Mortgage broker - ask me anything

K_S

Gp2006 said:

I have a query about self employed income. My mortgage is with HSBC and planning to speak to them next week but if anyone can answer ahead of that I’d be really grateful!
 

I’m hoping to move and port my mortgage to a new house and increase borrowing. I’m employed part time and also have a separate small business which made a profit of around 3k in 21/22 and again in 22/23. I’m currently on maternity leave and going back to my employed work in around a month. I stopped my business in January last year and will also be returning to that in a month or so. I know for my employed job I can provide my last payslips before maternity leave and confirm I’m going back on the same terms and conditions. According to the HSBC website for my self employment they need the last two years tax calculations dated within 18 months. Will they take into consideration the two tax years that I have calculations for? I didn’t trade at all in 23-24. 

Obviously only a small amount but really need it for affordability! When I took out my mortgage my business had only been up and running for a year and it wasn’t needed for affordability so they don’t know about it. 

Thank you. 

@gp2006 As a sole trader, if you averaged 3k of net profits over the last 2 full tax years (2021-22 and 2022-23), that's what the lender would consider for an application in early 2024.

However, if the lender is aware that you haven't traded at all for more than a year, I doubt they will consider the SE income.

If the trade is directly linked to your main profession (eg: your main income is as an NHS medic and the self-employed trade is in the same field), then you could perhaps make the argument that it's a maternity related break and hence should be treated in the same way, but that's just speculation on my part, not something from experience.

On the plus side, the 3k is unlikely to add more than 12-15k to the max borrowing (play around with the HSBC aff calc here https://portal.intermediaries.hsbc.co.uk/affordabilitycalculator/affordabilitycalculatorpage.php ) so hopefully you wont need it. Good luck!

Gp2006

Thank you @K_S that’s really helpful.

 It’s not a linked industry and I had to stop before my employed job as it was physically demanding which is why I’ve had a bigger break. I guess even if they were to consider it they would question whether I could go straight back to earning the same with it which I wouldn’t, it would take a while to build up clients again. 

Think I’m just clutching at straws really as just need another 15k for a house I’ve seen. I have a DIP without the SE income as was hoping to just leave it off anyway so think I’ll just have to leave it as is and forget about this house. 

Thanks again. 

Gp2006

Following on from above, I have another question if anyone can answer please. 

When I put my details into the HSBC intermediaries calculator I can increase the amount they’ll lend by about £20k (total £234000) by putting the term up from 25 to 35 years. However, when I make this change on my DIP it only increases by a couple of hundred pounds. Do you know why this might be? 

(I’m 41, husband 43. Joint income £55k, 3 dependent children, no CCs or loans, £200 travel costs is the only thing we had to enter under expenses).

Thank you. 

kingstreet

Gp2006 said:

Following on from above, I have another question if anyone can answer please. 

When I put my details into the HSBC intermediaries calculator I can increase the amount they’ll lend by about £20k (total £234000) by putting the term up from 25 to 35 years. However, when I make this change on my DIP it only increases by a couple of hundred pounds. Do you know why this might be? 

(I’m 41, husband 43. Joint income £55k, 3 dependent children, no CCs or loans, £200 travel costs is the only thing we had to enter under expenses).

Thank you. 

HSBC affordability works only upto 70. You can have a term to 75 but you won't increase what you can borrow by doing so.

"***PLEASE NOTE: When checking affordability using our calculator, please key the overall term in line with the oldest customer reaching age 70 (or anticipated retirement age if earlier). If the calculator shows as affordable on the term to age 70 (or anticipated retirement age), then you can key the application over your required term (in line with policy maximums)."

Gp2006

Thanks @kingstreet, thought it might be something to do with our ages. 

Talltree12

Hi


Hoping for a bit of guidance if possible. 

We are looking to remortgage in July. My other half has defaults on her credit report. One back in 2018 worth around £250 and a more recent one in 2022 worth £450.

We are currently with precise mortgages as they could offer us a deal back in 2022 with the recent default. We now wish to hopefully get back to a more traditional lender and a competitive rate. 

Does anyone know if the general rule is that many lenders aren't too concerned with defaults if over 2 years old, or is this a myth?

Also does anyone know of any lenders that are competitive for people like us. Apart from the defaults we are a fairly standard application. 

