Mortgage broker - ask me anything

K_S

Penguin_ said:

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.

@Penguin_

Open zero-balance cards - for the vast majority of cases, with mainstream lenders it shouldn't make a difference either way

Paying off capital - generally speaking, any overpayment you make on a mortgage goes 100% towards reducing the capital and thus saves you interest going forward. From a purely numbers point of view, if your current mortgage rate is lower than what you can get on a savings account, it may make sense to put extra funds in savings, and use it to reduce the size of the mortgage you need next year.

Penguin_

Thanks @K_S

That's really good to know, I got myself into a few issues a while ago & although I have a couple of historic defaults (4-5 years ago) I am trying to get myself into the best possible position for next year.

I didn't think about savings interest rate, mortgage is currently 2.05% so savings would definitely be better I think.

JamesM333

Hi, we're approaching the end of our mortgage product and going to switch onto our next product - a 5-year fix.

At the minute, our lender is offering 3.99%.

However, we have a lump sum to overpay and want to put down another lump sum later this year (all things permitting). To avoid our initial lump sum eating into our overpayment allowance for the year, we are planning to let our mortgage lapse onto the Standard rate for a day and during that day, pay our initial lump sum.

Then we will switch to the 5-year product with our overpayment balance set at £0.

My worry is that when we revert to the standard rate (7+%) our lender will not offer us as low an offer as 3.99%. Is this likely, i.e. that we'll miss out on the lower rates if we wait in order to do our initial overpayment?

K_S

JamesM333 said:

Hi, we're approaching the end of our mortgage product and going to switch onto our next product - a 5-year fix.

At the minute, our lender is offering 3.99%.

However, we have a lump sum to overpay and want to put down another lump sum later this year (all things permitting). To avoid our initial lump sum eating into our overpayment allowance for the year, we are planning to let our mortgage lapse onto the Standard rate for a day and during that day, pay our initial lump sum.

Then we will switch to the 5-year product with our overpayment balance set at £0.

My worry is that when we revert to the standard rate (7+%) our lender will not offer us as low an offer as 3.99%. Is this likely, i.e. that we'll miss out on the lower rates if we wait in order to do our initial overpayment?

@jamesm333 It's impossible to say as (like a purchase/re-mortgage rate) it'll depend on what the lender is offering at a particular point in time. So if you're comparing rates available today to something available in 3-6 months time, it could be lower/higher/same, there's no way to predict it.

PT (product-transfer/product-switch/rate-switch) and o/p allowance mechanics will vary across lenders so what you could do is check a few things with your lender or a broker so you can decide on a course of action -

1. Does the o/p allowance reset when the product changes?
2. What is the o/p allowance? It may have increased since you last took out the mortgage. For example NatWest used to be 10%, they've upped it to 20% effective from a few weeks ago.
3. Will they let you book a PT to kick in on a future date with a lower amount?
4. Is there a way to go down an advised route which will allow you to pay the lumpsum as part of the PT without using up your overpayment allowance?
5. Also understand what the implications are of going on SVR if that's what you intend to do as some lenders will only allow a PT to kick in at the beginning of a month so you may end up on SVR for a month.

Finally, from a money-saving perspective, it might also be worth checking your re-mortgage (new lender) options if your circumstances allow. You may be able to get a lower rate with no additional cost to a PT (as all mainstream lenders offer free-legals and free-vals for remos), you can sort out the lump sum, and you can set completion for the day after your current fix ends.

JamesM333

Thanks, I've checked with the lender that the o/p allowance resets when the product changes. The allowance is 10% of the initial loan amount per year as it's with Nationwide. I'll have a check in with the other alternatives as they sound like - if possible - they'll provide that additional certainty without the risk of additional fees.

We're due to lapse onto the SVR at the end of this month so shouldn't change too much in interest rate offered after all. But as you say I also need to check if it'll be SVR for the whole month.

Thanks for your help, I'll keep plugging on and see what happens

K_S

JamesM333 said:

Thanks, I've checked with the lender that the o/p allowance resets when the product changes. The allowance is 10% of the initial loan amount per year as it's with Nationwide. I'll have a check in with the other alternatives as they sound like - if possible - they'll provide that additional certainty without the risk of additional fees.

We're due to lapse onto the SVR at the end of this month so shouldn't change too much in interest rate offered after all. But as you say I also need to check if it'll be SVR for the whole month.

Thanks for your help, I'll keep plugging on and see what happens

@jamesm333 These are the Nationwide policies for an intermediary rate switch - can only start from the 1st of the month, cut-off dates a week or so before the end of the previous month https://www.nationwide-intermediary.co.uk/products/rate-switch

Please note that the above applies to an intermediary rate switch, I've no idea if it's the same/different direct.

DJSINGH

Hi
I'm interested in finding a regulated BTL mortgage (aka family BTL). Would this require a specialist or do mortgage advisors have access to that alongside the usual BTL mortgages?

K_S

DJSINGH said:

Hi
I'm interested in finding a regulated BTL mortgage (aka family BTL). Would this require a specialist or do mortgage advisors have access to that alongside the usual BTL mortgages?

@djsingh Any experienced whole of market broker will have access to the lenders that offer regulated/family BTL products and should be able to help. Ask family/friends/colleagues for a broker they would recommend, or use the MSE guide here https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3 

Penguin_

Further to my earlier post regarding open Credit Cards, how much of a struggle will I have when we look to get a mortgage? I have no short term borrowing, as in my over draft is clear & so are my credit cards, no car finance or anything. The only issues I have is I have 4 defaults from 2019/2020 which I am repaying slowly. 

sturgeon

I’m thinking of buying a property later this year, would it be best to secure a mortgage asap to lock in current rates as the offer should stand for 6 months? I haven’t found a property nor is mine on the market but I’d list mine asap. Also, I’d normally opt for 2 year fixed deals but if I went for a 5 year fix how portable are these? I’d likely move again before the 5 years and imagine the next property would be more expensive so would want to avoid an early repayment charge. If portable, would that mean you take out an additional mortgage or a separate product with the same lender at whatever the current rates/deals are, keeping the ported portion on the same terms?