Mortgage broker - ask me anything

LL198585

K_S said:

LL198585 said:

Hi all quick question 

my partner house is worth 160 grand and owes 78 grand to Newcastle building society.

when she bought the house she was on 24 grand a year but now earns 10 thousand due to baby and  has my second income but I’m not in a position to get credit.

will she be able to borrow extra money to cover home improvements when she makes just 10 grand a year? Perfect credit and no other debts 

thanks in advance 

LL

@ll198585 Not likely on a 10k income as it wouldn’t meet affordability to borrow the existing loan amount of 78k, let alone any additional funds on top of that.

Thanks for the reply. I guess I thought because she had a bit of equity she might of got the chance. I know we can’t use my wage as a second income which is a shame 

BarelySentientAI

LL198585 said:

K_S said:

LL198585 said:

Hi all quick question 

my partner house is worth 160 grand and owes 78 grand to Newcastle building society.

when she bought the house she was on 24 grand a year but now earns 10 thousand due to baby and  has my second income but I’m not in a position to get credit.

will she be able to borrow extra money to cover home improvements when she makes just 10 grand a year? Perfect credit and no other debts 

thanks in advance 

LL

@ll198585 Not likely on a 10k income as it wouldn’t meet affordability to borrow the existing loan amount of 78k, let alone any additional funds on top of that.

Thanks for the reply. I guess I thought because she had a bit of equity she might of got the chance. I know we can’t use my wage as a second income which is a shame 

Equity tends to mean "can borrow at a better rate" and not "can borrow more money".

Myci85

Hi all,

I'm not sure if there is a standard answer to this question or if it may vary with different lenders. 

If you agree a purchase price for a property, get a mortgage offer, and then end up agreeing a lower purchase price, would the mortgage underwriting need to be done again, or would it be a simple case of just altering the figures? I know in theory if you're offered a mortgage, there should be no issue offering a lower amount, but we're currently in a position of mortgage broker and their business manager trying to push through a mortgage offer that the underwriter thinks doesn't meet criteria. If by some miracle we do get the offer through, there is an issue with the property that we weren't made aware of initially, that we would like to negotiate a price reduction on, but if that could jeopardise the mortgage offer it wouldn't be worth it!

K_S

Myci85 said:

Hi all,

I'm not sure if there is a standard answer to this question or if it may vary with different lenders. 

If you agree a purchase price for a property, get a mortgage offer, and then end up agreeing a lower purchase price, would the mortgage underwriting need to be done again, or would it be a simple case of just altering the figures? I know in theory if you're offered a mortgage, there should be no issue offering a lower amount, but we're currently in a position of mortgage broker and their business manager trying to push through a mortgage offer that the underwriter thinks doesn't meet criteria. If by some miracle we do get the offer through, there is an issue with the property that we weren't made aware of initially, that we would like to negotiate a price reduction on, but if that could jeopardise the mortgage offer it wouldn't be worth it!

@myci85 Generally speaking it will not require full re-underwriting just for adjusting the PP and reissuing the offer.

It will usually require ‘rescoring’ on the lender’s system which may or may not have ramifications on the application depending on the specific numbers, whether there’s any LTV change (as the lender’s valuation of the property will usually be adjusted down to the renegotiated PP), etc.

KE48

K_S said:

KE48 said:

Why might a lender say they can lend significantly less when porting and borrowing more than taking out a new 5 year fix? Is the affordability assessment different between options? 

@ke48 How significant? And is there still a difference if you were taking out a 2 year fix and not a 5? It could have something to do with the ported part ending in <5 years and hence being subject to a higher stress-rest compared to the 5 year fix. Still shouldn’t be a huge difference though.

Generally speaking, the lender’s system uses the same affordability calculator for both so if the inputs and requirements are consistent, they should give results that aren’t too far off each other.

So we’ve been told we cannot port due to the amount of additional borrowing we need and increase in loan to value, linked to some new policy re 5 year affordability. So we’d have to take out a new deal and pay the very large ERC unless we have a gap between completion and purchase. Of all the things I thought might catch us out, this wasn’t one of them. 

K_S

KE48 said:

K_S said:

KE48 said:

Why might a lender say they can lend significantly less when porting and borrowing more than taking out a new 5 year fix? Is the affordability assessment different between options? 

@ke48 How significant? And is there still a difference if you were taking out a 2 year fix and not a 5? It could have something to do with the ported part ending in <5 years and hence being subject to a higher stress-rest compared to the 5 year fix. Still shouldn’t be a huge difference though.

Generally speaking, the lender’s system uses the same affordability calculator for both so if the inputs and requirements are consistent, they should give results that aren’t too far off each other.

