Mortgage broker - ask me anything

theonenonly

Maybe a bit of a quirky query but here goes:

Parents own their home, have about £50k left on their interest only mortgage and 7 years. They're in their late 50s and father pretty much part time, on minimum wage. House is now worth about £500k

A house has gone up for sale on their road. Asking for £525k. They want me to buy it but I can only borrow £340k, and have about £60k cash.

They floated the idea of remortgaging their current property to offset the difference. Will that work?

Another option is they remortgage the whole house and buy the new property to rent out, eventually leaving this for me after their passing.

In strictly mortgage terms, are either of these feasible?

K_S

theonenonly said:

Maybe a bit of a quirky query but here goes:

Parents own their home, have about £50k left on their interest only mortgage and 7 years. They're in their late 50s and father pretty much part time, on minimum wage. House is now worth about £500k

A house has gone up for sale on their road. Asking for £525k. They want me to buy it but I can only borrow £340k, and have about £60k cash.

They floated the idea of remortgaging their current property to offset the difference. Will that work?

Another option is they remortgage the whole house and buy the new property to rent out, eventually leaving this for me after their passing.

In strictly mortgage terms, are either of these feasible?

@theonenonly

If your father’s only income is a part-time min wage job, and they already have a 50k mortgage, it’s unlikely that the numbers will add up to a normal capital-raise remortgage as their income will not support it. The options available (if any) to release cash will probably be through later-life (55+) lending options like equity release, RIO, etc.

Alternatively, if your parents want to help you bridge the 125k gap, you could potentially look at lenders like Tipton that offer family assist type products with collateral charges (additional charge on the parent’s property to make up the shortfall) which is typically useful for parents who wish to help but do not have the cash to gift.

MoneysavingSam

I think this is a stupid question so apologies in advance.  Also these are rough numbers so it's more the principle I need help with! 

Recently moved from a 1.3% fixed repayment mortgage (rough balance is/was £250k) the monthly repayment was circa £1090 with around £800 going towards reducing the capital balance. 

Moved to a variable rate of 5.5% - repayments have jumped to around £1600 (term has remained the same) but the capital repayment element is now only around £500! 

My understanding was that the repayments have jumped due to the increase in interest so why does the capital repayment also reduce, feels like a double whammy of bad!  

K_S

MoneysavingSam said:

I think this is a stupid question so apologies in advance.  Also these are rough numbers so it's more the principle I need help with! 

Recently moved from a 1.3% fixed repayment mortgage (rough balance is/was £250k) the monthly repayment was circa £1090 with around £800 going towards reducing the capital balance. 

Moved to a variable rate of 5.5% - repayments have jumped to around £1600 (term has remained the same) but the capital repayment element is now only around £500! 

My understanding was that the repayments have jumped due to the increase in interest so why does the capital repayment also reduce, feels like a double whammy of bad!  

@moneysavingsam Not sure if I understand your question but here goes - when you switch from a lower interest rate to a higher one, the proportion of your monthly payment that goes towards interest increases, which means less of your payment is available to reduce the capital. This is why, even though your total monthly payment has increased after moving to a 5.5% interest rate, the amount that goes towards the capital has decreased.

If you have £300 cash spare at the end of the month, you could consider setting up a regular overpayment so that you’re still paying off at least £800 capital a month in total. When you make an overpayment, all of it goes straight to capital.

littleivy

We are trying to change mortgage providers, Kensington sold our account to Mars Capital Feb 2023, we have a charging order of around£4,500 since 2008 , we don't want to borrow any money we just want to get away from Mars Capital as they are not a nice company . We have £16K arrears , and this happened as i had cancer and my husband had to give his up business to look after me, Mars Capital now receive £300 support for mortgage interest and we agreed to make up the rest which is the full contractual payment for the next six months , then they will consider capitalising the arrears (although not sure they will as when it was with Kensington they capitalised arrears back in 2008),so I have written to the people who put the charging order on our home to ask if a full and final payment would be accepted , the debt was my husbands so should this be halved in a full and final offer ? thank you . We do have a possible company who will consider us , waiting for them to get back to us , but the charging order I fear will stop this ?

silvercar

At what point would a pregnancy need to be declared on a mortgage application, or to a broker?

