Mortgage broker - ask me anything

kazzyb123

K_S said:

kazzyb123 said:

Hi,

we have a NatWest mortgage with 90K left to pay and would like to move but would need extra borrowing. House is worth approx 180. My partner is self employed and I have an illness which means I can’t work. We have remortgaged with NatWest because our deal finishes in August so would need to borrow extra from them and port the mortgage (5 year fix). I cant input our info on their website because we don’t fit normal circumstances.

 This is our current income

partner self employed profit 14K

Pip 8158 a year
Eas is 6115 a year
tax credits of 4492
child benefit of 1133 a year but my daughter is 16 now so these will stop in two and a half years time.
savings which I could add 20k to the pot. Current house is worth around 180/190K 

The other problem is that we can only have a 14 year term because of my partners age, he is 56 this year so that takes us to 70

Do you think we have any chance of NatWest lending us enough to buy something that will be approx 230K? We would need an extra 30k on top of now  so 120K

Thanks.

@kazzyb123 NatWest is one of the better mainstream lenders out there when it comes to accepting various benefits. However, when the benefits income exceeds the earned income then there's a significant amount of underwriter discretion involved. NatWest will consider CB, but with underwriter discretion depending on the age of the child. So for a 16 year old it likely won't be considered.

With respect to the term, if the applicant intends to work up to 75 or beyond and it is plausible (usually means a non-manual trade/occupation), NatWest will consider a term up to 75 so you could potentially go up to 19 years on term depending on your partner's trade.

But even with a 19 year term, assuming all the benefits are considered, and assuming no background debt or commitments besides the 1 dependent, I suspect you'll still end up 15-30k short of 120k based on the numbers you've shared. Unfortunately, lender affordability calculations have become significantly more restrictive over the past year due to rampant inflation and jump in rates, and this usually has a disproportionately larger impact lower down the income scale.

Try playing around with the NatWest affordability calculator here to see what kind of borrowing figures it's giving you.
https://spa.mortgages.natwest.com/calculator/residential-affordability

Good luck, I hope you're able to borrow what you need, either from NatWest or elsewhere!

Thanks I thought that might be the case. I assumed child benefit wouldn’t be used and probably tax credits too because they don’t run to the end of the mortgage term. If my partner has a better year this year and his income is 25k what difference do you think that would make?

Thanks for your help.

K_S

kazzyb123 said:

K_S said:

kazzyb123 said:

Hi,

we have a NatWest mortgage with 90K left to pay and would like to move but would need extra borrowing. House is worth approx 180. My partner is self employed and I have an illness which means I can’t work. We have remortgaged with NatWest because our deal finishes in August so would need to borrow extra from them and port the mortgage (5 year fix). I cant input our info on their website because we don’t fit normal circumstances.

 This is our current income

partner self employed profit 14K

Pip 8158 a year
Eas is 6115 a year
tax credits of 4492
child benefit of 1133 a year but my daughter is 16 now so these will stop in two and a half years time.
savings which I could add 20k to the pot. Current house is worth around 180/190K 

The other problem is that we can only have a 14 year term because of my partners age, he is 56 this year so that takes us to 70

Do you think we have any chance of NatWest lending us enough to buy something that will be approx 230K? We would need an extra 30k on top of now  so 120K

Thanks.

@kazzyb123 NatWest is one of the better mainstream lenders out there when it comes to accepting various benefits. However, when the benefits income exceeds the earned income then there's a significant amount of underwriter discretion involved. NatWest will consider CB, but with underwriter discretion depending on the age of the child. So for a 16 year old it likely won't be considered.

With respect to the term, if the applicant intends to work up to 75 or beyond and it is plausible (usually means a non-manual trade/occupation), NatWest will consider a term up to 75 so you could potentially go up to 19 years on term depending on your partner's trade.

But even with a 19 year term, assuming all the benefits are considered, and assuming no background debt or commitments besides the 1 dependent, I suspect you'll still end up 15-30k short of 120k based on the numbers you've shared. Unfortunately, lender affordability calculations have become significantly more restrictive over the past year due to rampant inflation and jump in rates, and this usually has a disproportionately larger impact lower down the income scale.

