Mortgage broker - ask me anything

K_S

savingsavy said:

Hi, 
My husband and I are both first time buyers and need some advice please. 

We recently paid off our joint IVA with a full and final offer in May 2024. This drops off our credit file in September. 

I am in the process of settling an employment tribunal claim with my employer out of court. This will be our deposit. As part of the agreement,  I'll be leaving my employment of over 10yrs. I am currently job searching. 

My husband is looking for work too after being off work since made redundant in 2020. He had some health issues which are now resolved and we needed childcare. He also upskilled in that time period and did some contract and volunteer work I  his field to keep skill current.

My questions is how much of a risk will a lender see us as due to the way we got our deposit, our new empty and poor credit file. I am guessing we need to disclose where the deposit came from?

And also how bad is it that my husband not having work since 2020.

We are both looking for work before applying for a mortgage and will continue working.  

We rent privately and our rent just went up by 50%. It is now in line with similar size rental houses. 

The increase in rent is eating into our ability to save. We are finding out as much info as we can to see what our options are, regarding getting a mortgage.  

Thank you for your time

@savingsavy

IVA - if it drops off your credit files in 3 months (September 2024) and your credit file will be clean (no defaults, CCJs, recent missed payments), then that should be irrelevant from the point of view of a mortgage. 

Source of deposit - should be absolutely that it comes from a tribunal payout, will just be keyed in as savings. Just keep the paperwork for the conveyancer

Employment history - Irrespective of your employment history prior to that, if both of you are in perm PAYE employment(even if it is day 1 of the new job) at the time of application, you should be able to access a good number (not all, because some require x months of continuous employment history) of mainstream lenders.

To summarise, at the point of application, as long as your credit files are clean and you are both in perm PAYE employment, you should be fine with respect to qualifying for a mortgage from a mainstream lender.

EmmaBl1970

HI I'm a first time buyer currently at DIP stage to see what amount I can borrow.  I have provided my figures to some different  on-line brokers who have come back with similar amounts however if I go direct to lenders and input my figures their DIP amount is lower.  Is this normal ? I don't want to get as far as  applying for a mortgage and therefore affecting my credit rating if its unlikely I wont be able to borrow the amount I need. Thanks for your time 

K_S

EmmaBl1970 said:

HI I'm a first time buyer currently at DIP stage to see what amount I can borrow.  I have provided my figures to some different  on-line brokers who have come back with similar amounts however if I go direct to lenders and input my figures their DIP amount is lower.  Is this normal ? I don't want to get as far as  applying for a mortgage and therefore affecting my credit rating if its unlikely I wont be able to borrow the amount I need. Thanks for your time 

@EmmaBl1970 You don’t need to do a DIP to get a reasonably accurate figure for the maximum that a specific lender might lend you. All you need to do is use their full affordability calculator.

For example if you want to check LenderA just google “LenderA for intermediaries affordability calculator”. If you fill in the full calculator correctly and as per criteria, the number you get will be accurate.

Vp0007

Hi, thank you so much for all your help, really useful! 

My broker has said our application is going through a final checking stage - what does this involve? Does this mean it is with the underwriter who makes the final decision? And what exactly are they checking at this stage?

Thanks! 

K_S

Vp0007 said:

Hi, thank you so much for all your help, really useful! 

My broker has said our application is going through a final checking stage - what does this involve? Does this mean it is with the underwriter who makes the final decision? And what exactly are they checking at this stage?

Thanks! 

@vp0007 I’ve no idea what it means in your particular case but it might just be a standard holding response for when everything is complete (as far as the broker can tell) bar the final offer being issued.

adampv

Hello,

At the end of this month I will owe £77400 on my original £180k 25 year mortgage.
My final year of my 3 year fixed term 2.39% mortgage starts in July. I've just paid £8000 of current years 10% allowance.

Over the weekend I watched a video featuring a mortgage broker who suggested extending a mortgage term and lowering the payments, and the overpaying that 10% allowance means that more is paid directly to the capital on which interest is not accrued. The suggestion is that by lowering the monthly payment the lower the total interest that is paid.

Is this accurate? Or have I misunderstood/is it just nonsense?

