Mortgage broker - ask me anything

K_S

@d4ndo999 For an 80% LTV app, I don’t see anything that looks overly problematic. Use of arranged OD on a low LTV app with background savings isn’t usually an issue.

With most applications, lenders have access to 90% of the banking information (including OD history, balances, disposable cash, income, etc.) they need to reach a decision without any documents from yourself. Not all banks even ask for bank statements from applicants and where they do, it’s often for a sense check more than anything else.

D4ndo999 said:

Hi

 I am looking for some advice regarding what lenders see as red flags on bank statements when applying for a mortgage.

So we haven't officially started our application yet but will be requiring an 80LTV on a new build property due to complete in December. 

Now my concern with regards to bank statements if required is that we have a joint account that I get my salary Paid into, and then I transfer what's not required for joint bills etc into a Monzo account. Up until 6 weeks ago I have been putting the bulk of that money Into a Monzo pot as it was paying good interest on the balance in there but meant bills and general spending would take me into the overdraft on the account but well within the arranged limited then the following month I would transfer salary back into the account and clear the overdraft and Put the rest into the pot. 


Since mid July I have transferred the balance of the pot back into the current account with Monzo so have around 4/5 weeks of no overdraft and a good rolling balance. 

Have been reading some old posts on the forum etc and it's made me concerned that I am going to give underwriters a bad impression of how I manage my finances. 

Would you be able to advise on where I may stand with this?

Thanks 

IAMIAM

Is this feasible....

House Value - £235k
Mortgage - £195k
LTV - 85%
Mortgage Payment - £850
Rental Payment - £950 minus 9% management fee.

Move out, leave on consent to let with HSBC for approx two years whilst renting closer to work and look at potential new areas for the future...

Salary £53k with £50k Savings use this to fund a new purchase in a couple of years....potentially with background property going to BTL or remaining as is until sold as it will become 185k and a value of 245k potentially.

D4ndo999

K_S said:

@d4ndo999 For an 80% LTV app, I don’t see anything that looks overly problematic. Use of arranged OD on a low LTV app with background savings isn’t usually an issue.

With most applications, lenders have access to 90% of the banking information (including OD history, balances, disposable cash, income, etc.) they need to reach a decision without any documents from yourself. Not all banks even ask for bank statements from applicants and where they do, it’s often for a sense check more than anything else.

D4ndo999 said:

Hi

 I am looking for some advice regarding what lenders see as red flags on bank statements when applying for a mortgage.

So we haven't officially started our application yet but will be requiring an 80LTV on a new build property due to complete in December. 

Now my concern with regards to bank statements if required is that we have a joint account that I get my salary Paid into, and then I transfer what's not required for joint bills etc into a Monzo account. Up until 6 weeks ago I have been putting the bulk of that money Into a Monzo pot as it was paying good interest on the balance in there but meant bills and general spending would take me into the overdraft on the account but well within the arranged limited then the following month I would transfer salary back into the account and clear the overdraft and Put the rest into the pot. 


Since mid July I have transferred the balance of the pot back into the current account with Monzo so have around 4/5 weeks of no overdraft and a good rolling balance. 

Have been reading some old posts on the forum etc and it's made me concerned that I am going to give underwriters a bad impression of how I manage my finances. 

Would you be able to advise on where I may stand with this?

Thanks 

Thank you for such a quick response, we have been asked to provide 3 months of statements to the mortgage broker we are going to be using, like I said the joint account has my regular salary deposit, along with a child benefit and monthly bills. But from what you said, the Monzo account for example in may 23 was overdrawn for nearly the entire month but with a savings account linked to the account, would this be a cause for concern? 

Sorry alot of overthinking going on. 

philng

My daughter & son in law have recently transferred their business to LTD co from Partnership. They have owned the business for 3 years and have 3 years accounts but their existing Lender won't accept them on mortgage renewal due to them only just changing to Ltd Co.

Their existing mortgage has myself as named which was required at the outset 2 years ago when they only had 1 years accounts.

They have spoken to a broker who have sourced an accept decision but the Lender is insisting on a 40 year term & 5 Year Fixed Rate but they only wanted a 35 year term & a shorter term fixed rate.

