bed flat on the ground floor, would need full renovation, mostly cosmetics but also rewiring and new boiler. Otherwise, in a good location. Would be an ideal investment but have been doing some research and may be difficult to find a suitable lender apparently?

Thanks.

@heston2014 Unless the property is clearly uninhabitable, you should have options available to buy it using a mortgage.

What options (if any) will depend on the details and some of the pertinent criteria will be that it's an ex-council flat, block specifics, location, value, LTV, etc.

Very very generally speaking, with ex council flats location is quite important. For example a council flat in London is likely to be much more easily mortgageable than the exact same flat in a town up north.

Thanks for the response.

The property is in London, block has two floors, main entry access no deck access and located on the ground floor.  LTV 75% but we would be looking to let to students as it is located close to a university with a potential rental income of £2300pcm.

K_S

heston2014 said:

K_S said:

heston2014 said:

Hello,

Sadly, the previous occupant was a hoarder and the agent said the property is sold as is. Structurally sound but unfortunately, won’t know what issues may be hiding underneath all the stuff.  It is an ex council 3-bed flat on the ground floor, would need full renovation, mostly cosmetics but also rewiring and new boiler. Otherwise, in a good location. Would be an ideal investment but have been doing some research and may be difficult to find a suitable lender apparently?

Thanks.

@heston2014 Unless the property is clearly uninhabitable, you should have options available to buy it using a mortgage.

What options (if any) will depend on the details and some of the pertinent criteria will be that it's an ex-council flat, block specifics, location, value, LTV, etc.

Very very generally speaking, with ex council flats location is quite important. For example a council flat in London is likely to be much more easily mortgageable than the exact same flat in a town up north.

Thanks for the response.

The property is in London, block has two floors, main entry access no deck access and located on the ground floor.  LTV 75% but we would be looking to let to students as it is located close to a university with a potential rental income of £2300pcm.

@heston2014 All the flat specific details shouldn't pose too many issues on their own. The small-HMO aspect brings in additional criteria such as council licensing requirements, freeholder permission, number of bedrooms (some lenders have a minimum number of bedrooms required for HMO mortgages), applicant's landlord experience, etc.

heston2014

K_S said:

heston2014 said:

K_S said:

heston2014 said:

Hello,

Sadly, the previous occupant was a hoarder and the agent said the property is sold as is. Structurally sound but unfortunately, won’t know what issues may be hiding underneath all the stuff.  It is an ex council 3-bed flat on the ground floor, would need full renovation, mostly cosmetics but also rewiring and new boiler. Otherwise, in a good location. Would be an ideal investment but have been doing some research and may be difficult to find a suitable lender apparently?

Thanks.

@heston2014 Unless the property is clearly uninhabitable, you should have options available to buy it using a mortgage.

What options (if any) will depend on the details and some of the pertinent criteria will be that it's an ex-council flat, block specifics, location, value, LTV, etc.

Very very generally speaking, with ex council flats location is quite important. For example a council flat in London is likely to be much more easily mortgageable than the exact same flat in a town up north.

Thanks for the response.

The property is in London, block has two floors, main entry access no deck access and located on the ground floor.  LTV 75% but we would be looking to let to students as it is located close to a university with a potential rental income of £2300pcm.

@heston2014 All the flat specific details shouldn't pose too many issues on their own. The small-HMO aspect brings in additional criteria such as council licensing requirements, freeholder permission, number of bedrooms (some lenders have a minimum number of bedrooms required for HMO mortgages), applicant's landlord experience, etc.

As it’s 3 bedroom, would fall under small HMO (we have gone through the process once with the same council) so would apply for licensing for sure. Property will be managed by an agent too.

MasterplanC

After we had our full structural survey back, we are trying to renegotiate the price with the sellers to reflect some work that needs to be done soon. In case they agree to a lower price, what do we need to do with our mortgage offer, for which we secured a good rate (with Barclays)? I am assuming we can keep the interest rate and worst case they will reduce the loan value by the amount the price is reduced. Do we have any options how to adapt the loan value without loosing the rate on the original mortgage offer (valid until January). Our current LTV is roughly 43%, so am I right to assume it might be possible to keep the original loan value if we wanted and reduce the deposit?
Thank you in advance!