Any pointers or advice would be greatly appreciated 

Matt 

Fkhan95

Hi,

Would be grateful if someone could shed light on the following:

a) Looking to sell our property(approx 400k) and buy a new build at 85% LTV (approx 435k purchase price). Would the initial exchange deposit we would be liable for the new build be 15% (as the mortgage deposit is 15%) or 10%? I’m assuming 10% will be coming up the chain from our buyer? 

 b) We have roughly 70k equity in the house - im assuming if it’s the 10% liable for the exchange of new build purchase, we’ll have to plug the 3.5k to bring it up to 10% and the rest will be payable from the equity and we won’t have to make a payment of the 5% and instead will be deducted by the solicitor upon sale, along with the stamp duty?

Many thanks 

K_S

Talltree12 said:

Hi


Hoping for a bit of guidance if possible. 

We are looking to remortgage in July. My other half has defaults on her credit report. One back in 2018 worth around £250 and a more recent one in 2022 worth £450.

We are currently with precise mortgages as they could offer us a deal back in 2022 with the recent default. We now wish to hopefully get back to a more traditional lender and a competitive rate. 

Does anyone know if the general rule is that many lenders aren't too concerned with defaults if over 2 years old, or is this a myth?

Also does anyone know of any lenders that are competitive for people like us. Apart from the defaults we are a fairly standard application. 

Any pointers or advice would be greatly appreciated 

Matt 

@talltree12 Unfortunately, there's no such 'geberal rule' but yes the impact of a default on the credit report diminishes with time so a >2 year old default may have a lower impact than a 1 year old one.

It's hard to speculate on what you may be able to access as that depends on the specifics - what your credit reports (Experian & Equifax) actually look like, kind of remo, LTV, etc etc. The most important being what's on your reports and LTV.

Very very generally speaking - you may get a mainstream product, you may get a mainstream-ish product like Accord Cascade, etc. but it's impossible to say based on your post.

Your best course of action might be to get an up to date copy of your Experian and Equifax credit reports and speak to a broker. The MSE guide here can help you find one.
https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3

All the best!

K_S

Fkhan95 said:

Hi,

Would be grateful if someone could shed light on the following:

a) Looking to sell our property(approx 400k) and buy a new build at 85% LTV (approx 435k purchase price). Would the initial exchange deposit we would be liable for the new build be 15% (as the mortgage deposit is 15%) or 10%? I’m assuming 10% will be coming up the chain from our buyer? 

 b) We have roughly 70k equity in the house - im assuming if it’s the 10% liable for the exchange of new build purchase, we’ll have to plug the 3.5k to bring it up to 10% and the rest will be payable from the equity and we won’t have to make a payment of the 5% and instead will be deducted by the solicitor upon sale, along with the stamp duty?

Many thanks 

@fkhan95 You won't have to make up the difference, a 5-10% deposit is usually enough in these kind of scenarios.

Unless the property is built and ready, the usual issue that clients come up with when buying new-build in a chain is that for popular developments (where there's no dearth of buyers) the builder insists on the buyer being chain free.

And if you're using equity for the deposit in a long chain, the buyers below you in the chain often balk at having to exchange and wait for the build to complete.

Fkhan95

K_S said:

Fkhan95 said:

Hi,

Would be grateful if someone could shed light on the following:

a) Looking to sell our property(approx 400k) and buy a new build at 85% LTV (approx 435k purchase price). Would the initial exchange deposit we would be liable for the new build be 15% (as the mortgage deposit is 15%) or 10%? I’m assuming 10% will be coming up the chain from our buyer? 

 b) We have roughly 70k equity in the house - im assuming if it’s the 10% liable for the exchange of new build purchase, we’ll have to plug the 3.5k to bring it up to 10% and the rest will be payable from the equity and we won’t have to make a payment of the 5% and instead will be deducted by the solicitor upon sale, along with the stamp duty?

Many thanks 

@fkhan95 You won't have to make up the difference, a 5-10% deposit is usually enough in these kind of scenarios.

Unless the property is built and ready, the usual issue that clients come up with when buying new-build in a chain is that for popular developments (where there's no dearth of buyers) the builder insists on the buyer being chain free.

And if you're using equity for the deposit in a long chain, the buyers below you in the chain often balk at having to exchange and wait for the build to complete.

Thanks - much appreciated.

In your experience how feasible is it to find buyers who will be acceptable of completion on notice? Appreciate that it depends on specific circumstances but for context we’re in zone 6 London (3 br terraced property). Im hoping because of the price point it’ll be a first time buyer and therefore a short chain..