So we’ve been told we cannot port due to the amount of additional borrowing we need and increase in loan to value, linked to some new policy re 5 year affordability. So we’d have to take out a new deal and pay the very large ERC unless we have a gap between completion and purchase. Of all the things I thought might catch us out, this wasn’t one of them. 

@ke48 Sorry to hear that, always a possibility with porting unfortunately as you’re dependent on ticking the boxes for one single lender.

Having said that, if the same lender is telling you that they will lend you (I’m using made up numbers) 500k on a new 5 year fix at 85% LTV, but won’t allow you to port 300k and borrow 200k extra on an 85% LTV 5 year fix, then as an applicant I would raise a complaint and see where it gets me as you could argue that it doesn’t meet their obligations under Consumer Duty / TCF. In cases like these, lenders can often exercise a good level of discretion when it comes to porting and existing customers.

KE48

K_S said:

KE48 said:

K_S said:

KE48 said:

Why might a lender say they can lend significantly less when porting and borrowing more than taking out a new 5 year fix? Is the affordability assessment different between options? 

@ke48 How significant? And is there still a difference if you were taking out a 2 year fix and not a 5? It could have something to do with the ported part ending in <5 years and hence being subject to a higher stress-rest compared to the 5 year fix. Still shouldn’t be a huge difference though.

Generally speaking, the lender’s system uses the same affordability calculator for both so if the inputs and requirements are consistent, they should give results that aren’t too far off each other.

So we’ve been told we cannot port due to the amount of additional borrowing we need and increase in loan to value, linked to some new policy re 5 year affordability. So we’d have to take out a new deal and pay the very large ERC unless we have a gap between completion and purchase. Of all the things I thought might catch us out, this wasn’t one of them. 

@ke48 Sorry to hear that, always a possibility with porting unfortunately as you’re dependent on ticking the boxes for one single lender.

Having said that, if the same lender is telling you that they will lend you (I’m using made up numbers) 500k on a new 5 year fix at 85% LTV, but won’t allow you to port 300k and borrow 200k extra on an 85% LTV 5 year fix, then as an applicant I would raise a complaint and see where it gets me as you could argue that it doesn’t meet their obligations under Consumer Duty / TCF. In cases like these, lenders can often exercise a good level of discretion when it comes to porting and existing customers.

Thank you. I think the issue is the additional borrowing is more than the porting amount. But it seems odd that we can borrow more than we wanted to to cover the substantial ERC on a new deal, which also worsens the LTV. But then we can have a refund if we have a gap between transactions. I knew porting would be subject to their terms at the time but this seems a bit bonkers. 

lea

Hello

I seperated from my husband approx. 8 years ago. We have a joint outstanding mortgage of approx £150k on a property worth in region of £300k. He remains in the property and pays the mortgage and bills with the help of a lodger and with his business (see below). I have not lived in the property for 8 years although legally we are still married and joint owners of the property. The mortgage was taken out by us initially to repay a business overdraft he had on his business (before this, he owned this property outright with no mortgage due to a family joint owner passing away, but the bank recalled his business overdraft and as he had recently started up as self employed, he couldnt solely borrow against the property without me being a joint applicant.) So together we borrowed money out of the house to repay the business debt, and the mortgage is considered a business debt although its a personal mortgage.

I am in a lot of personal credit card debt from trying to start my life over after splitting from him and high rental costs and a low income. I have been speaking to Stepchange about the possibility of taking on a DMP or an IVA. I'm wanting to know how this might affect my ex partner and our joint mortgage. Ex is of the opinion that because I have not lived in house for nearly a decade and he has been covering bills and mortgage, and he owned it before I came along, and because of the mortgage being a business debt, that it is his property and my name being on it is a technicality.

Our fixed term mortgage ends early 2026 and is on a very low interest rate of 1% ish.

If I take out a DMP or IVA will my ex be affected?
Should my ex consider attempting a remortgage is his sole name now, or wait til 2026?
If I default on any credit card payments in the mean time, will his ability to remortgage solely be affected?
Is there anything else we need to consider?

Thanks so much

K_S

@lea Quick comments - 

- both of you need to get copies of your credit reports and check if you are marked as a ‘financial associate’ on each other’s reports

- if Yes, then one of you having credit issues on your report may impact the other when they make new applications for credit (eg: remortgaging to another lender, opening a new credit card, opening a new bank account, etc.). The more severe the marker, the bigger the impact.

- given that you have lived apart for 6+ months, even though you have a joint mortgage, you can speak to the credit bureau to apply to break the financial association. If you’re still legally married that might not be possible but I’m not entirely sure.

