Mortgage broker - ask me anything

K_S

sonaldo said:

haras_n0sirrah said:

Thought I would start a thread where people can ask the brokers opinion on things @ACG @LRmortgage @kingstreet @Deleted_User (any other brokers want to chip in - these were the main other brokers who came to mind.
It is definately an interesting market - probably the busiest I have ever been but at the same time lenders are sooo slow. 
Anyone got a question? Ask away

My partner and I are considering moving house. I earn £62,425 a year in a permanent, full time job but, since May this year, she's been freelance. Her average monthly income is ~5k. ~1k of this comes from a regular contract and the rest from media appearances (e.g. podcasts, broadcasts), public speaking and columns for newspapers/magazines.

When applying for a 'mortgage in principle', when you click 'self-employed' in the drop-down it asks when the business was set up, net profit for the previous year etc. None of this seems applicable because she hasn't 'set up' a business and she doesn't yet have a year's worth of income...

As a result, we can't really get a sense of how much we can borrow. Is our only option speaking to someone (rather than applying online) or simply waiting until she's been freelance for longer?

@sonaldo It depends on the specifics of how she's remunerated.

The media ad-hoc income (media appearances, etc) will probably need at least a 1 full year track record before you can use it for mortgage affordability.

The contract income, if it's in the same line of work as she's been in previously, might be usable with some lenders depending on the specifics.

Best speak to a good broker and see what they say. It might well be the case that you have to wait, but I wouldn't say that yet.

All the best!

theonenonly

I live in my parents house, and my father and I (mother no longer around) plan to live here until... forever. 

The house has around £40k left on the mortgage, and when my dad bought this place in the mid 2000s he got it on an interest only mortgage. He's now getting on a bit and unable to work enough to pay off the mortgage with only 5 years remaining, so I pay towards it.


He wants this me to take over the mortgage officially and have it under my name: I think this makes sense: I plan to live here indefinitely so have no worries about losing FTB perks, and if I can extend the mortgage term to 25-30 years on the remaining £50k it works out great for me and my dad. 

Is this something that's doable?

K_S

theonenonly said:

I live in my parents house, and my father and I (mother no longer around) plan to live here until... forever. 

The house has around £40k left on the mortgage, and when my dad bought this place in the mid 2000s he got it on an interest only mortgage. He's now getting on a bit and unable to work enough to pay off the mortgage with only 5 years remaining, so I pay towards it.

He wants this me to take over the mortgage officially and have it under my name: I think this makes sense: I plan to live here indefinitely so have no worries about losing FTB perks, and if I can extend the mortgage term to 25-30 years on the remaining £50k it works out great for me and my dad. 

Is this something that's doable?

@theonenonly As I understand it, you're looking at doing a transfer of equity (adding yourself to the deeds) which will also involve adding you to the mortgage through a remortgage.

The loan size will be around 50k and you want to extend the term to 25-30 years.

Unless I'm missing something obvious, as long as you can evidence affordability to borrow the required amount, it should be fairly straightforward to achieve the above.

Threebabes

Hi, we are hoping to move next year. It’s now come to my attention that the stamp duty is changing end of march 25.  Do we rush to market the house now to save any buyer the stamp duty, house is worth approx £340k. Works out about £17k. Thank you 

K_S

Threebabes said:

Hi, we are hoping to move next year. It’s now come to my attention that the stamp duty is changing end of march 25.  Do we rush to market the house now to save any buyer the stamp duty, house is worth approx £340k. Works out about £17k. Thank you 

@threebabes Are you sure about the 17k? As I understand it the thresholds go down to:

FTBs: 0% up to 300k, 5% above that so 2k for a 340k property

Home movers: 0% up to 125k, 2% from 125-250 and then 5%. So 7k in total for a 340k house.

Personally, I'm not sure I'd be overly concerned about the impact of SDLT on my decision on when to sell the house. I doubt the 2-7k uptick in SDLT, on its own will make a material difference to what price you get for your house. There are probably as many as important factors (economy, interest rates, lender policies, etc.) between now and next year that may have as big or a bigger impact on the market. Impossible to predict.

No19v87

When our current fixed term ends we would be in the following position, assuming online calculators are accurate, so leaving a margin for error.

