Mortgage broker - ask me anything

kimstead19

Do you know of any mortgage lenders that will accept the 'housing element' of a universal credit award towards monthly income please?

K_S

kimstead19 said:

Do you know of any mortgage lenders that will accept the 'housing element' of a universal credit award towards monthly income please?

@kimstead19 With respect to benefits (and any income stream tbh), it will only be considered for mortgage affordability IF the income will continue after you become an owner occupier ie completion of the mortgage.

As I understand it, the housing element of UC is not paid to owner occupiers, only to renters. If that is correct then it cannot be factored in for mortgage affordability as it will not continue after completion.

kimstead19

K_S said:

kimstead19 said:

Do you know of any mortgage lenders that will accept the 'housing element' of a universal credit award towards monthly income please?

@kimstead19 With respect to benefits (and any income stream tbh), it will only be considered for mortgage affordability IF the income will continue after you become an owner occupier ie completion of the mortgage.

As I understand it, the housing element of UC is not paid to owner occupiers, only to renters. If that is correct then it cannot be factored in for mortgage affordability as it will not continue after completion.

Sorry I should have explained it is a shared ownership scheme so will have a large amount of rent to pay so the universal credit housing element will still apply I just need to find a lender that will accept it 

Mahzes

K_S said:

@mahzes I don’t think I understood the whole scenario, but generally speaking -

- transfer of equity is usually adding someone to the deeds+mortgage or removing someone to the deeds+mortgage. I don’t know how simple/complicated it is (from the lender’s point of view) to actually replace one of the owners with another person through this process but it should be possible I guess.

- if the lender is ok with the above and allows a ToE, the new combination of owners will need to meet affordability and criteria for the required loan amount so there will be some form of checks and underwriting. Conveyancing will also be required.

- the mortgage will always be joint (both of you will be responsible for 100% of it), irrespective of whether you own the property as tenants in common or joint tenants.

Mahzes said:

Hi, 

An opportunity has come up to buy a 50% share of a property from a friend who initially bought it with another friend of ours back in August 2020 as Joint Tenants. They are looking to come off the mortgage so I can buy their share with the intent of changing the mortgage to Tenants in Common.

Am I correct in understanding that a Transfer of Equity would simply move me onto the existing mortgage in place of the person selling, or would a new mortgage be drawn up from scratch for this?

The value of the properly was £243,000 and a deposit of £65,000 was paid, with each person paying half of this. A mortgage was then taken out on the remaining £178,000 which both parties have been paying off equally since.

If the person selling their 50% share has paid toward it since August 2020 (when the property was bought), how would this work in terms of them selling the full 50% share to me at the value they paid? So effectively they would be selling their half to me at a value of £121,500. How does this work in terms of what they have already paid off?

Since they would have already been paying into their half of the overall mortgage, me moving onto this presumably wouldn't set their half back to zero, so how would this work? Would I just need to arrange payment to them for the amount they had already paid (presumably their half of the deposit + mortgage contributions so far?) and then continue paying toward the remainder of their half of the mortgage as well? Or does it work some other way in this situation?

Essentially I'd be looking to buy half of the property from a friend who has a 50% share and where the mortgage is still ongoing.

The main thing I'm wondering is how this would work in regards to the fact that only one person is selling their half and the other will be staying, as I imagine this will complicate things? I'm not sure how thinks would work in terms of what the outgoing person has already paid and how this would translate into how cleanly they can effectively sell me their 50% share.

silvercar

Mahzes said:

K_S said:

@mahzes I don’t think I understood the whole scenario, but generally speaking -

- transfer of equity is usually adding someone to the deeds+mortgage or removing someone to the deeds+mortgage. I don’t know how simple/complicated it is (from the lender’s point of view) to actually replace one of the owners with another person through this process but it should be possible I guess.

- if the lender is ok with the above and allows a ToE, the new combination of owners will need to meet affordability and criteria for the required loan amount so there will be some form of checks and underwriting. Conveyancing will also be required.

- the mortgage will always be joint (both of you will be responsible for 100% of it), irrespective of whether you own the property as tenants in common or joint tenants.

Mahzes said:

Hi, 

An opportunity has come up to buy a 50% share of a property from a friend who initially bought it with another friend of ours back in August 2020 as Joint Tenants. They are looking to come off the mortgage so I can buy their share with the intent of changing the mortgage to Tenants in Common.

Am I correct in understanding that a Transfer of Equity would simply move me onto the existing mortgage in place of the person selling, or would a new mortgage be drawn up from scratch for this?

The value of the properly was £243,000 and a deposit of £65,000 was paid, with each person paying half of this. A mortgage was then taken out on the remaining £178,000 which both parties have been paying off equally since.

If the person selling their 50% share has paid toward it since August 2020 (when the property was bought), how would this work in terms of them selling the full 50% share to me at the value they paid? So effectively they would be selling their half to me at a value of £121,500. How does this work in terms of what they have already paid off?

Since they would have already been paying into their half of the overall mortgage, me moving onto this presumably wouldn't set their half back to zero, so how would this work? Would I just need to arrange payment to them for the amount they had already paid (presumably their half of the deposit + mortgage contributions so far?) and then continue paying toward the remainder of their half of the mortgage as well? Or does it work some other way in this situation?

Essentially I'd be looking to buy half of the property from a friend who has a 50% share and where the mortgage is still ongoing.

The main thing I'm wondering is how this would work in regards to the fact that only one person is selling their half and the other will be staying, as I imagine this will complicate things? I'm not sure how thinks would work in terms of what the outgoing person has already paid and how this would translate into how cleanly they can effectively sell me their 50% share.