- your name being on the property deeds and the mortgage is certainly not a ‘technicality’ imho. The fact that he used the funds raised for his business does not make it a business debt, to the lender or your credit report. As far as the lender is concerned, it is debt held by yourself+ex and secured against the house that your ex lives in.

- if your ex wants to take on the whole mortgage, and he can afford it (as per the current lender’s criteria and affordability) he doesn’t need to wait till 2026 or break the current fix. All he needs to do is apply with his current lender for a transfer-of-equity which transfers 100% of the ownership to his name and 100% of the mortgage in his sole name.

lea said:

Hello

I seperated from my husband approx. 8 years ago. We have a joint outstanding mortgage of approx £150k on a property worth in region of £300k. He remains in the property and pays the mortgage and bills with the help of a lodger and with his business (see below). I have not lived in the property for 8 years although legally we are still married and joint owners of the property. The mortgage was taken out by us initially to repay a business overdraft he had on his business (before this, he owned this property outright with no mortgage due to a family joint owner passing away, but the bank recalled his business overdraft and as he had recently started up as self employed, he couldnt solely borrow against the property without me being a joint applicant.) So together we borrowed money out of the house to repay the business debt, and the mortgage is considered a business debt although its a personal mortgage.

I am in a lot of personal credit card debt from trying to start my life over after splitting from him and high rental costs and a low income. I have been speaking to Stepchange about the possibility of taking on a DMP or an IVA. I'm wanting to know how this might affect my ex partner and our joint mortgage. Ex is of the opinion that because I have not lived in house for nearly a decade and he has been covering bills and mortgage, and he owned it before I came along, and because of the mortgage being a business debt, that it is his property and my name being on it is a technicality.

Our fixed term mortgage ends early 2026 and is on a very low interest rate of 1% ish.

If I take out a DMP or IVA will my ex be affected?
Should my ex consider attempting a remortgage is his sole name now, or wait til 2026?
If I default on any credit card payments in the mean time, will his ability to remortgage solely be affected?
Is there anything else we need to consider?

Thanks so much

lea

K_S said:

@lea Quick comments - 

- both of you need to get copies of your credit reports and check if you are marked as a ‘financial associate’ on each other’s reports

- if Yes, then one of you having credit issues on your report may impact the other when they make new applications for credit (eg: remortgaging to another lender, opening a new credit card, opening a new bank account, etc.). The more severe the marker, the bigger the impact.

- given that you have lived apart for 6+ months, even though you have a joint mortgage, you can speak to the credit bureau to apply to break the financial association. If you’re still legally married that might not be possible but I’m not entirely sure.

- your name being on the property deeds and the mortgage is certainly not a ‘technicality’ imho. The fact that he used the funds raised for his business does not make it a business debt, to the lender or your credit report. As far as the lender is concerned, it is debt held by yourself+ex and secured against the house that your ex lives in.

- if your ex wants to take on the whole mortgage, and he can afford it (as per the current lender’s criteria and affordability) he doesn’t need to wait till 2026 or break the current fix. All he needs to do is apply with his current lender for a transfer-of-equity which transfers 100% of the ownership to his name and 100% of the mortgage in his sole name.

lea said:

Hello

I seperated from my husband approx. 8 years ago. We have a joint outstanding mortgage of approx £150k on a property worth in region of £300k. He remains in the property and pays the mortgage and bills with the help of a lodger and with his business (see below). I have not lived in the property for 8 years although legally we are still married and joint owners of the property. The mortgage was taken out by us initially to repay a business overdraft he had on his business (before this, he owned this property outright with no mortgage due to a family joint owner passing away, but the bank recalled his business overdraft and as he had recently started up as self employed, he couldnt solely borrow against the property without me being a joint applicant.) So together we borrowed money out of the house to repay the business debt, and the mortgage is considered a business debt although its a personal mortgage.

I am in a lot of personal credit card debt from trying to start my life over after splitting from him and high rental costs and a low income. I have been speaking to Stepchange about the possibility of taking on a DMP or an IVA. I'm wanting to know how this might affect my ex partner and our joint mortgage. Ex is of the opinion that because I have not lived in house for nearly a decade and he has been covering bills and mortgage, and he owned it before I came along, and because of the mortgage being a business debt, that it is his property and my name being on it is a technicality.

Our fixed term mortgage ends early 2026 and is on a very low interest rate of 1% ish.

If I take out a DMP or IVA will my ex be affected?
Should my ex consider attempting a remortgage is his sole name now, or wait til 2026?
If I default on any credit card payments in the mean time, will his ability to remortgage solely be affected?
Is there anything else we need to consider?

Thanks so much

Really appreciate your quick and thorough response - thank you for this info!