Mortgage broker - ask me anything

sunnyvintage

Hello experts!

I have a question amd thought would be good to have your opinion

Can there be a scenario where lenders mortgage rates are less than Bank of England base rate?. E.g lets say in 2 years BOE base rate falls to 3.5% from current 5.25%. Does that mean lenders rate to the borrowers will be more than 3.5% or there is no corelation ?

Regards

K_S

sunnyvintage said:

Hello experts!

I have a question amd thought would be good to have your opinion

Can there be a scenario where lenders mortgage rates are less than Bank of England base rate?. E.g lets say in 2 years BOE base rate falls to 3.5% from current 5.25%. Does that mean lenders rate to the borrowers will be more than 3.5% or there is no corelation ?

Regards

@sunnyvintage Not sure I understand the question.

Many of the fixed rates offered by lenders today are already below the BoE rate of 5.25%. For example if you look at 75% LTV 2yr or 5yr fixes today, there are plenty that are lower than 4.75%. 

The 2yr and 5yr fix rates will broadly reflect where the market expects rates to be in 2 and 5 years’ time, not just what the BoE rate is today.

In 2026 - if the BoE rate is 3.5% and the expectation for 2028 is that rates will be around 2%, then there might be 2yr fix rates available that are around 2%. If the expectation for 2028 is that rates will be around 5%, then the 2yr fix rates might be around 5%.

I hope that makes sense! There are a lot of factors that are involved, some that we know, and a lot that is uncertain.

sunnyvintage

K_S said:

sunnyvintage said:

Hello experts!

I have a question amd thought would be good to have your opinion

Can there be a scenario where lenders mortgage rates are less than Bank of England base rate?. E.g lets say in 2 years BOE base rate falls to 3.5% from current 5.25%. Does that mean lenders rate to the borrowers will be more than 3.5% or there is no corelation ?

Regards

@sunnyvintage Not sure I understand the question.

Many of the fixed rates offered by lenders today are already below the BoE rate of 5.25%. For example if you look at 75% LTV 2yr or 5yr fixes today, there are plenty that are lower than 4.75%. 

The 2yr and 5yr fix rates will broadly reflect where the market expects rates to be in 2 and 5 years’ time, not just what the BoE rate is today.

In 2026 - if the BoE rate is 3.5% and the expectation for 2028 is that rates will be around 2%, then there might be 2yr fix rates available that are around 2%. If the expectation for 2028 is that rates will be around 5%, then the 2yr fix rates might be around 5%.

I hope that makes sense! There are a lot of factors that are involved, some that we know, and a lot that is uncertain.

Absolutely makes sense, thanks!

mustiuc

Hello 

Some years ago when I got my first mortgage I remember the broker (no longer in trade) saying as (part of) deposit could been used some stocks/investments without them effectively being sold, but somehow locked and in the lenders possession - or something similar

Found a property that buggers me to buy but the deposit needed is locked into some long years term of cash ISA. Is it possible to use this as deposit without asking the money back and paying the hefty fee? 

Thank you

K_S

mustiuc said:

Hello 

Some years ago when I got my first mortgage I remember the broker (no longer in trade) saying as (part of) deposit could been used some stocks/investments without them effectively being sold, but somehow locked and in the lenders possession - or something similar

Found a property that buggers me to buy but the deposit needed is locked into some long years term of cash ISA. Is it possible to use this as deposit without asking the money back and paying the hefty fee? 

Thank you

@mustiuc Not that I'm aware of.

ammarah

Hi, we’re currently in the process of selling and buying. The current house is mortgaged by my partner but we are doing a joint mortgage application. He has great credit, I have 3 defaults settles and all 4/5 years old. We got an AIP from NatWest but also contacted a mortgage broker. They have told me that they have got us an AIP from a high street lender, however has advised me to continue with NatWest application as the rates he found are slightly higher. Although I’m grateful for his honesty, I’m wary that NatWest will decline on full application as he said they can be hazy with defaults but he seems to think it would have been picked up at AIP stage. What are your thoughts?

K_S

ammarah said:

Hi, we’re currently in the process of selling and buying. The current house is mortgaged by my partner but we are doing a joint mortgage application. He has great credit, I have 3 defaults settles and all 4/5 years old. We got an AIP from NatWest but also contacted a mortgage broker. They have told me that they have got us an AIP from a high street lender, however has advised me to continue with NatWest application as the rates he found are slightly higher. Although I’m grateful for his honesty, I’m wary that NatWest will decline on full application as he said they can be hazy with defaults but he seems to think it would have been picked up at AIP stage. What are your thoughts?

@ammarah You’ve got a DIP from NatWest, the broker got a DIP from another high-street lender so I don’t really see the issue here.

Yes, NatWest (or another lender) might well decline the app at FMA (full mortgage application) but at this stage you have as much assurance as you can get that your historic defaults aren’t causing an issue so I’d just go ahead with whatever lender you want to and take it from there.

In the event that high-street lender A declines you at FMA, it’s not the end of the world as (based on you having got two high-street DIPs), you should still be able to get a mortgage with high-street lender B, worst case scenario one of the slightly higher rate mainstream products like Accord Cascade or Leeds similar range. 

All the best, I hope you get the mortgage you need!

ammarah

Thank you for your advice. We applied to NatWest so fingers crossed.

theonenonly

Bit of an odd one from me: partner is currently on maternity, and we've applied for DIP on her salary pre maternity, on the understanding that she'll go back on same pay.

However, she's actually getting a payrise once she goes back. What evidence would we need to provide of this payrise: is confirmation via document from her employer enough?

Or would she need to provide proof via payslips? Which means waiting until she's gone back to work, and working until payslips come through.

K_S

theonenonly said:

Bit of an odd one from me: partner is currently on maternity, and we've applied for DIP on her salary pre maternity, on the understanding that she'll go back on same pay.

However, she's actually getting a payrise once she goes back. What evidence would we need to provide of this payrise: is confirmation via document from her employer enough?

Or would she need to provide proof via payslips? Which means waiting until she's gone back to work, and working until payslips come through.

@theonenonly Depends on the lender (as policy differs on future pay rises) and whether or not you need the pay rise to meet affordability for the number you’re aiming for.

Also when running a DIP do remember to factor in an extra dependent and expected childcare costs (if any) when she goes back to work.