Mortgage broker - ask me anything

K_S

Fkhan95 said:

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.. 

@fkhan95 I’ve no clue tbh. I suppose it depends on luck. Hopefully you’ll get an FTB buyer that is happy with a significant gap between exchange and completion or one that doesn’t fully understand the ramifications of the same. All the best!

silvercar

Fkhan95 said:

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.. 

My son is a FTB and looking to buy at the moment. He would accept a delayed completion on notice, provided it had an end date that was within the expiry date of his mortgage offer. He wouldn’t accept an open completion of notice, both because he actually wants to move and has to consider his mortgage offer.

Ian_B_B

Hi!  Couple of questions....

1.  What is the lesser of two evils on a mortgage application - loan or credit card debt? Or are they treated the same?

2.  We are coming to the end of our 5 year fixed - we also have a 20% HTB which we are thinking about paying back.  Are brokers likely to have an "all in one" service which incorporates a solcititor / transferring the funds etc.

3.  In terms of general sums - we have a house value to £380k, with an o/s mortgage of £200k, and will want to pay the HTB (£76k) and some o/s debt (£50k).  Are mortgages like that with allow extra money for those reasons available (affordability / credit score is not an issue)...  Thanks!

K_S

Ian_B_B said:

Hi!  Couple of questions....

1.  What is the lesser of two evils on a mortgage application - loan or credit card debt? Or are they treated the same?

2.  We are coming to the end of our 5 year fixed - we also have a 20% HTB which we are thinking about paying back.  Are brokers likely to have an "all in one" service which incorporates a solcititor / transferring the funds etc.

3.  In terms of general sums - we have a house value to £380k, with an o/s mortgage of £200k, and will want to pay the HTB (£76k) and some o/s debt (£50k).  Are mortgages like that with allow extra money for those reasons available (affordability / credit score is not an issue)...  Thanks!

@ian_B_B Generally speaking -
1. CC debt - is taken as 3-5% (can vary across lenders) of o/s balance as a monthly commitment. So if you have a 10k cc balance (the interest rate is immaterial), lenders will consider it as a £300-500/month outgoing for affordability.
Loan payments - impact is based on the monthly payment. Irrespective of whether your loan is 10k or 5k, if the monthly payment is £500, then that's the monthly outgoing for affordability.
2. As I'm sure you are aware, the whole HTB redemption process involves actions on the part of 4 parties - yourself, HTB, solicitor, broker and lender. If you're asking if there are brokers who will provide a service that takes responsiblity for organising all these people and the actions involved, the answer is probably not.
3. You're looking for a capital raise remortgage at 85% LTV to pay off HTB and 50k o/s unsecured debt. If affordability, credit history, etc. isn't an issue, you should be able to find a mainstream lender for this depending on the specifics.

silvercar

Ian_B_B said:

Hi!  Couple of questions....

1.  What is the lesser of two evils on a mortgage application - loan or credit card debt? Or are they treated the same?

2.  We are coming to the end of our 5 year fixed - we also have a 20% HTB which we are thinking about paying back.  Are brokers likely to have an "all in one" service which incorporates a solcititor / transferring the funds etc.

3.  In terms of general sums - we have a house value to £380k, with an o/s mortgage of £200k, and will want to pay the HTB (£76k) and some o/s debt (£50k).  Are mortgages like that with allow extra money for those reasons available (affordability / credit score is not an issue)...  Thanks!

Why do you want to move the HTB to the mortgage? Interest rates on the HTB are low, probably lower than you will pay on your mortgage.

Fkhan95

Another quick question - apologies!

Does the payment of additional extras in a new build go through the solicitor as part of the conveyancing process or do we just pay the builders ourselves (through bank transfer/card etc)? 

Thanks 

Exodi

Long story short, my fixed term is up later this year. I've worked out what affect my mortgage payments will have on the LTV over the next few months, and am considering making a small lump sum payment to get myself into a new LTV bracket for a slightly smaller interest rate.

However, I'm unsure about the interaction between current/future LTV and what fixes can be locked on when.

