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Mortgage broker - ask me anything

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  • Dogsasleep
    Dogsasleep Posts: 11 Forumite
    10 Posts Name Dropper
    Hi - how are lenders viewing the new payrolling benefit in kind system? Halifax don't seem to understand it and have deducted the total monthly BIK from gross pay on our mortgage application - rather than understanding that its only shown on the payslip to demonstrate how much of the gross pay is BIK.  Are you aware of any lenders who understand the new system and accept that the net pay on the pay slip IS actually the amount paid...  
  • K_S
    K_S Posts: 6,880 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    edited 18 April 2024 at 2:50PM
    Hi - how are lenders viewing the new payrolling benefit in kind system? Halifax don't seem to understand it and have deducted the total monthly BIK from gross pay on our mortgage application - rather than understanding that its only shown on the payslip to demonstrate how much of the gross pay is BIK.  Are you aware of any lenders who understand the new system and accept that the net pay on the pay slip IS actually the amount paid...  
    @dogsasleep Unless I'm missing something obvious, that sounds about right?

    Or are they reducing the BIK amount on the payslip from the basic pay / salary line on the payslip?

    If your payslip says
    Basic pay / salary: 5k
    BIK car: 1k
    Gross: 6k

    Are they treating the income as 5k or 4k? 5k would be correct, 4k would be incorrect.

    Just to be clear, I can read all kinds of payslips for a mortgage but am not aware of the "new payrolling BIK" system that you refer to. I've never come across the problem of the lender taking out BIK twice such that it understates the applicant's income.

    If they are indeed double counting it by mistake, then if you're using a broker they should be able to sort it out pretty easily.

    If direct and they don't see sense, put in a formal complaint so it moves from the processor sitting overseas to a senior underwriter in the UK who can look at it properly.

    All the best, hope you get to offer soon!

    I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. 

    PLEASE DO NOT SEND PMs asking for one-to-one-advice, or representation.

  • GoingOn30
    GoingOn30 Posts: 231 Forumite
    Sixth Anniversary 100 Posts Name Dropper
    Can anyone help me compare 2 mortgage products to compare the costs over a 2years? This is to help me decide between a tracker and a fix when our product ends in 6 weeks. I know the answer depends on what happens to rates so want to make a couple of assumptions in these calculations. In Jan when we applied for a new product it looked like rates would fall faster than current projections so I just want to revisit the decision before we pay a product fee. 

    Equity: £310k, outstanding mortgage £290k. Term length 33 yrs

    Tracker product - 0.19 above base rate (so currently 5.44%), I'd like to assume one 0.25 base rate fall this year and 2 next financial year, product fee is £999
    Fixed product - 4.63% for 2 years, product fee is £1114

    Essentially I want to know how many base rate falls would be needed in the next 2 years to make the tracker worth it. 
    Anyone any thoughts? 

  • K_S
    K_S Posts: 6,880 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    edited 18 April 2024 at 3:09PM
    GoingOn30 said:
    Can anyone help me compare 2 mortgage products to compare the costs over a 2years? This is to help me decide between a tracker and a fix when our product ends in 6 weeks. I know the answer depends on what happens to rates so want to make a couple of assumptions in these calculations. In Jan when we applied for a new product it looked like rates would fall faster than current projections so I just want to revisit the decision before we pay a product fee. 

    Equity: £310k, outstanding mortgage £290k. Term length 33 yrs

    Tracker product - 0.19 above base rate (so currently 5.44%), I'd like to assume one 0.25 base rate fall this year and 2 next financial year, product fee is £999
    Fixed product - 4.63% for 2 years, product fee is £1114

    Essentially I want to know how many base rate falls would be needed in the next 2 years to make the tracker worth it. 
    Anyone any thoughts? 

    @goingon30 You'll have to do the legwork to get an exact figure.

    Very approximate back of fag packet calcs

    - ignoring the 999 Vs 1114 diff in fees as it's tiny for a 290k loan size.

    - rate diff of 0.81% between the two products

    - to potentially save any money at all on the tracker Vs the fix, you'll need the base rate to go down by at least 0.81%, so 1% (assuming rate cuts will be in 0.25% steps).

    - Even with a 1% drop in rates, you'll need it to happen pretty early within the 2 years for it to stand any chance of turning out cheaper than the fix over 2 years

    Hopefully I haven't missed anything obvious!

    I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. 

    PLEASE DO NOT SEND PMs asking for one-to-one-advice, or representation.

