Mortgage broker - ask me anything

nicky73

Hello,
I moved into my house in Dec’22 on a pretty good rate (3.5%) compared to now. Since moving in have spent quite a bit on the house resulting in £11K loan and £5K on credit card (0% APR until Dec). 

I’ve got a call with a mortgage broker on Monday about securing a mortgage advance for £18K to clear these debts. 

I’m aware of the risk of moving unsecured to secured debt but this will free up money each month and I’ll be able to overpay the new mortgage. Also I am concerned my 0% deal on the cc ends this year and I won’t be able to clear the card that quickly and worry there will be less 0% deals available by this time. 

My query is how quickly Halifax tend to approve these things? I don’t think they’d need to revalue the property as it’s only just over the 6 months allowed to request an advance and LTV is currently at 32% - the proposed additional borrowing will increase this to 37%. 

The additional borrowing is okay according to their calculators if they exclude debt to be repaid by the advance - do they do this? 

Many thanks 

ryanmccorry86

My fixed rates ends in january. Halifax (existing lender) are offering me a current rate of 6% for 2y. I havent signed the documents yet and have until dec 31st - can i change to a new product if the interest rates fall back by year end? Should i sign the documents to lock in the price now or is it already locked in?(ie they wont withdraw it even if interest rates rise?)

Thanks

SuperExcelMan

nicky73 said:

Hello,
I moved into my house in Dec’22 on a pretty good rate (3.5%) compared to now. Since moving in have spent quite a bit on the house resulting in £11K loan and £5K on credit card (0% APR until Dec). 

I’ve got a call with a mortgage broker on Monday about securing a mortgage advance for £18K to clear these debts. 

I’m aware of the risk of moving unsecured to secured debt but this will free up money each month and I’ll be able to overpay the new mortgage. Also I am concerned my 0% deal on the cc ends this year and I won’t be able to clear the card that quickly and worry there will be less 0% deals available by this time. 

My query is how quickly Halifax tend to approve these things? I don’t think they’d need to revalue the property as it’s only just over the 6 months allowed to request an advance and LTV is currently at 32% - the proposed additional borrowing will increase this to 37%. 

The additional borrowing is okay according to their calculators if they exclude debt to be repaid by the advance - do they do this? 

Many thanks 

I think you should go on the “debt free wannabe” board on MSE and ask the same question.

Personally, I think it’s a terrible idea. Also, why do you need £18k for £5k+£11k? What’s the extra £2k for? (I guarantee you’ll be asked these two on the DFW board, so I’m just prompting you).

Also, £18k equals only an extra 5% LTV? Ouch

VNX

Have just read many lenders don’t offer many mortgage of under 50k is this true? My loan amount will be under 50k at remortgage 

thank you 

jen_fpb

Mortgage currently 1.14% 2 year fix ends 31 December. £70k left, 14 years.

Wanting a 2 year fix but also suggested offset mortgages as have 50k savings. Any initial thoughts? Or things to think about....

AcerBen

Not about my mortgage but just a general question that puzzles me

Whilst no one was predicting interest rates would go up this fast, wasn't it virtually inevitable that they'd go back up this high at some point?  So why when looking at someone's mortgage affordability, why wasn't the scenario of the interest rates going back to historical norms taken into account, by lenders and by mortgage holders?  

silvercar

AcerBen said:

Not about my mortgage but just a general question that puzzles me

Whilst no one was predicting interest rates would go up this fast, wasn't it virtually inevitable that they'd go back up this high at some point?  So why when looking at someone's mortgage affordability, why wasn't the scenario of the interest rates going back to historical norms taken into account, by lenders and by mortgage holders?  

It wasn't predicted to go up this fast, so people would have been able to fix before it got to the current rates. For mortgage holders, a lot of people are stuck between a rock and a hard place. Rents are often higher than mortgage payments, so there is no benefit to not buying.

K_S

AcerBen said:

Not about my mortgage but just a general question that puzzles me

Whilst no one was predicting interest rates would go up this fast, wasn't it virtually inevitable that they'd go back up this high at some point?  So why when looking at someone's mortgage affordability, why wasn't the scenario of the interest rates going back to historical norms taken into account, by lenders and by mortgage holders?  

@acerben Lenders applied the affordability stress tests required by regulation, direct/broker mortgage advisers provided advice as required by regulation and lender criteria, and buyers borrowed what they needed to (and were allowed to) to buy the house/flat they wanted at prices dictated by the market. 

You'd have to ask the powers-that-be why mortgages weren't/aren't stress tested at much higher rates than they are.

But by the same token you could also ask why it's so easy to get a interest-free credit card or a personal loan, why rates were held down so low for so long instead of gradually increasing it over the past decade, why fiscal policies were used that put fuel on the inflation fire, why fiscal and monetary policy was/is instinctively geared towards maintaining/increasing house prices, why house prices were allowed to almost quadruple between 2000-2022 while median wages in England less than doubled, etc.

K_S

jen_fpb said:

Mortgage currently 1.14% 2 year fix ends 31 December. £70k left, 14 years.

Wanting a 2 year fix but also suggested offset mortgages as have 50k savings. Any initial thoughts? Or things to think about....

@jen_fpb Don't really have anything specific other than to say that consider securing a rate with your current lender first (make sure you do it cost-free and after confirming that it can be cancelled before completion) and then you can look at your options in a more leisurely manner.

K_S

nicky73 said:

Hello,
I moved into my house in Dec’22 on a pretty good rate (3.5%) compared to now. Since moving in have spent quite a bit on the house resulting in £11K loan and £5K on credit card (0% APR until Dec). 

I’ve got a call with a mortgage broker on Monday about securing a mortgage advance for £18K to clear these debts. 

I’m aware of the risk of moving unsecured to secured debt but this will free up money each month and I’ll be able to overpay the new mortgage. Also I am concerned my 0% deal on the cc ends this year and I won’t be able to clear the card that quickly and worry there will be less 0% deals available by this time. 

My query is how quickly Halifax tend to approve these things? I don’t think they’d need to revalue the property as it’s only just over the 6 months allowed to request an advance and LTV is currently at 32% - the proposed additional borrowing will increase this to 37%. 

The additional borrowing is okay according to their calculators if they exclude debt to be repaid by the advance - do they do this? 

Many thanks 

@nicky73 I don't know about direct applications but otherwise Halifax are pretty quick at processing applications, typically no more than a couple of days to turnaround assessment and queries.

Below a certain LTV, they do ignore debt to paid off but I don't know if they've updated policy recently on this front. Anyways, a soft-check DIP should give you the answer on that so no harm done.