For examples (using % to keep it simple) three different hypothetical scenarios:

1) if I'm currently at 66% LTV, I plan to pay off the equivalent of 5% LTV at some point in the future and my mortgage payments will naturally reduce the balance the equivalent of 1% LTV. I'd imagine I couldn't lock in a 60% LTV deal now because the lender has no guarantee I'll make the lump sum payment and be sub 60% at the time of the switch.

2) if I'm currently at 66% LTV, make the lump sum payment now bringing it to 61% LTV and can see that my mortgage payments will naturally reduce the balance the equivalent of 1% LTV at the time of the switch. Would a lender allow the locking in of a 60% LTV deal now when technically the borrower is currently at 61% LTV? Or would this be a 'computer says no' issue?

3) Just dump money into the mortgage to get to 60% LTV now, which undoubtedly would allow the locking in of a 60% LTV deal in the future.

Hope that makes sense?

K_S

Exodi said:

Long story short, my fixed term is up later this year. I've worked out what affect my mortgage payments will have on the LTV over the next few months, and am considering making a small lump sum payment to get myself into a new LTV bracket for a slightly smaller interest rate.

However, I'm unsure about the interaction between current/future LTV and what fixes can be locked on when.

For examples (using % to keep it simple) three different hypothetical scenarios:

1) if I'm currently at 66% LTV, I plan to pay off the equivalent of 5% LTV at some point in the future and my mortgage payments will naturally reduce the balance the equivalent of 1% LTV. I'd imagine I couldn't lock in a 60% LTV deal now because the lender has no guarantee I'll make the lump sum payment and be sub 60% at the time of the switch.

2) if I'm currently at 66% LTV, make the lump sum payment now bringing it to 61% LTV and can see that my mortgage payments will naturally reduce the balance the equivalent of 1% LTV at the time of the switch. Would a lender allow the locking in of a 60% LTV deal now when technically the borrower is currently at 61% LTV? Or would this be a 'computer says no' issue?

3) Just dump money into the mortgage to get to 60% LTV now, which undoubtedly would allow the locking in of a 60% LTV deal in the future.

Hope that makes sense?

@exodi I'll make a distinction between a product-switch (staying with your current lender) and a remortgage (changing to a new lender)

Product switch - what you've said in 1 is broadly correct. Generally speaking, you will only be able to reserve a product switch based on the exact LTV (based on the indexed valuation on the lender's system) that shows on the lender's system at the point that you apply to reserve a switch. Even so, I can't speak for your specific case or lender, perhaps they might have some discretion for a manual direct product switch.

Remortgage - you can get a remortgage offer for a 60% LTV (based on actual valuation, not the automatic indexed one) amount and as long as you bring the balance down to the mortgage offer amount a few weeks before completion, it should be fine.

Do keep in mind that the automatic indexed valuation on the lender's system (used for the product switch) may wildly differ from the valuation that a new lender would use for a remortgage.

I don't know how far you are from the end of the fix but for future reference, for extra optionality, do keep in mind that you can often secure a remortgage rate a lot earlier than 6 months - NatWest allows a 1 month extension so you get 7 months, Nationwide has a 90 day product reservation feature and a 15 day extension so effectively gives you around 8.5 months, Platform does 6+3, and a couple of lenders will do 6+6 on remortgage offers.

Exodi

K_S said:

Exodi said:

Long story short, my fixed term is up later this year. I've worked out what affect my mortgage payments will have on the LTV over the next few months, and am considering making a small lump sum payment to get myself into a new LTV bracket for a slightly smaller interest rate.

However, I'm unsure about the interaction between current/future LTV and what fixes can be locked on when.

For examples (using % to keep it simple) three different hypothetical scenarios:

1) if I'm currently at 66% LTV, I plan to pay off the equivalent of 5% LTV at some point in the future and my mortgage payments will naturally reduce the balance the equivalent of 1% LTV. I'd imagine I couldn't lock in a 60% LTV deal now because the lender has no guarantee I'll make the lump sum payment and be sub 60% at the time of the switch.

