Mortgage broker - ask me anything

K_S

Jase_UK said:

Hello all

Myself and my partner have an agreement in principle for a shared-ownership mortgage, agreed in Jan 2023. This is for ~£120,000, with a 6.24% fixed rate for 3 years. 

The house is due for completion "March/April", but has been delayed due to site handover delays. My question is, do you think it's worth me going back to the broker to see if the recent lowered interest rates might have a positive impact i.e. finding a new mortgage deal?

Many thanks

@jase_uk AIP or mortgage offer?

If it's just an AIP then it shouldn't matter as a rate will be secured when your broker submits a full application so he/she will recommend the most cost effective lender that will lend what you need at that point in time.

If it's a full mortgage offer then there's definitely no harm in checking with your broker if there have been any noticeable changes in rates applicable to you as generally speaking rates have dropped across the LTV spectrum in the last couple of months.

K_S

atlasmm said:

Hi,

The below quote is taken from onlinemortgageadvisor.co.uk -

“Kensington and Principality Building Society, for example, only use soft searches when performing a credit check.”

Is this correct? A full mortgage application can be completed with this lender without a hard search being left on the credit file and the worst that can happen is the lender rejects the application, leaving no trace on the credit file?

Thanks

@atlasmm Credit-checks can leave a soft-footprint (visible only to you) or a hard-footprint (visible to lenders). I haven't yet come across a mortgage lender that does not leave a hard-footprint for a full mortgage application.

atlasmm said:

Hi, my question is how much a hard search actually impacts a mortgage approval chances. 

If we apply for a mortgage and are rejected, is this going to impact our chances if we were to apply again in 3 months? Or is it only going to impact us if we applied again in the same month. 

Thanks for all the help so far!

Very very generally speaking, for most cases, a hard-footprint should not have any residual impact after a few weeks.

I get plenty of clients who come straight to me after a mortgage being declined and by itself, that has never stopped me from placing them with a suitable lender.

Some underwriters may query the reason for a recent decline if they manually review the applicant's credit report but that only happens rarely.

VNX

Sorry if this is a stupid question.

so I am planning ahead and in two years I think I will pay my mortgage down to a loan of around 20k for five years.

in terms of deciding whether to take out a 20k mortgage or clear it all together.

I understand the desire to have a higher savings rate than mortgage rate to make it worth while not clearing the mortgage but if I kept the 20k in savings it would compound over the five years and a mortgage would do the opposite of compounding (sorry don’t know the term) I.e each year the percentage of my monthly payments which would be off the capital would increase.

so is it as simple as saying if savings rate is higher than mortgage rate then don’t clear the mortgage? 

K_S

VNX said:

Sorry if this is a stupid question.

so I am planning ahead and in two years I think I will pay my mortgage down to a loan of around 20k for five years.

in terms of deciding whether to take out a 20k mortgage or clear it all together.

I understand the desire to have a higher savings rate than mortgage rate to make it worth while not clearing the mortgage but if I kept the 20k in savings it would compound over the five years and a mortgage would do the opposite of compounding (sorry don’t know the term) I.e each year the percentage of my monthly payments which would be off the capital would increase.

so is it as simple as saying if savings rate is higher than mortgage rate then don’t clear the mortgage? 

@vnx It looks like you're asking if it's worth overpaying/paying-off your mortgage using savings. If so, this MSE article should help you decide

https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/#overpayingvsaving

VNX

K_S said:

VNX said:

Sorry if this is a stupid question.

so I am planning ahead and in two years I think I will pay my mortgage down to a loan of around 20k for five years.

in terms of deciding whether to take out a 20k mortgage or clear it all together.

I understand the desire to have a higher savings rate than mortgage rate to make it worth while not clearing the mortgage but if I kept the 20k in savings it would compound over the five years and a mortgage would do the opposite of compounding (sorry don’t know the term) I.e each year the percentage of my monthly payments which would be off the capital would increase.

so is it as simple as saying if savings rate is higher than mortgage rate then don’t clear the mortgage? 

@vnx It looks like you're asking if it's worth overpaying/paying-off your mortgage using savings. If so, this MSE article should help you decide

https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/#overpayingvsaving

Thank you for your reply. Not sure if I am using the calculator wrong, it’s not really an overpayment as such it’s trying to decide whether to take out a 20k mortgage and keep 20k in savings or use the 20k savings to then have no mortgage. 

Sorry if I’m. Missing something 

InAPickle76

silvercar said:

InAPickle76 said:

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 

So sorry to repost but just wondering if anyone had any advice on my query above?? Thanks so much x

In my unqualified opinion, those payments won't mean anything. I have small direct debits set up to keep accounts open, you would have no way of knowing if they were to savings accounts or to debts.

Many thanks for your reply. When I pay the creditors I pay via the online portals and it comes up with the name of the creditor on my statement against the payment eg PRA/Lowell etc. Is there any way of avoiding this? Thanks again

atlasmm

I have read on both Skipton BS intermediaries and Bank of Ireland intermediaries website that they both only require 1 months bank statements. 

Is this consistent with your experience for both these lenders for a 95% LTV mortgage or do they ask for more?

Thanks

Fkhan95

Quick question re bank statements:
I’m in full time employment but privately tutor as well. I have filed my tax returns and have the SA302’s. My bank statements show some of my income from tutoring, but not all as I get paid in cash by some clients. Would this be problematic when mortgage lenders look at my application, or would the SA302s suffice? Should I ask all my clients to pay me via bank transfer moving forwards?

Thank you. 

K_S

Fkhan95 said:

Quick question re bank statements:
I’m in full time employment but privately tutor as well. I have filed my tax returns and have the SA302’s. My bank statements show some of my income from tutoring, but not all as I get paid in cash by some clients. Would this be problematic when mortgage lenders look at my application, or would the SA302s suffice? Should I ask all my clients to pay me via bank transfer moving forwards?

Thank you. 

@fkhan95 With respect to your case specifically, it'll depend on the lender, the specifics of the case and the underwriter that looks at it.

But very generally speaking, from an underwriting point of view, if they review the bank statements, lenders will prefer to see bank credits rather than cash deposits when it comes to self employed income, especially so when it's a secondary income on top of a full time PAYE job.

It might also be better if you had a separate bank account only for the self employed trade income and outgoings.

Penguin_

Hi, I have 2 questions really as I am thinking ahead as hoping to buy a new property with my fiancée in a year or so.

Firstly, I had about 5 credit cards which through saving hard I have managed to clear - these now have no balances on them, should I close some or all of them? Will it make a difference in having x cards with zero balance when we apply?

My second question is I currently have a mortgage with Natwest & I have been given a payrise, I would like to put the extra pay towards my mortgage every month, what is the best way to do this? I'd like to bring the capital down if possible.