Many thanks in advance,

Adam

maddapple

Hi There

Our (1.59%) 5 yr fixed mortgage to coming to an end in December and we will still owe around £275k.
We are fortunate enough to have been able to save a decent amount and will be in a position to pay off an additional £175k leaving us with a £100k mortgage. 
A 100k mortgage over 20 years will mean that we will have a monthly repayment around £675, we are able to pay at least £2,000 per month (so an overpayment of £1,325), however over 12 months this would result in paying off more than 10% so is a no no. 
I think my options are:
1. Reduce the remaining term on a fixed term mortgage form the current 20 years to say 5. Resulting in a much higher monthly payment (around £1,900)
2. Keep at 20 years and over pay the max 10% then save the rest and pay off at the end of the fixed term.
3. Take out a tracker and overpay the full amount.

Are these the only options or am I missing any also am I missing out anything obvious that I should consider with regards to the above options.
Finally what would any pro's and cons?

Thanks for reading this and please be gentle if i'm doing or saying anything stupid 

K_S

adampv said:

Hello,

At the end of this month I will owe £77400 on my original £180k 25 year mortgage.
My final year of my 3 year fixed term 2.39% mortgage starts in July. I've just paid £8000 of current years 10% allowance.

Over the weekend I watched a video featuring a mortgage broker who suggested extending a mortgage term and lowering the payments, and the overpaying that 10% allowance means that more is paid directly to the capital on which interest is not accrued. The suggestion is that by lowering the monthly payment the lower the total interest that is paid.

Is this accurate? Or have I misunderstood/is it just nonsense?

Many thanks in advance,

Adam

@adampv Sorry, I don’t understand the scenario outlined in your post.

If you’re trying to minimise mortgage interest paid AND want a fixed rate AND want to maximise use of the annual overpayment allowance, I would’ve thought you’d want to 

- reduce the term to the shortest that the lender will allow.

- use 100% of the annual penalty-free overpayment allowance (10% with most lenders, 20% with some like NatWest) every year. Every single penny of the overpayments you make will go towards the capital, thus reducing the amount on which you owe interest.

K_S

maddapple said:

Hi There

Our (1.59%) 5 yr fixed mortgage to coming to an end in December and we will still owe around £275k.
We are fortunate enough to have been able to save a decent amount and will be in a position to pay off an additional £175k leaving us with a £100k mortgage. 
A 100k mortgage over 20 years will mean that we will have a monthly repayment around £675, we are able to pay at least £2,000 per month (so an overpayment of £1,325), however over 12 months this would result in paying off more than 10% so is a no no. 
I think my options are:
1. Reduce the remaining term on a fixed term mortgage form the current 20 years to say 5. Resulting in a much higher monthly payment (around £1,900)
2. Keep at 20 years and over pay the max 10% then save the rest and pay off at the end of the fixed term.
3. Take out a tracker and overpay the full amount.

Are these the only options or am I missing any also am I missing out anything obvious that I should consider with regards to the above options.
Finally what would any pro's and cons?

Thanks for reading this and please be gentle if i'm doing or saying anything stupid 

@maddapple I can’t think of any option you’ve missed - reduce term+overpay, keep-term + overpay, tracker and overpay.

If you want to maximise overpayments you could go with a lender that allows 20% (eg: NatWest) or more than 10% through quirks (eg: Barclays) or offers fixes with unlimited overpayments (eg: FD as per what I’ve read on the forum)

Pros and cons - too many permutations and combinations for me to list everything. Hopefully someone else can help.

All the best!

KnittedPython

I am a FTB in Scotland.

I will be gifted a deposit from my mother (from England) who has inherited the money. Will I need her to sign something that the deposit is gifted to me?

I currently have a financial association with someone on a DMP. Next month we will move the joint accounts to just in my name which ends any credit products we share. Is just enough to write to the credit agencies to break the link? I will be looking to get a mortgage just in my name.

I will also like to live with this person in my new place. We share the same last name, but are not married. I changed my last name to his because I like his last name. I have the piece of paper I used to declare I am called something else. Is this going to be an issue for applying for a mortgage?

Can he live with me? He is willing to sign a occupiers consent form.

I am in stable employment for + 2yrs, and I have no active debts or missed payments. I do have historic debts which have been paid off, and I have a credit card which I pay off in full.