Try playing around with the NatWest affordability calculator here to see what kind of borrowing figures it's giving you.
https://spa.mortgages.natwest.com/calculator/residential-affordability

Good luck, I hope you're able to borrow what you need, either from NatWest or elsewhere!

Thanks I thought that might be the case. I assumed child benefit wouldn’t be used and probably tax credits too because they don’t run to the end of the mortgage term. If my partner has a better year this year and his income is 25k what difference do you think that would make?

Thanks for your help.

@kazzyb123 With the optimistic assumptions given in my earlier post, if the SE income goes up from 14k to 19.5k (average of 25k and 14k) and looking for 120k over 19 years, I suspect you'd be there or thereabouts. Over 14 years, you'll likely be significantly short.

InAPickle76

InAPickle76 said:

We are looking to remortgage as we are with The One Account and the interest seems to be going up every month!! We had a DMP back in October 2014 originally with StepChange then went self managed about 3 years ago which is all going really well.

My concern is that when the mortgage company asks for the past 3 months' bank statements it is going to show all the payments to the creditors (we have 8 in total (with 3 different creditors) paying £5 per month) even though the defaults have all dropped off our credit files and our credit scores are now excellent. 

Is there anything we can do?? Will the lenders be likely to decline us due to the ongoing creditor payments on our bank statements?

Many thanks for reading 

Just wondering if anyone has any advice/thoughts? Thanks so much x

MrFrugalFever

I am going abroad to several different countries this year (August and October) and want to ensure i'm armed with suitable travel credit/debit cards. I already have one VISA credit card which provides me with FX fee free usage and my debit card, however, I would like to have a backup credit card (Mastercard) which is also ideal for travel being FX fee free. I have been pre-approved on the lenders eligiblity checker, however, I am worried that a hard credit search circa 6-9 months prior to applying for a mortgage may have an adverse affect. Are mortgage lenders really that fussy?

I haven't paid interest on a credit card for 2 years and my previous 'bad credit' history is due to drop off my CRA's in October this year so I will have an untarnished, well managed credit profile (reasonably good limits, low utilisation and good affordability).

Appreciate any thoughts.

K_S

MrFrugalFever said:

I am going abroad to several different countries this year (August and October) and want to ensure i'm armed with suitable travel credit/debit cards. I already have one VISA credit card which provides me with FX fee free usage and my debit card, however, I would like to have a backup credit card (Mastercard) which is also ideal for travel being FX fee free. I have been pre-approved on the lenders eligiblity checker, however, I am worried that a hard credit search circa 6-9 months prior to applying for a mortgage may have an adverse affect. Are mortgage lenders really that fussy?

I haven't paid interest on a credit card for 2 years and my previous 'bad credit' history is due to drop off my CRA's in October this year so I will have an untarnished, well managed credit profile (reasonably good limits, low utilisation and good affordability).

Appreciate any thoughts.

@mrfrugalfever From my experience, with respect to mortgage applications, hard checks (be that for CCs, loans, current accounts, broadband, mobile phone, insurance instalments, etc.) on their own rarely have any residual impact on the lender 'credit-scoring' (nothing to do with the credit bureau credit scores) after a few weeks post the hard-footprint.

[Deleted User]

How do lenders view these shared ownership scams? Where your own part and pay rent on the rest.

On the face of it you would think it wouldn't work because whatever rent you pay is going to be more than the mortgage on the same amount. Why would a lender lend you part of it with the additional rent on top, if they won't lend you the whole amount?

Plus there is the additional risk if you do default and the owner makes it hard for the bank to sell the property. They probably won't just be able to throw it in an auction, and may need to find another victim willing to take on shared ownership.

K_S

[Deleted User] said:

How do lenders view these shared ownership scams? Where your own part and pay rent on the rest.

On the face of it you would think it wouldn't work because whatever rent you pay is going to be more than the mortgage on the same amount. Why would a lender lend you part of it with the additional rent on top, if they won't lend you the whole amount?