Close family member and spouse have their mortgage offer, but haven’t yet exchanged contracts. She is in the very, very early stages of pregnancy. She has 6 months full pay on maternity leave and fully intends to return to work full time, so there would be no drop on income. Family could in theory support all childcare needs, though likely the baby will go to childcare part of the week. But it is still very early days, so firm discussions on childcare haven’t taken place. The couple don’t really want to announce to anyone outside immediate family as yet. Is there an obligation to do so? And at what point of the pregnancy would that become a legal requirement. 

K_S

silvercar said:

At what point would a pregnancy need to be declared on a mortgage application, or to a broker?

Close family member and spouse have their mortgage offer, but haven’t yet exchanged contracts. She is in the very, very early stages of pregnancy. She has 6 months full pay on maternity leave and fully intends to return to work full time, so there would be no drop on income. Family could in theory support all childcare needs, though likely the baby will go to childcare part of the week. But it is still very early days, so firm discussions on childcare haven’t taken place. The couple don’t really want to announce to anyone outside immediate family as yet. Is there an obligation to do so? And at what point of the pregnancy would that become a legal requirement. 

@silvercar In theory, any upcoming material changes that will impact income/expenditure/commitments should be declared up to completion. To the lender if direct, to the broker if using one.

As a broker if my client informed me post-offer, I would make a judgement call. To take two extreme examples - if it was an FTB couple borrowing 5x their income at 95% LTV, I would most likely inform the lender who might ask me to modify the app and rerun scoring and affordability. If it was a home-mover couple borrowing 2x their income at 60% LTV and the client confirmed mat pay and return to work, I might decide that it isn't material.

In practice, from my experience with clients, plenty will withhold information about an upcoming pregnancy both before app and before completion. I usually stumble upon it when doing their remortgage where I get the dependent's dob And really there's no way for the broker or lender to know without the client telling them. Not condoning it, just stating how it is!

Pucky89

Hi there, 

Currently in a predicament with upcoming mortgage term renewal. 

I havre around 45k to pay off and can pay 10k off now as in the last month before renewing.

I will have inheritance due at some point (about to go through probate) that would pay off remaining sum.

 Offers are a fixed 2 year at 4.99 or tracker at 5.99. Tracker enables repayment without fees, fixed will be either 1.5 or 2% dependant what year it’s paid back in.

Any advice on what to do so I don’t end up paying too much extra?

Cheers! 

K_S

Pucky89 said:

Hi there, 

Currently in a predicament with upcoming mortgage term renewal. 

I havre around 45k to pay off and can pay 10k off now as in the last month before renewing.

I will have inheritance due at some point (about to go through probate) that would pay off remaining sum.

 Offers are a fixed 2 year at 4.99 or tracker at 5.99. Tracker enables repayment without fees, fixed will be either 1.5 or 2% dependant what year it’s paid back in.

Any advice on what to do so I don’t end up paying too much extra?

Cheers! 

@pucky89 Based on the limited info in your post, I'd consider just going with the fix probably, reduce the term to the minimum possible, and overpay as much as I can upto the penalty free overpayment limit.

AIUI, with Nationwide, the 10% overpayment allowance is based on the original balance when you first took out the mortgage with Nationwide, so depending on how big the mortgage was at the start, you might have a hefty allowance (15k if your original mortgage was 150k) compared to the current loan size of 35k.

Rottieland

Buy-2-let mortgages rates.
Can anyone tell me if these price comparison sites have the rates correct or is it all a gimmick.
I've been on l+c and there is rates from 3.7% + fees and up.
But a local financial advisor is saying there more like 6% at the minute