Mortgage broker - ask me anything

K_S

snowqueen555 said:

A bit of a complicated question which I've googled and found no answer.

Buying a new build flat with a professional consultant certificate, how hard is it to sell on? The cert lasts 6 years so what happens if I try to sell from year 6-10? 

I've found a few threads saying banks won't lend on the flat as they typically expect new builds to have a 10 year structural warranty.

Thanks

@snowqueen555 It differs across lenders. What is/isn't classed as a new build can differ across lenders but generally speaking it falls into one of the following buckets -
- properties completed in the last 2 years (some lenders have a longer time span)
- or the first time that it's being occupied after the build
- or the first time it's being sold after it was built.

If it is classified as a new build then it will almost certainly require some form of warranty (which may include a PCC depending on the lender). There are lenders that will consider 6 year PCCs (as long as it isn't retrospective and is in the appropriate CML format), it's definitely not useless. Some (not all) lenders will ask for a warranty/PCC for properties built in the last x years. Just for reference, a PCC used to be called an Architect's Certificate, as I understand it.

While the above will definitely apply to you purchasing a new build flat and getting a mortgage for you to buy the property now may or may not be difficult (depending on the details), once you've lived in it for 5+ years, from a mortgage point of view, it's going to be much easier for your buyer and there are mainstream lenders that will accept a PCC (if they require a warranty for properties built within the last x years).

snowqueen555

K_S said:

snowqueen555 said:

A bit of a complicated question which I've googled and found no answer.

Buying a new build flat with a professional consultant certificate, how hard is it to sell on? The cert lasts 6 years so what happens if I try to sell from year 6-10? 

I've found a few threads saying banks won't lend on the flat as they typically expect new builds to have a 10 year structural warranty.

Thanks

@snowqueen555 It differs across lenders. What is/isn't classed as a new build can differ across lenders but generally speaking it falls into one of the following buckets -
- properties completed in the last 2 years (some lenders have a longer time span)
- or the first time that it's being occupied after the build
- or the first time it's being sold after it was built.

If it is classified as a new build then it will almost certainly require some form of warranty (which may include a PCC depending on the lender). There are lenders that will consider 6 year PCCs (as long as it isn't retrospective and is in the appropriate CML format), it's definitely not useless. Some (not all) lenders will ask for a warranty/PCC for properties built in the last x years. Just for reference, a PCC used to be called an Architect's Certificate, as I understand it.

While the above will definitely apply to you purchasing a new build flat and getting a mortgage for you to buy the property now may or may not be difficult (depending on the details), once you've lived in it for 5+ years, from a mortgage point of view, it's going to be much easier for your buyer and there are mainstream lenders that will accept a PCC (if they require a warranty for properties built within the last x years).

Why would this be the case? Once the PCC expires and I want to sell on, how will the bank view that flat now? Have you experienced this situation, and how often do you come across pccs?

K_S

snowqueen555 said:

K_S said:

snowqueen555 said:

A bit of a complicated question which I've googled and found no answer.

Buying a new build flat with a professional consultant certificate, how hard is it to sell on? The cert lasts 6 years so what happens if I try to sell from year 6-10? 

I've found a few threads saying banks won't lend on the flat as they typically expect new builds to have a 10 year structural warranty.

Thanks

@snowqueen555 It differs across lenders. What is/isn't classed as a new build can differ across lenders but generally speaking it falls into one of the following buckets -
- properties completed in the last 2 years (some lenders have a longer time span)
- or the first time that it's being occupied after the build
- or the first time it's being sold after it was built.

If it is classified as a new build then it will almost certainly require some form of warranty (which may include a PCC depending on the lender). There are lenders that will consider 6 year PCCs (as long as it isn't retrospective and is in the appropriate CML format), it's definitely not useless. Some (not all) lenders will ask for a warranty/PCC for properties built in the last x years. Just for reference, a PCC used to be called an Architect's Certificate, as I understand it.

While the above will definitely apply to you purchasing a new build flat and getting a mortgage for you to buy the property now may or may not be difficult (depending on the details), once you've lived in it for 5+ years, from a mortgage point of view, it's going to be much easier for your buyer and there are mainstream lenders that will accept a PCC (if they require a warranty for properties built within the last x years).

Why would this be the case? Once the PCC expires and I want to sell on, how will the bank view that flat now? Have you experienced this situation, and how often do you come across pccs?

@snowqueen555

Today it's a brand new-build, no one's lived in it, it'll probably go down in value for the first few years, build quality is unproven, etc. which is why it's a higher risk to the lender and hence why lenders have stricter criteria for new builds (even more so when its a flat) - LTV, warranty requirements, etc. In 5+ years time, the risk dramatically goes down, it's no longer classed as a new build, etc. and lender criteria is easier to meet. Hopefully that makes sense.

Secondly, thinking of it as 'the bank' is not particularly useful as there is no one single approach. There are many lenders and lender A may have different criteria to lender B. For example lender A might consider < 2yrs as new build, for lender B it might be < 1yr. Lender A might only accept a 10 year structural warranty, lender B might consider a PCC subject to details, etc. For example here's a screenshot of HSBC's published criteria re PCC for new builds. Nationwide's is "PCCs are acceptable for newly built homes within a development of no more than 10 units. A maximum of 4 units within the structure where they're within a continuous structure. For example, a row of terrace houses or block of flats."

rebs

How do lenders evaluate income that's from pension drawdown?  I'm trying to get a sense of how much I might be able to borrow post divorce using a pension pot of approx £450k. 

I'll have about £270k for a deposit.

I do/will have a couple of other small sources of income which are easy to define and predictable, but drawdown from the pension pot can be variable.