  • Dogsasleep
    Dogsasleep Posts: 11 Forumite
    10 Posts Name Dropper
    K_S said:
    Hi - how are lenders viewing the new payrolling benefit in kind system? Halifax don't seem to understand it and have deducted the total monthly BIK from gross pay on our mortgage application - rather than understanding that its only shown on the payslip to demonstrate how much of the gross pay is BIK.  Are you aware of any lenders who understand the new system and accept that the net pay on the pay slip IS actually the amount paid...  
    @dogsasleep Unless I'm missing something obvious, that sounds about right?

    Or are they reducing the BIK amount on the payslip from the basic pay / salary line on the payslip?

    If your payslip says
    Basic pay / salary: 5k
    BIK car: 1k
    Gross: 6k

    Are they treating the income as 5k or 4k? 5k would be correct, 4k would be incorrect.

    Just to be clear, I can read all kinds of payslips for a mortgage but am not aware of the "new payrolling BIK" system that you refer to. I've never come across the problem of the lender taking out BIK twice such that it understates the applicant's income.

    If they are indeed double counting it by mistake, then if you're using a broker they should be able to sort it out pretty easily.

    If direct and they don't see sense, put in a formal complaint so it moves from the processor sitting overseas to a senior underwriter in the UK who can look at it properly.

    All the best, hope you get to offer soon!
    Thank you for your advice, the payslip would look like this:

    It says Gross £5k on left, then tax and NI deductions - £1k on right hand side, then ( -£500 BIK) - in brackets and as a negative... also on deductions side.
    Net Pay £4k at bottom (which corresponds to the amount paid into bank account).   

    So the TAXABLE amount of BIK that month is £500, with the actual amount of tax paid being included in the tax deduction.  There is no other deduction. and £500 def isn't deducted.

    Halifax are then deducting the (-£500) from the net pay and judging mortgage on £3500 - even though they can see that is NOT what is being paid into bank each month.  The broker says they're not listening to her!
  • Rottieland
    Rottieland Posts: 11 Forumite
    10 Posts Name Dropper
    Can any one give advise on mortgage into retirement.
    OK so, do lenders facter in any of the current income. (9yrs until retirement). Or base solely on retirement income.
    Looking into the possibility of getting mortgage until 75 (17 years) or 80 (21 years) if we can get the lender.
    Also is basic full state pension countable. Or just private pension pot  and other income from rental property.
  • K_S
    K_S Posts: 6,880 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    edited 19 April 2024 at 8:00PM
    Can any one give advise on mortgage into retirement.
    OK so, do lenders facter in any of the current income. (9yrs until retirement). Or base solely on retirement income.
    Looking into the possibility of getting mortgage until 75 (17 years) or 80 (21 years) if we can get the lender.
    Also is basic full state pension countable. Or just private pension pot  and other income from rental property.
    @rottieland Depends on the lender and the specifics.

    Generally speaking, if you're within 10 years of intended retirement age, and the term goes into retirement, most (not all) lenders will base max borrowing on provable retirement income.

    From your numbers it looks like you are 58 and intend to retire at 67. If your intended retirement age was 70, 75 or 80, there are a decent number of mainstream lenders that may consider a term to 75 or 80 based solely on your current income, subject to the individual lender criteria for lending beyond 70 on current income and/or lending into retirement.

    FYI the only professions for which lenders might question an intended retirement age of 70+ is where it isn't plausible. If you're in a desk based role, it's usually ok with most mainstream lenders, even if you're a civil servant, a desk based role in the police, etc.

    I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. 

    PLEASE DO NOT SEND PMs asking for one-to-one-advice, or representation.

  • Rottieland
    Rottieland Posts: 11 Forumite
    10 Posts Name Dropper
    K_S said:
    Can any one give advise on mortgage into retirement.
    OK so, do lenders facter in any of the current income. (9yrs until retirement). Or base solely on retirement income.
    Looking into the possibility of getting mortgage until 75 (17 years) or 80 (21 years) if we can get the lender.
    Also is basic full state pension countable. Or just private pension pot  and other income from rental property.
    @rottieland Depends on the lender and the specifics.

    Generally speaking, if you're within 10 years of intended retirement age, and the term goes into retirement, most (not all) lenders will base max borrowing on provable retirement income.

    From your numbers it looks like you are 58 and intend to retire at 67. If your intended retirement age was 70, 75 or 80, there are a decent number of mainstream lenders that may consider a term to 75 or 80 based solely on your current income, subject to the individual lender criteria for lending beyond 70 on current income and/or lending into retirement.

    FYI the only professions for which lenders might question an intended retirement age of 70+ is where it isn't plausible. If you're in a desk based role, it's usually ok with most mainstream lenders, even if you're a civil servant, a desk based role in the police, etc.
    She will be 58 in June we did the government calculator and the result was.