Plus there is the additional risk if you do default and the owner makes it hard for the bank to sell the property. They probably won't just be able to throw it in an auction, and may need to find another victim willing to take on shared ownership.

@[Deleted User] Plenty of lenders offer SO mortgages.

The lender's interest is very well protected. If an SO tenant defaults on their mortgage, then the lender may repossess the shared ownership property. As part of the repo, if the lender is struggling to sell, they can decide to staircase to 100% and sell the property on the open market. If the lender would make a loss as a result, in many scenarios the HA must effectively cover this by a corresponding price reduction for the staircase. And the HA can then pursue the tenant for their loss if they wish to.

I've oversimplified the process above but in effect the lender is protected quite well and that allows them to offer competitive SO mortgages with very little equity from the buyer.

[Deleted User]

K_S said:

[Deleted User] said:

How do lenders view these shared ownership scams? Where your own part and pay rent on the rest.

On the face of it you would think it wouldn't work because whatever rent you pay is going to be more than the mortgage on the same amount. Why would a lender lend you part of it with the additional rent on top, if they won't lend you the whole amount?

Plus there is the additional risk if you do default and the owner makes it hard for the bank to sell the property. They probably won't just be able to throw it in an auction, and may need to find another victim willing to take on shared ownership.

@[Deleted User] Plenty of lenders offer SO mortgages.

The lender's interest is very well protected. If an SO tenant defaults on their mortgage, then the lender may repossess the shared ownership property. As part of the repo, if the lender is struggling to sell, they can decide to staircase to 100% and sell the property on the open market. If the lender would make a loss as a result, in many scenarios the HA must effectively cover this by a corresponding price reduction for the staircase. And the HA can then pursue the tenant for their loss if they wish to.

I've oversimplified the process above but in effect the lender is protected quite well and that allows them to offer competitive SO mortgages with very little equity from the buyer.

Thanks.

Basically the bank's interests are more protected because the HA takes on some of the risk. Therefore the tenant can "afford" a much more expensive house that they could if they were trying to borrow more from the bank directly. Is that a reasonable summary?

K_S

[Deleted User] said:

K_S said:

[Deleted User] said:

How do lenders view these shared ownership scams? Where your own part and pay rent on the rest.

On the face of it you would think it wouldn't work because whatever rent you pay is going to be more than the mortgage on the same amount. Why would a lender lend you part of it with the additional rent on top, if they won't lend you the whole amount?

Plus there is the additional risk if you do default and the owner makes it hard for the bank to sell the property. They probably won't just be able to throw it in an auction, and may need to find another victim willing to take on shared ownership.

@[Deleted User] Plenty of lenders offer SO mortgages.

The lender's interest is very well protected. If an SO tenant defaults on their mortgage, then the lender may repossess the shared ownership property. As part of the repo, if the lender is struggling to sell, they can decide to staircase to 100% and sell the property on the open market. If the lender would make a loss as a result, in many scenarios the HA must effectively cover this by a corresponding price reduction for the staircase. And the HA can then pursue the tenant for their loss if they wish to.

I've oversimplified the process above but in effect the lender is protected quite well and that allows them to offer competitive SO mortgages with very little equity from the buyer.

Thanks.

Basically the bank's interests are more protected because the HA takes on some of the risk. Therefore the tenant can "afford" a much more expensive house that they could if they were trying to borrow more from the bank directly. Is that a reasonable summary?

@[Deleted User] I suppose so.

At the end of the day Shared Ownership is just another government-backed scheme intended to allow people to borrow to buy a property that they perhaps otherwise wouldn't be able to, so no different in that aspect from help2buy equity loan, right2buy, gov first homes scheme, the 95% LTV h2b mortgage guarantee scheme, etc. 

Logan72

Grateful for some advice/thoughts on the two questions below...thanks very much.

I own two houses (no mortgages on either now).  I live in one and my parents in the other.

Can I re-mortgage the one I don’t live in (rather than the one I do) to give me additional capital in the short term?

If I wanted to sell my home to buy another of higher value outright (to live in), could I take out a mortgage on the house my parents live in (rather than the new one) to fund the difference in price?