2) if I'm currently at 66% LTV, make the lump sum payment now bringing it to 61% LTV and can see that my mortgage payments will naturally reduce the balance the equivalent of 1% LTV at the time of the switch. Would a lender allow the locking in of a 60% LTV deal now when technically the borrower is currently at 61% LTV? Or would this be a 'computer says no' issue?

3) Just dump money into the mortgage to get to 60% LTV now, which undoubtedly would allow the locking in of a 60% LTV deal in the future.

Hope that makes sense?

@exodi I'll make a distinction between a product-switch (staying with your current lender) and a remortgage (changing to a new lender)

Product switch - what you've said in 1 is broadly correct. Generally speaking, you will only be able to reserve a product switch based on the exact LTV (based on the indexed valuation on the lender's system) that shows on the lender's system at the point that you apply to reserve a switch. Even so, I can't speak for your specific case or lender, perhaps they might have some discretion for a manual direct product switch.

Remortgage - you can get a remortgage offer for a 60% LTV (based on actual valuation, not the automatic indexed one) amount and as long as you bring the balance down to the mortgage offer amount a few weeks before completion, it should be fine.

Do keep in mind that the automatic indexed valuation on the lender's system (used for the product switch) may wildly differ from the valuation that a new lender would use for a remortgage.

I don't know how far you are from the end of the fix but for future reference, for extra optionality, do keep in mind that you can often secure a remortgage rate a lot earlier than 6 months - NatWest allows a 1 month extension so you get 7 months, Nationwide has a 90 day product reservation feature and a 15 day extension so effectively gives you around 8.5 months, Platform does 6+3, and a couple of lenders will do 6+6 on remortgage offers.

Hi K_S,

Thanks for swift reply, that's all very helpful, I know exactly what you mean about automatic indexed valuations - I have been creating dummy product applications on the internet banking where it states their assessment of the house price. My LTV calculations are based off this value since I know that's what they are using. I'm with Nationwide and I believe their house values renew quarterly (with the next in April).

The bottom bit is very interesting (regarding timings), I'm not completely clear so I'd appreciate if you could help me a little bit more (thanks!).

Without making it too complicated, I have a big mortgage and a relatively small further advance (a relic of buying my ex out several years ago). I'd like to combine them both into one mortgage during a product-switch. The big mortgage fix @1.99% ends 30/06 this year and the smaller further advance fix @4.29% ends 31/10.

My plan was, as it's not in my interests to renew the big mortgage at a relatively low interest rate early, to have the product-switch happen on the 1st July (which also merges both into one). This is obviously 4 months early on the further advance, but I don't believe this is an issue?

At what point could I apply for the switch (I thought the earliest would be 6 months from the further advance, so 1st May?). Could you expand on the 90 days reservation/extension/etc?

Thanks so much for help so far!

K_S

Exodi said:

K_S said:

Exodi said:

Long story short, my fixed term is up later this year. I've worked out what affect my mortgage payments will have on the LTV over the next few months, and am considering making a small lump sum payment to get myself into a new LTV bracket for a slightly smaller interest rate.

However, I'm unsure about the interaction between current/future LTV and what fixes can be locked on when.

For examples (using % to keep it simple) three different hypothetical scenarios:

1) if I'm currently at 66% LTV, I plan to pay off the equivalent of 5% LTV at some point in the future and my mortgage payments will naturally reduce the balance the equivalent of 1% LTV. I'd imagine I couldn't lock in a 60% LTV deal now because the lender has no guarantee I'll make the lump sum payment and be sub 60% at the time of the switch.

2) if I'm currently at 66% LTV, make the lump sum payment now bringing it to 61% LTV and can see that my mortgage payments will naturally reduce the balance the equivalent of 1% LTV at the time of the switch. Would a lender allow the locking in of a 60% LTV deal now when technically the borrower is currently at 61% LTV? Or would this be a 'computer says no' issue?

3) Just dump money into the mortgage to get to 60% LTV now, which undoubtedly would allow the locking in of a 60% LTV deal in the future.

