Mortgage broker - ask me anything

jonnydeppiwish!

@K_S thanks for your advice so far. 

I’ve previously asked about let to buy mortgage but we were wondering whether it is possible to just get a £300,000 residential mortgage on our current property (value ~ £425k), and use this money, together with a £200,000 mortgage to purchase a second property (value ~ £475k)?

Idea would be to spend 3-6 months renovating new property prior to selling first property. Would need the extra cash for SDLT and have cash for renovations in savings.

Joint income is £110k with no debts, dependants or any other outgoings bar normal household expenses.

K_S

jonnydeppiwish! said:

@K_S thanks for your advice so far. 

I’ve previously asked about let to buy mortgage but we were wondering whether it is possible to just get a £300,000 residential mortgage on our current property (value ~ £425k), and use this money, together with a £200,000 mortgage to purchase a second property (value ~ £475k)?

Idea would be to spend 3-6 months renovating new property prior to selling first property. Would need the extra cash for SDLT and have cash for renovations in savings.

Joint income is £110k with no debts, dependants or any other outgoings bar normal household expenses.

@jonnydeppiwish! Are the mechanics of what you've proposed above possible in theory - potentially yes. In essence, you would need to be able to meet affordability, criteria and plausibility for having 2 residential homes, total borrowing of 500k over 2 mortgages, running costs of 2 properties (as per actuals and lender assumptions) on your income, outgoings and other relevant financial circumstances. 

What you're looking to achieve isn't unusual, breaking a chain to give a borrower some time to facilitate renovation of either the current property (before sale) or of the new property (before moving in) is quite common but there are far more straightforward ways of doing it. For example a regulated bridge which is secured against both properties and relies on an exit of sale+remortgage. Or specialist short-term lending chain-break products from smaller building societies, etc.

jonnydeppiwish!

@K_S thanks, I didn’t know about the shorter term lending products. Will have a look at them now.

thanks again!

BLN83

Hi, 
looking for some some hopeful reassurance as I have been spiralling all weekend convinced our mortgage application will get declined. So sorry for the long message.

Applied through broker Haysto as they specialise in credit issue mortgages and on 17th Nov got a DIP with West Brom. 

Offer accepted on our dream house 22nd Nov and full application submitted Friday 24th. 

Background is husband as perfect credit rating and only credit is car finance and a credit card. 

I however have been working on repairing things. No defaults or CCJ and just 2/3 missed payments dating back to 2019/20. The issue is my high level of borrowing right now. 

Hard search done by West Brom today and annoyingly they used Experian which is where my score appears as very low. Equifax on the other hand I’m classed much higher in the good category!! 

Worked out my debt ratio as West Brom take into account both monthly and quarterly commission receive and numbers look like 

SALARY

Basic salary (yearly/gross) = £50,600 // £4,222

Monthly comm (75% yearly/ gross) = £8,436 // £703

Quarterly comm (50% yearly/gross) = £16,632 // £1,386

TOTAL yearly/gross= £75,668 // £6,311

Monthly gross = £6,311

Monthly debt = £1,945 (loans and 3% of credit and store cards factored in) 

DIR = 30.8%

(Husbands DIR is 15% - our combined comes to 25.3% and 42.8% if mortgage payment factored in)

House is £350k and we have a 15% deposit. 

Thoughts on if I should prepare myself for bad news with numbers and issues like this? 

K_S

@bln83 If DTI was a showstopper, that would (normally) show up as decline at the DIP stage. I wouldn't worry too much on that front. In any case, for the few lenders that do operate a max DTI (non-mortgage debt to income) ceiling, it's usually 40-50%. Most lenders don't use an explicit DTI limit, it's just one of the factors used for 'scoring' the app at DIP stage.

Having said that, the only "issues" on your application seem to be a couple of missed payments that are 3+ years old and needing a lender that treats commission favourably when assessing income. I'm sure I'm missing some piece of relevant information (or the broker had already tried DIPs with high-street lenders before settling on West Brom) but based on what you've said I can't see any obvious reason why you'd need to pay for a adverse broker (at least I hope they aren't charging you the top fee of £1,500) or why you wouldn't pass a high-street DIP. West Brom rates are competitive but they're still materially higher. 

Once you have the West Brom offer in hand, if you haven't explored high-street options at all, I would suggest you consider doing so, between now and completion, either by confirming the same with your current broker or getting a second opinion from one of the fee-free brokers recommended by MSE in their guide here
https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3

Good luck, I hope you get to offer soon!

BLN83 said:

Hi, 
looking for some some hopeful reassurance as I have been spiralling all weekend convinced our mortgage application will get declined. So sorry for the long message.

Applied through broker Haysto as they specialise in credit issue mortgages and on 17th Nov got a DIP with West Brom. 

Offer accepted on our dream house 22nd Nov and full application submitted Friday 24th. 

Background is husband as perfect credit rating and only credit is car finance and a credit card. 

I however have been working on repairing things. No defaults or CCJ and just 2/3 missed payments dating back to 2019/20. The issue is my high level of borrowing right now. 