    You’ll reach State Pension age on 30 June 2033.

    Your State Pension age is 67 years.

    Is this what the lenders will work of. 

    Allow she doesn't plan to retire on this date.

    She does care in the community, basically just calling in with elderly people to make sure there ok.

  • K_S
    K_S Posts: 6,880 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    K_S said:
    Can any one give advise on mortgage into retirement.
    OK so, do lenders facter in any of the current income. (9yrs until retirement). Or base solely on retirement income.
    Looking into the possibility of getting mortgage until 75 (17 years) or 80 (21 years) if we can get the lender.
    Also is basic full state pension countable. Or just private pension pot  and other income from rental property.
    @rottieland Depends on the lender and the specifics.

    Generally speaking, if you're within 10 years of intended retirement age, and the term goes into retirement, most (not all) lenders will base max borrowing on provable retirement income.

    From your numbers it looks like you are 58 and intend to retire at 67. If your intended retirement age was 70, 75 or 80, there are a decent number of mainstream lenders that may consider a term to 75 or 80 based solely on your current income, subject to the individual lender criteria for lending beyond 70 on current income and/or lending into retirement.

    FYI the only professions for which lenders might question an intended retirement age of 70+ is where it isn't plausible. If you're in a desk based role, it's usually ok with most mainstream lenders, even if you're a civil servant, a desk based role in the police, etc.
    She will be 58 in June we did the government calculator and the result was.

    You’ll reach State Pension age on 30 June 2033.

    Your State Pension age is 67 years.

    Is this what the lenders will work of. 

    Allow she doesn't plan to retire on this date.

    She does care in the community, basically just calling in with elderly people to make sure there ok.

    @rottieland Max retirement age and max term based on current employment income depends on the specific lender's policy. They will usually fall into one of the following buckets -

    - state retirement age (very few lenders, usually small building societies)

    - profession linked mandated retirement age (usually uniformed services)

    - 70 max retirement age and max term

    - 70 max retirement age, max term to 75 based on current employment income as long as more than x years from retirement and/or no older than X years at application and/or proof of current pension contributions eg: Nationwide

    - 75 max retirement age and max term eg: NatWest 

    - 80 Max retirement age and max term, with some lenders capping affordability based on term to 70 or 75 eg: Accord

    - other permutations and combinations

    I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. 

    PLEASE DO NOT SEND PMs asking for one-to-one-advice, or representation.

  • Rottieland
    Rottieland Posts: 11 Forumite
    10 Posts Name Dropper
    K_S said:
    K_S said:
    Can any one give advise on mortgage into retirement.
    OK so, do lenders facter in any of the current income. (9yrs until retirement). Or base solely on retirement income.
    Looking into the possibility of getting mortgage until 75 (17 years) or 80 (21 years) if we can get the lender.
    Also is basic full state pension countable. Or just private pension pot  and other income from rental property.
    @rottieland Depends on the lender and the specifics.

    Generally speaking, if you're within 10 years of intended retirement age, and the term goes into retirement, most (not all) lenders will base max borrowing on provable retirement income.

    From your numbers it looks like you are 58 and intend to retire at 67. If your intended retirement age was 70, 75 or 80, there are a decent number of mainstream lenders that may consider a term to 75 or 80 based solely on your current income, subject to the individual lender criteria for lending beyond 70 on current income and/or lending into retirement.

    FYI the only professions for which lenders might question an intended retirement age of 70+ is where it isn't plausible. If you're in a desk based role, it's usually ok with most mainstream lenders, even if you're a civil servant, a desk based role in the police, etc.
    She will be 58 in June we did the government calculator and the result was.

    You’ll reach State Pension age on 30 June 2033.

    Your State Pension age is 67 years.

    Is this what the lenders will work of. 

    Allow she doesn't plan to retire on this date.

    She does care in the community, basically just calling in with elderly people to make sure there ok.

    @rottieland Max retirement age and max term based on current employment income depends on the specific lender's policy. They will usually fall into one of the following buckets -

    - state retirement age (very few lenders, usually small building societies)

    - profession linked mandated retirement age (usually uniformed services)

    - 70 max retirement age and max term

    - 70 max retirement age, max term to 75 based on current employment income as long as more than x years from retirement and/or no older than X years at application and/or proof of current pension contributions eg: Nationwide

    - 75 max retirement age and max term eg: NatWest 

    - 80 Max retirement age and max term, with some lenders capping affordability based on term to 70 or 75 eg: Accord

    - other permutations and combinations
    That's great thank you very much 😊 
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