Is it correct a Lender can mandate the product & term such as this? They are saying on a shorter term & shorter fix rate they can only lend a lower amount?

K_S

IAMIAM said:

Is this feasible....

House Value - £235k
Mortgage - £195k
LTV - 85%
Mortgage Payment - £850
Rental Payment - £950 minus 9% management fee.

Move out, leave on consent to let with HSBC for approx two years whilst renting closer to work and look at potential new areas for the future...

Salary £53k with £50k Savings use this to fund a new purchase in a couple of years....potentially with background property going to BTL or remaining as is until sold as it will become 185k and a value of 245k potentially.

@iamiam Not sure if I've understood your question but as long as you can get a CTL from HSBC, I don't see why you'd have a problem doing any of the rest.

When it comes to buying a property in a few years time, if you're not selling the background property, then if the mortgage payment is £850 and monthly rent is £950, any impact it might have on your affordability will likely be minimal.

K_S

philng said:

My daughter & son in law have recently transferred their business to LTD co from Partnership. They have owned the business for 3 years and have 3 years accounts but their existing Lender won't accept them on mortgage renewal due to them only just changing to Ltd Co.

Their existing mortgage has myself as named which was required at the outset 2 years ago when they only had 1 years accounts.

They have spoken to a broker who have sourced an accept decision but the Lender is insisting on a 40 year term & 5 Year Fixed Rate but they only wanted a 35 year term & a shorter term fixed rate.

Is it correct a Lender can mandate the product & term such as this? They are saying on a shorter term & shorter fix rate they can only lend a lower amount?

@philng Very very generally speaking, when it comes to affordability calculations (these will differ from lender to lender), the lender may lend more on a longer term than a shorter term, and may lend more on a 5+ year fix than they would on a 2-3 year fix.

That being the case, if you want to borrow X, and it does not meet the lender's affordability calculations based on a 35 year term and a 2 year fix, then yes, a solution could be to increase the term and/or opt for a 5 year fix.

Term - I wouldn't worry about the term too much. Most lenders will have a 10% annual penalty-free overpayment allowance, so there's nothing stopping you from overpaying like you were on a 35 year term, and then reducing the term when it comes to the end of the current fix if that's what you wish to do.

Length of fixed rate - The only things you can do is reduce the loan size to what the lender will allow on a 2/3 year fix or find another lender (if there is one) which will lend what you need on a 2yr fix.

If there is no pressing need for the parent to be taken off the mortgage right now, you could just consider a product-switch to another short fix with the current lender and then take the parent off the mortgage at a future point in time.

philng

K_S said:

philng said:

My daughter & son in law have recently transferred their business to LTD co from Partnership. They have owned the business for 3 years and have 3 years accounts but their existing Lender won't accept them on mortgage renewal due to them only just changing to Ltd Co.

Their existing mortgage has myself as named which was required at the outset 2 years ago when they only had 1 years accounts.

They have spoken to a broker who have sourced an accept decision but the Lender is insisting on a 40 year term & 5 Year Fixed Rate but they only wanted a 35 year term & a shorter term fixed rate.

Is it correct a Lender can mandate the product & term such as this? They are saying on a shorter term & shorter fix rate they can only lend a lower amount?

@philng Very very generally speaking, when it comes to affordability calculations (these will differ from lender to lender), the lender may lend more on a longer term than a shorter term, and may lend more on a 5+ year fix than they would on a 2-3 year fix.

That being the case, if you want to borrow X, and it does not meet the lender's affordability calculations based on a 35 year term and a 2 year fix, then yes, a solution could be to increase the term and/or opt for a 5 year fix.

Term - I wouldn't worry about the term too much. Most lenders will have a 10% annual penalty-free overpayment allowance, so there's nothing stopping you from overpaying like you were on a 35 year term, and then reducing the term when it comes to the end of the current fix if that's what you wish to do.

Length of fixed rate - The only things you can do is reduce the loan size to what the lender will allow on a 2/3 year fix or find another lender (if there is one) which will lend what you need on a 2yr fix.

If there is no pressing need for the parent to be taken off the mortgage right now, you could just consider a product-switch to another short fix with the current lender and then take the parent off the mortgage at a future point in time.

Thank you.