House price - £274,950 (assuming no price rise in the two years we have owned)
Outstanding mortgage - £235,201

This would leave us just short of 15% equity. By my calculations, £1,493.50.

1. I assume our lender would therefore offer us a new fixed term based on their 10% rather than 15% rates?
2. If we made an overpayment of c.£1,500, would this then push us into the 15% equity?
3. If so, at what stage would we need to make such payment? Could we do it during our current fixed term? Or would we need to wait until the fixed term ends and then fix a new rate the next day? 

The difference between their 10% and 15% rates are fairly negligible to be honest, but if we fixed for 3 years then this would basically save us a similar amount to the overpayment made so we’d end up gaining equity for essentially nothing. 

silvercar

No19v87 said:

When our current fixed term ends we would be in the following position, assuming online calculators are accurate, so leaving a margin for error.

House price - £274,950 (assuming no price rise in the two years we have owned)
Outstanding mortgage - £235,201

This would leave us just short of 15% equity. By my calculations, £1,493.50.

1. I assume our lender would therefore offer us a new fixed term based on their 10% rather than 15% rates?
2. If we made an overpayment of c.£1,500, would this then push us into the 15% equity?
3. If so, at what stage would we need to make such payment? Could we do it during our current fixed term? Or would we need to wait until the fixed term ends and then fix a new rate the next day? 

The difference between their 10% and 15% rates are fairly negligible to be honest, but if we fixed for 3 years then this would basically save us a similar amount to the overpayment made so we’d end up gaining equity for essentially nothing. 

lenders usually use one of the calculators to work out current prices. See what effect it has had on your home: https://www.nationwide.co.uk/house-price-index/

K_S

No19v87 said:

When our current fixed term ends we would be in the following position, assuming online calculators are accurate, so leaving a margin for error.

House price - £274,950 (assuming no price rise in the two years we have owned)
Outstanding mortgage - £235,201

This would leave us just short of 15% equity. By my calculations, £1,493.50.

1. I assume our lender would therefore offer us a new fixed term based on their 10% rather than 15% rates?
2. If we made an overpayment of c.£1,500, would this then push us into the 15% equity?
3. If so, at what stage would we need to make such payment? Could we do it during our current fixed term? Or would we need to wait until the fixed term ends and then fix a new rate the next day? 

The difference between their 10% and 15% rates are fairly negligible to be honest, but if we fixed for 3 years then this would basically save us a similar amount to the overpayment made so we’d end up gaining equity for essentially nothing. 

@No19v87 Quick comments re PTs (product-transfer/product-switch/rate-switch - staying with the current lender and choosing a new product)

- with most mainstream lenders, you should be able to see the latest (usually updated monthly) indexed value of your house on your online account. In most cases this is the value that the lender will use so it shouldn't come as a surprise.

- yes, the LTV band (85% Vs 90%) will indeed be calculated as you have described

- you can make an overpayment at any point and that should filter through to your PT options in a few days at most. For example, if your fix is ending in 3 months, you see that you're £1,500 short of 85% LTV, you overpay by that amount and recheck your options in a few days, you should be seeing 85% LTV PT products.

No19v87

Thanks both. Looking at the indexed value looks like we’ll be in the 15% in any event (subject to any economic disasters between now and then). Helpful to know how it all works.

Crazycat89

Hi There 👋🏻 

I’ve tried to locate an answer to this and found one comment on a thread so wanted to ask whether this was a ‘thing’.

Me and my partner are looking to move next year. I have been on a DMP managed via step change for the last 6 years and shortly the defaults will fall off my account.. albeit the DMP will still be active.

We’ve been lucky in that our current house value/equity has increased since we moved here a few years ago which will leave us with a significant amount of money for a large deposit (potentially 40%) as well as some additional funds left over.. which brings me to my next question.

Would any lenders offer a better rate if an agreement was made to clear the remaining DMP debt? As mentioned I did see one individual post advising they had received this providing the lender received confirmation within 30 days the debt had been cleared.

Im aware we could still get a mortgage with a DMP through a specialised broker - we’re looking at a mortgage of 2.5x salary, with as I mentioned at least a 30-40% deposit but would just like the weight finally lifted.

Any advice would be appreciated.