Hard search done by West Brom today and annoyingly they used Experian which is where my score appears as very low. Equifax on the other hand I’m classed much higher in the good category!! 

Worked out my debt ratio as West Brom take into account both monthly and quarterly commission receive and numbers look like 

SALARY

Basic salary (yearly/gross) = £50,600 // £4,222

Monthly comm (75% yearly/ gross) = £8,436 // £703

Quarterly comm (50% yearly/gross) = £16,632 // £1,386

TOTAL yearly/gross= £75,668 // £6,311

Monthly gross = £6,311

Monthly debt = £1,945 (loans and 3% of credit and store cards factored in) 

DIR = 30.8%

(Husbands DIR is 15% - our combined comes to 25.3% and 42.8% if mortgage payment factored in)

House is £350k and we have a 15% deposit. 

Thoughts on if I should prepare myself for bad news with numbers and issues like this? 

Melziejane

Melziejane said:

Hi, 

We have submitted a mortgage application with TSB borrowing 137k with 28k deposit. 

My partner has went into his unarranged overdraft a few times in the statements we have provided, however he's always cleared the amount quickly and there is no fees being charged on his statement or impact on his credit report. Credit report is 996.

No other debt. 

How likely is it our application will be rejected? 

Household income 45k +

Is someone available to help me please? It looks like my post has been overlooked. 

kingstreet

Melziejane said:

Hi, 

We have submitted a mortgage application with TSB borrowing 137k with 28k deposit. 

My partner has went into his unarranged overdraft a few times in the statements we have provided, however he's always cleared the amount quickly and there is no fees being charged on his statement or impact on his credit report. Credit report is 996.

No other debt. 

How likely is it our application will be rejected? 

Household income 45k +

His unarranged overdraft? Can you clarify what you mean by that? Usually it's an arranged overdraft or unauthorised borrowing.

Melziejane

kingstreet said:

Melziejane said:

Hi, 

We have submitted a mortgage application with TSB borrowing 137k with 28k deposit. 

My partner has went into his unarranged overdraft a few times in the statements we have provided, however he's always cleared the amount quickly and there is no fees being charged on his statement or impact on his credit report. Credit report is 996.

No other debt. 

How likely is it our application will be rejected? 

Household income 45k +

His unarranged overdraft? Can you clarify what you mean by that? Usually it's an arranged overdraft or unauthorised borrowing.

He doesn't have an authorised overdraft but has spent more than is in his account, I presume it's unauthorised borrowing then? 

misslizi

Hi all

Please be gentle - I’m a long time lurker! 

We are in the process of selling our current property for around 300k and buying a property at £375k.

We have approx 85k equity to put into the new mortgage. 

My question is regarding acceptable income sources as when looking at calculators the amount they’ll lend seems to differ greatly lender to lender and strangely our lowest figure is with our current lender Nationwide. 

My husband is technically on a secondment in his current role (been with the company for 9 years but in a promotion) a secondment when first getting the promotion is just standard in his business, he’s been on it a year and has a secondment contract showing he’s guaranteed it until at least September 2024 (but normally the company make the secondment perm before then). His secondment pay adds an additional £450 a month plus £422 a month car allowance so it’s quite a big amount to leave off our affordability- are there any lenders out there that would take an honorarium into the calculation based on us being able to evidence receiving it for over a year? It does make a big difference on our affordability on the calculators, although most lenders seem to be able to lend us enough without including it, I’d rather not be too close to our lending limit.

Thank you! 

K_S

@misslizi Generally speaking the principle is - as things stand, if a permanent PAYE applicant's salary is currently X+1k but will go down to X in 10 months time, and the lender is aware of that fact, the salary used for the application will be X. I hope the logic behind that makes sense. 

Might your case be treated differently? Possibly but that'll depend on the details, dates, what's written in the contract, what kind of assurance/confirmation the employer is willing to provide, the specific lender's criteria, etc. 

Unless there's a specific reason to be concerned, I wouldn't worry too much about how close to your max borrowing you are. Whether the margin is 1k or 50k out, as long as you can borrow what you need, there's no difference in rate, costs, etc. 

I hope the move works out fine, all the best!

misslizi said:

Hi all

Please be gentle - I’m a long time lurker! 

We are in the process of selling our current property for around 300k and buying a property at £375k.

We have approx 85k equity to put into the new mortgage. 

My question is regarding acceptable income sources as when looking at calculators the amount they’ll lend seems to differ greatly lender to lender and strangely our lowest figure is with our current lender Nationwide. 

My husband is technically on a secondment in his current role (been with the company for 9 years but in a promotion) a secondment when first getting the promotion is just standard in his business, he’s been on it a year and has a secondment contract showing he’s guaranteed it until at least September 2024 (but normally the company make the secondment perm before then). His secondment pay adds an additional £450 a month plus £422 a month car allowance so it’s quite a big amount to leave off our affordability- are there any lenders out there that would take an honorarium into the calculation based on us being able to evidence receiving it for over a year? It does make a big difference on our affordability on the calculators, although most lenders seem to be able to lend us enough without including it, I’d rather not be too close to our lending limit.

Thank you!