The issue with leaving the parent on the mortgage is that it is restricting the term due to age of parent to just 16 years which makes the Mortgage unaffordable combined with the rate increases from 2 years ago.

They have been told in 1 year with 1 year LTD co accounts it should open up the market to more options?

D4ndo999

D4ndo999 said:

K_S said:

@d4ndo999 For an 80% LTV app, I don’t see anything that looks overly problematic. Use of arranged OD on a low LTV app with background savings isn’t usually an issue.

With most applications, lenders have access to 90% of the banking information (including OD history, balances, disposable cash, income, etc.) they need to reach a decision without any documents from yourself. Not all banks even ask for bank statements from applicants and where they do, it’s often for a sense check more than anything else.

D4ndo999 said:

Hi

 I am looking for some advice regarding what lenders see as red flags on bank statements when applying for a mortgage.

So we haven't officially started our application yet but will be requiring an 80LTV on a new build property due to complete in December. 

Now my concern with regards to bank statements if required is that we have a joint account that I get my salary Paid into, and then I transfer what's not required for joint bills etc into a Monzo account. Up until 6 weeks ago I have been putting the bulk of that money Into a Monzo pot as it was paying good interest on the balance in there but meant bills and general spending would take me into the overdraft on the account but well within the arranged limited then the following month I would transfer salary back into the account and clear the overdraft and Put the rest into the pot. 


Since mid July I have transferred the balance of the pot back into the current account with Monzo so have around 4/5 weeks of no overdraft and a good rolling balance. 

Have been reading some old posts on the forum etc and it's made me concerned that I am going to give underwriters a bad impression of how I manage my finances. 

Would you be able to advise on where I may stand with this?

Thanks 

Thank you for such a quick response, we have been asked to provide 3 months of statements to the mortgage broker we are going to be using, like I said the joint account has my regular salary deposit, along with a child benefit and monthly bills. But from what you said, the Monzo account for example in may 23 was overdrawn for nearly the entire month but with a savings account linked to the account, would this be a cause for concern? 

Sorry alot of overthinking going on. 

@k_s sorry I didn't tag you previously 

philng

K_S said:

philng said:

My daughter & son in law have recently transferred their business to LTD co from Partnership. They have owned the business for 3 years and have 3 years accounts but their existing Lender won't accept them on mortgage renewal due to them only just changing to Ltd Co.

Their existing mortgage has myself as named which was required at the outset 2 years ago when they only had 1 years accounts.

They have spoken to a broker who have sourced an accept decision but the Lender is insisting on a 40 year term & 5 Year Fixed Rate but they only wanted a 35 year term & a shorter term fixed rate.

Is it correct a Lender can mandate the product & term such as this? They are saying on a shorter term & shorter fix rate they can only lend a lower amount?

@philng Very very generally speaking, when it comes to affordability calculations (these will differ from lender to lender), the lender may lend more on a longer term than a shorter term, and may lend more on a 5+ year fix than they would on a 2-3 year fix.

That being the case, if you want to borrow X, and it does not meet the lender's affordability calculations based on a 35 year term and a 2 year fix, then yes, a solution could be to increase the term and/or opt for a 5 year fix.

Term - I wouldn't worry about the term too much. Most lenders will have a 10% annual penalty-free overpayment allowance, so there's nothing stopping you from overpaying like you were on a 35 year term, and then reducing the term when it comes to the end of the current fix if that's what you wish to do.

Length of fixed rate - The only things you can do is reduce the loan size to what the lender will allow on a 2/3 year fix or find another lender (if there is one) which will lend what you need on a 2yr fix.

If there is no pressing need for the parent to be taken off the mortgage right now, you could just consider a product-switch to another short fix with the current lender and then take the parent off the mortgage at a future point in time.

But could they maybe go on interest only for 12 months with existing lender then in 12 months time look at all options if lenders will accept 1 year Ltd Co accounts?


Was thinking they could go interest only and top up by £250pm add payment or would going interest only be held against them when looking at options in 12 months time?

machiavellie

Once you've accepted a mortgage offer from a lender, how likely is it they will pull out and refuse to release the funds before completion (assuming my circumstances don't change).

Completion is 8th September and just being a bit paranoid.