Hope that makes sense?

@exodi I'll make a distinction between a product-switch (staying with your current lender) and a remortgage (changing to a new lender)

Product switch - what you've said in 1 is broadly correct. Generally speaking, you will only be able to reserve a product switch based on the exact LTV (based on the indexed valuation on the lender's system) that shows on the lender's system at the point that you apply to reserve a switch. Even so, I can't speak for your specific case or lender, perhaps they might have some discretion for a manual direct product switch.

Remortgage - you can get a remortgage offer for a 60% LTV (based on actual valuation, not the automatic indexed one) amount and as long as you bring the balance down to the mortgage offer amount a few weeks before completion, it should be fine.

Do keep in mind that the automatic indexed valuation on the lender's system (used for the product switch) may wildly differ from the valuation that a new lender would use for a remortgage.

I don't know how far you are from the end of the fix but for future reference, for extra optionality, do keep in mind that you can often secure a remortgage rate a lot earlier than 6 months - NatWest allows a 1 month extension so you get 7 months, Nationwide has a 90 day product reservation feature and a 15 day extension so effectively gives you around 8.5 months, Platform does 6+3, and a couple of lenders will do 6+6 on remortgage offers.

Hi K_S,

Thanks for swift reply, that's all very helpful, I know exactly what you mean about automatic indexed valuations - I have been creating dummy product applications on the internet banking where it states their assessment of the house price. My LTV calculations are based off this value since I know that's what they are using. I'm with Nationwide and I believe their house values renew quarterly (with the next in April).

The bottom bit is very interesting (regarding timings), I'm not completely clear so I'd appreciate if you could help me a little bit more (thanks!).

Without making it too complicated, I have a big mortgage and a relatively small further advance (a relic of buying my ex out several years ago). I'd like to combine them both into one mortgage during a product-switch. The big mortgage fix @1.99% ends 30/06 this year and the smaller further advance fix @4.29% ends 31/10.

My plan was, as it's not in my interests to renew the big mortgage at a relatively low interest rate early, to have the product-switch happen on the 1st July (which also merges both into one). This is obviously 4 months early on the further advance, but I don't believe this is an issue?

At what point could I apply for the switch (I thought the earliest would be 6 months from the further advance, so 1st May?). Could you expand on the 90 days reservation/extension/etc?

Thanks so much for help so far!

@exodi All the below applies to broker PTs (product transfer / product switch / rate switch), I've no idea whether it is any different for direct PTs.

- With a PT, staying with the same lender, you can't combine two mortgage parts into one. They'll always stay as two separate parts even if you align the end-dates by paying ERC on one part.

- The earliest that you can book a PT is 6 months before the fix end date, and that applies to both parts separately. So for the 30-Jun part it would be early Jan, for the 31 Oct part it would be early May. 

- If you wish to align the end-dates (you will still have 2 different parts) on 1 July, then you will need to pay the applicable ERC on the second part.

- Alternatively, book a PT in early May for the second part to kick in on 1 August (which is the earliest in the 3 months ERC waiver period for part 2) so the two end dates would only be mis-aligned by 1 month. Another option, if rates in early May are similar to now, then you could book a PT (potentially rebook for the first part) for both parts to kick in on 1 August, but it will cost you a month on SVR for the bigger part.

- depending on how big/small the second part is, yet another option is to just PT the smaller part on to a Nationwide ERC-free tracker and hammer away at it until it disappears so then you just end up with one part.

Reservation/offer-extension - These are two examples of how it works. Afaik, only applies to new-business re-mortgages, not existing borrower PTs

Nationwide 90 day product reservation on DIP - https://www.nationwide-intermediary.co.uk/products/reserving-a-product. This is unique to Nationwide.

6+X months offer validity - The initial offer is for 6 months. In the final month you can apply for a re-offer on the same product/rate and the reissued offer has its validity extended for X months (X depends on the lender). It's not a full reapplication process, generally involves a refresh of payslip, refreshed automatic valuation and a customer declaration saying no change in circumstances.