Aged 60, so hoping to borrow for perhaps 10 years.

K_S

rebs said:

How do lenders evaluate income that's from pension drawdown?  I'm trying to get a sense of how much I might be able to borrow post divorce using a pension pot of approx £450k. 

I'll have about £270k for a deposit.

I do/will have a couple of other small sources of income which are easy to define and predictable, but drawdown from the pension pot can be variable.

Aged 60, so hoping to borrow for perhaps 10 years.

@rebs Assuming you mean flexible drawdown from a SIPP/PP, there's no one approach, it will depend on the specific lender. Some lenders will not consider, some will factor it as x%/year of the pot subject to ancillary criteria.

To give you an example - 4% of the pot value will be considered as the annual pension income. Applicant needs to be 55+ and any underlying S&S investments must be FTSE listed.

The above is one example, depending on the lender there might be different variations on the above. Plus in most cases the applicant will also need to meet any criteria specific to retired applicants.

Hopefully that helps you get an idea of how it's looked at.

I would suggest that you don't get too hung up about keeping the term short as that (depending on the numbers) may limit your options and how much you can borrow. Irrespective of whether the term is 15-20-25 years, there's nothing stopping you from overpaying and paying it off in 10 using the annual 10% o/p allowance and lump sum overpayments when you come to the end of a fix.

annetheman

Hi @K_S thank you so much for your incredibly helpful advice!!!! So grateful to read your replies in here.

I am a second home buyer, and am speaking to a broker soon, but would be great to have some help with 2 questions while I scope around for AiPs.

Bonus evidence
I started a job in July 2023, and per my company's bonus scheme, my 'minimum target annual bonus' is 18% of my salary - the bonus amount is £14,400 currently. My first bonus will be paid in March 2024, and pro-rated due to my starting in the middle of the bonus year (Jan-Dec).

Additional bonus could in theory be anything up to £34,000 depending on the company's performance.

I am worried because:

 a) I haven't got at least 2 years' worth of this to prove it, and b) the first one will be pro-rated and thus lower.

Q: Is it okay for me to use the figure of £14,400 in additional income from bonus questions for mortgage applications?

Timing
I also will have a pay review in March and will see my salary increase - I am not sure by how much, likely 2% or thereabouts.

Q:Is it worth it to wait until then to make an application?

THANK YOU SO MUCH again!

rebs

@K_S - thank you so much for that - that is very helpful.

K_S

annetheman said:

Hi @K_S thank you so much for your incredibly helpful advice!!!! So grateful to read your replies in here.

I am a second home buyer, and am speaking to a broker soon, but would be great to have some help with 2 questions while I scope around for AiPs.

Bonus evidence
I started a job in July 2023, and per my company's bonus scheme, my 'minimum target annual bonus' is 18% of my salary - the bonus amount is £14,400 currently. My first bonus will be paid in March 2024, and pro-rated due to my starting in the middle of the bonus year (Jan-Dec).

Additional bonus could in theory be anything up to £34,000 depending on the company's performance.

I am worried because:

 a) I haven't got at least 2 years' worth of this to prove it, and b) the first one will be pro-rated and thus lower.

Q: Is it okay for me to use the figure of £14,400 in additional income from bonus questions for mortgage applications?

Timing
I also will have a pay review in March and will see my salary increase - I am not sure by how much, likely 2% or thereabouts.

Q:Is it worth it to wait until then to make an application?

THANK YOU SO MUCH again!

@annetheman

Bonus: Generally speaking, for bonuses that aren't contractually guaranteed, most lenders will look for 2 years of bonus history and take the lower of the average or most recent bonus. So you're unlikely to have it considered based on the limited info in your post. Depending on the specifics of the applicant's profession+income, etc. some lenders may consider 1 year bonus history, or 50% of it, but not as a general rule.

Timing: The 2% hike may have an impact on max borrowing so whether or not you'll benefit by waiting will depend on the numbers, how much you're looking to borrow, etc. From that point of view, 2% may translate into a 4-5x increase in how much you can borrow. So if 2% is 2k, your max borrowing might go up by 8-10k.

If the 2% takes the total application income above a enhanced LTI threshold (varies depending on lender and LTV but can be 60k-75k-100k-150k) then yes it may make a significant difference to how much you can potentially borrow.

Myci85

Apologies for so many questions over the last few days, the more I look into mortgage lending criteria, the more I realise how near impossible our situation is, and researching to try and see if there is a work around. Appreciate all the brokers who give their time to answer all these questions. 

Me and partner are FTBs trying to finally buy as we're on borrowed time on our long term rental and rents are so extortionate now. I'm an easy case for mortgage, employed for 2 years in permanent post, excellent credit history etc. Partner is employed on fixed term contract, will have been with employer for a year by Feb, 2 contracts in that time, current one ends end of June. He also has a history of multiple missed payments all now paid off and clear on credit file since mid 2020, paid off his overdrafts Sept 23. 

I had hoped Halifax might work, but seems they would need 6 months remaining on contract. Am now looking at Accord, their lending criteria just say 'a good history of contracting', other stuff I've read says they need you to have 12 months history, nothing about if you've only a few months left on current contract. I can also see they do a cascade product up to 95% LTV for those with credit issues. Do any brokers on here have much experience with Accord and think we'd stand a chance on the above info? Looking for around 92% LTV.

chrisrich204

Our fixed mortgage is due to run out at the end of March. I have a couple of new deals i am considering but i also have £15k in savings that i will have access to early March that i want to pay off the mortgage. Should i pay it off the old or do i hand it to my new provider?