It's not only a mortgage issue. You buy the 50% for whatever price you agree with the seller of that 50%. You also take on the mortgage, agreeing a contribution of whatever you agree with the other owner. eg property worth 243k, mortgage originally 178k with a deposit of 32.5k each. Now the situation is that the outstanding mortgage is only say 170k and the property may be worth 260k. So you may be paying 130k to the selling owner made up of taking on half the mortgage ie 85k and paying them 45k cash. This relies on you having the cash and the lender agreeing that you can take on the joint mortgage. 

kingstreet

kimstead19 said:

K_S said:

kimstead19 said:

Do you know of any mortgage lenders that will accept the 'housing element' of a universal credit award towards monthly income please?

@kimstead19 With respect to benefits (and any income stream tbh), it will only be considered for mortgage affordability IF the income will continue after you become an owner occupier ie completion of the mortgage.

As I understand it, the housing element of UC is not paid to owner occupiers, only to renters. If that is correct then it cannot be factored in for mortgage affordability as it will not continue after completion.

Sorry I should have explained it is a shared ownership scheme so will have a large amount of rent to pay so the universal credit housing element will still apply I just need to find a lender that will accept it 

As the current UC claim ends and another has to be made, you will struggle with this. You may wish to ask your HA/RSL about this first.

Mahzes

silvercar said:

Mahzes said:

K_S said:

@mahzes I don’t think I understood the whole scenario, but generally speaking -

- transfer of equity is usually adding someone to the deeds+mortgage or removing someone to the deeds+mortgage. I don’t know how simple/complicated it is (from the lender’s point of view) to actually replace one of the owners with another person through this process but it should be possible I guess.

- if the lender is ok with the above and allows a ToE, the new combination of owners will need to meet affordability and criteria for the required loan amount so there will be some form of checks and underwriting. Conveyancing will also be required.

- the mortgage will always be joint (both of you will be responsible for 100% of it), irrespective of whether you own the property as tenants in common or joint tenants.

Mahzes said:

Hi, 

An opportunity has come up to buy a 50% share of a property from a friend who initially bought it with another friend of ours back in August 2020 as Joint Tenants. They are looking to come off the mortgage so I can buy their share with the intent of changing the mortgage to Tenants in Common.

Am I correct in understanding that a Transfer of Equity would simply move me onto the existing mortgage in place of the person selling, or would a new mortgage be drawn up from scratch for this?

The value of the properly was £243,000 and a deposit of £65,000 was paid, with each person paying half of this. A mortgage was then taken out on the remaining £178,000 which both parties have been paying off equally since.

If the person selling their 50% share has paid toward it since August 2020 (when the property was bought), how would this work in terms of them selling the full 50% share to me at the value they paid? So effectively they would be selling their half to me at a value of £121,500. How does this work in terms of what they have already paid off?

Since they would have already been paying into their half of the overall mortgage, me moving onto this presumably wouldn't set their half back to zero, so how would this work? Would I just need to arrange payment to them for the amount they had already paid (presumably their half of the deposit + mortgage contributions so far?) and then continue paying toward the remainder of their half of the mortgage as well? Or does it work some other way in this situation?

Essentially I'd be looking to buy half of the property from a friend who has a 50% share and where the mortgage is still ongoing.

The main thing I'm wondering is how this would work in regards to the fact that only one person is selling their half and the other will be staying, as I imagine this will complicate things? I'm not sure how thinks would work in terms of what the outgoing person has already paid and how this would translate into how cleanly they can effectively sell me their 50% share.

It's not only a mortgage issue. You buy the 50% for whatever price you agree with the seller of that 50%. You also take on the mortgage, agreeing a contribution of whatever you agree with the other owner. eg property worth 243k, mortgage originally 178k with a deposit of 32.5k each. Now the situation is that the outstanding mortgage is only say 170k and the property may be worth 260k. So you may be paying 130k to the selling owner made up of taking on half the mortgage ie 85k and paying them 45k cash. This relies on you having the cash and the lender agreeing that you can take on the joint mortgage. 

So in this case would I essentially be taking on half of their remaining mortgage (i.e. their share of what's left to pay) and then separately pay the selling owner essentially everything they had paid towards it so far (i.e. their share of the deposit plus their mortgage contributions to date)?

Would that process require a new mortgage to be drawn up or would I be able to transfer onto the existing one and essentially carry on from where they left off in the above scenario?

jjmmww1

Saw nationwide have just dropped rates to 3.99% for new buyers.  Do we think theres any chance that will come to remortgage rates anytime soon

RubyGlen

Having a property using the Help to Buy Equity Loan scheme (20%), 8 years in.  

Are there any other options other than straightforward repayment mortgage (keeping the HTB loan in place), other than keeping a repayment mortgage in place for the remaining 17 years (up to year 25 of the HTB scheme)…to reduce monthly payments?

Such as 
1 interest only 
2 part and part 
3 increasing the mortgage term past the original 25 years

or…are all of the above only options if able to first pay off the HTB 20%?  Thanks 

kingstreet

RubyGlen said:

Having a property using the Help to Buy Equity Loan scheme (20%), 8 years in.  

Are there any other options other than straightforward repayment mortgage (keeping the HTB loan in place), other than keeping a repayment mortgage in place for the remaining 17 years (up to year 25 of the HTB scheme)…to reduce monthly payments?

Such as 
1 interest only 
2 part and part 
3 increasing the mortgage term past the original 25 years

or…are all of the above only options if able to first pay off the HTB 20%?  Thanks 

I don't believe any of those options exist with an HTB equity loan remaining in place.