K_S

@masterplanc If the purchase price is renegotiated downwards, it's fairly straightforward to get the offer reissued keeping the same product/rate.

At 43% LTV (which with Barclays means you're either on a 60% or 65% LTV product), you'd have to have a huge discount for it to make any difference to your LTV band so you should be able to keep the loan size unchanged.

MasterplanC said:

After we had our full structural survey back, we are trying to renegotiate the price with the sellers to reflect some work that needs to be done soon. In case they agree to a lower price, what do we need to do with our mortgage offer, for which we secured a good rate (with Barclays)? I am assuming we can keep the interest rate and worst case they will reduce the loan value by the amount the price is reduced. Do we have any options how to adapt the loan value without loosing the rate on the original mortgage offer (valid until January). Our current LTV is roughly 43%, so am I right to assume it might be possible to keep the original loan value if we wanted and reduce the deposit?
Thank you in advance!

dell12

One thing I've noticed K_S, is that as rates have risen, the premium in the form of lower rates borrowers receive for a larger deposit has shrunk significantly. By this I mean the gap between a 60% LTV and 90% LTV deal isn't all that great anymore.

Bank of England data suggests that the rate on the average two year fixed 60% LTV deal was 3.51% in August vs 3.92% at 90% LTV (so a 0.41% spread). I know some of the high LTV deal rates spiked during Covid, but if you go back to 2019, those same rates were 1.29% and 2.08% respectively (a 0.79% spread).

I'm struggling to work out why this is? I would have thought as rates rise, so too does the risk of a default, making lower LTV products much less risky and hence cheaper than higher LTV ones.

K_S

@dell12 You're absolutely right and there are even a few well known lenders who've gone down to just one LTV band up to 85% LTV.

I was looking at Nationwide 5yr fix purchase rates last week and they were static up to 85% LTV with a tiny 0.05% jump at 90% LTV.

I don't really know why that is but I suspect part of the reason is simply because they can as demand is still higher than what most mainstream lenders can process. 

dell12 said:

One thing I've noticed K_S, is that as rates have risen, the premium in the form of lower rates borrowers receive for a larger deposit has shrunk significantly. By this I mean the gap between a 60% LTV and 90% LTV deal isn't all that great anymore.

Bank of England data suggests that the rate on the average two year fixed 60% LTV deal was 3.51% in August vs 3.92% at 90% LTV (so a 0.41% spread). I know some of the high LTV deal rates spiked during Covid, but if you go back to 2019, those same rates were 1.29% and 2.08% respectively (a 0.79% spread).

I'm struggling to work out why this is? I would have thought as rates rise, so too does the risk of a default, making lower LTV products much less risky and hence cheaper than higher LTV ones.

simps100

Are mortgage offers generally safe? Have one for a remortgage which expires in January at a good rate which I doubt I’d get near now, looking to complete in early December, I’ve seen that past offers are generally OK when interest rates rise as lenders have already accounted for that lending at that rate but can’t help but to be nervous with each day the news seems to be worse! 

pinewood12

Hi all, I am purely asking these questions to try as best I can to manage to increasing anxiety on gaining a mortgage offer. Hopefully the below summaries my circumstances clearly:

• AIP confirmed with lender 
• Purchasing a shared ownership property on a LTV mortgage product under 75%. 
• Income fits affordability, however is split 3 ways - 50% permanent contract / 25% ZHC with the same employer + 25% somewhere between ZHC/Self Employed as fall under IR35  
• Near perfect credit score, no loans/credit cards etc. 

As you can imagine with a range of income, the lender has come back twice asking for further documentation to justify my income, and the share agreed with the broker is pretty tight on the shared ownership affordability calculator; but obviously like everyone you want to try and purchase the highest share possible. 

Obviously I am just very worried the lender will eventually come back and reject my application despite sizable costs already paid for arrangement fees, solicitor fees, property reservations etc. 

Looking forward to hearing peoples thoughts. Thanks 

coypondboy

How high will 2 yr fixed rate mortgages go now the bond market rate for 2 yr gilts nearly 5%, will it mean 2 yr fixed rates priced at 7% later in the week?