Mortgage broker - ask me anything

K_S

Reece_ said:

Where do I start with looking for a mortgage broker? I’m very confused as to the pros of the big companies like habito vs the independent ones. Our scenario is a RTB property, one applicant self employed, other on maternity although likely to be back in full time work before a mortgage commenced . 

@reece_ In general, all brokers have access to the largely the same lenders and rates, be it large ones like L&C/Habito or smaller local brokers working out of a high street office or their home. They are ALL independent of the lender and their main income is the procuration fee/ commission paid by the lender upon completion of a mortgage.

RTB isn't particularly complex, self-employment isn't unusual and mat-leave can be inconsequential as long as the applicant intends to return to work on the same terms as prior, and childcare arrangements are factored in for affordability. 

If you don't have anything to go by, just use the MSE guide here, pick a broker and see how it goes. 
https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#brok

All the best!

Moo1983

K_S said:

Moo1983 said:

Is it possible to get a mortgage on a house where the kitchen and bathroom are in the conservatory, rather than the main house? 

@moo1983 I guess it depends on how much the 'conservatory' differs from a normal rear extension.

If the extension is standard (brick built, tile/slate/flat roof, cavity wall) and attached properly to the house, I don't see why it would be an issue. It's not uncommon for small 2 bed terraces to have a downstairs-only bathroom and/or a small kitchen in a rear extension.

K_S thanks for your response. Its not standard unfortunately, its single skin walls with a wooden & plastic roof so more like a prefab extension. Barclays have already said no so I was thinking of trying a lender who is more inclined to lend on non-standard construction like Halifax but I'm unsure if any bank will actually lend on it. 

Reece_

Another question; we’re looking into RTB, we’re in an expensive area and so frankly it will likely be unaffordable but are there any specialist lenders that help with consolidation of existing debt within the mortgage ( is this called second charge)? I believe that would help with affordability but think that it may not be possible with RTB because of the equity clawback period. 

Theleak250

It’s in the press today that Rachel Reeves wants to reduce the strict rules in regards to affordability and income restrictions for mortgage lending. Rental payments may be considered and the stress test will be largely removed. Do you think this is a good idea?

K_S

Reece_ said:

Another question; we’re looking into RTB, we’re in an expensive area and so frankly it will likely be unaffordable but are there any specialist lenders that help with consolidation of existing debt within the mortgage ( is this called second charge)? I believe that would help with affordability but think that it may not be possible with RTB because of the equity clawback period. 

@reece_ Irrespective of RTB, in the vast majority of purchase cases there is no option to improve affordability through consolidating debt on to the mortgage as part of the process. The best you can do is use cash you have to pay off debt and then take out a bigger mortgage as you now have a smaller deposit. Of course with RTB you don't need any cash deposit at all.

Once you have a mortgage, if it's RTB then afaik there is no option to borrow extra to pay off debt - whether through additional borrowing (same lender), remortgage with capital raise (new lender) as the RTB rules don't allow it.

Second-charge mortgage (second charge lender) is not a possibility afaik as you'd need permission from the council during the process, but I couldn't say for sure as I don't touch second charge lending.

homeless9

Can someone explain to me why lenders offer mortgages with product fees and ones without...

From my basic research it seems that it's cheaper to go with the ones without the product fees.... so why would anyone taking up a mortgage want to pay an upfront fee of typically £1000-£1,500 and overall paying more over the 5 years.

I am automatically ignoring all mortgages charging a product fee - am I wrong to do so? - am I missing something?

K_S

homeless9 said:

Can someone explain to me why lenders offer mortgages with product fees and ones without...

From my basic research it seems that it's cheaper to go with the ones without the product fees.... so why would anyone taking up a mortgage want to pay an upfront fee of typically £1000-£1,500 and overall paying more over the 5 years.

I am automatically ignoring all mortgages charging a product fee - am I wrong to do so? - am I missing something?

@homeless9 Depends on the loan size. Very very generally speaking, the lower your loan size the more likely it is that the NO-FEE option works out cheaper overall.

The higher your loan size is, the more likely it is that the WITH-FEE option works out cheaper as the savings in interest will dwarf the fee charged.

Try playing around with the MSE ‘Compare two mortgages’ calculator with a 100k and a 500k loan size on the no-fee and with-fee options, and you’ll see that play out.

https://www.moneysavingexpert.com/mortgages/compare-mortgage-rates/

If the loan size is low enough, then yes the borrower might indeed be ok to ignore any with-fee options, depends on the specifics.

talkiewalkie

A family member has a BTL property in a Limited Company, with a BTL mortgage. Their circumstances have changed following divorce and they would like to revert to living in the BTL property and transfer to a residential mortgage. 

If the property wasn't owned by the Limited Company I think it would be straightforward to convert the BLT mortgage to a residential mortgage (with the usual affordability checks of course) but how would this work when the property is owned by the limited company (which is of course, their company), as presumably, you couldn't swap to a Residential mortgage while the property is owned by the Company, rather than an individual?

Can any mortgage broker offer any suggestions of how this would work? Thanks for reading - I'd be grateful for any pointers I can pass on as my family member is really struggling.

(Goes without saying that putting the property in a LC was a huge mistake in retrospect!)

K_S

@talkiewalkie Tbh, a broker wouldn't necessarily know the ins and outs of this situation as the mortgage part of it is more of a side-show than the rest of it matter at hand. So do take what I'm saying with that in mind!

As I understand it, you would need to buy the property from the company. The company would need to record the transaction as profit/loss, based on the market value at point of sale. You would need to pay whatever stamp duty might be due, again on the market value. Whether there is any way to structure the purchase so that the company's equity in the property can be used as a deposit - I don't know the answer to that.

The mortgage part of it might be a bit more complicated than normal because the purchase will be from a closely related party (yourself) and that isn't acceptable to some lenders. But there's no need to see that as a huge roadblock as you can always take out a short fix and then remortgage away to the whole market at the end of the fix, so it's only a short term issue.

The alternative is to simply move into the property and then sort this out later. Needless to say this will be against the BTL mortgage T&Cs.

talkiewalkie said:

A family member has a BTL property in a Limited Company, with a BTL mortgage. Their circumstances have changed following divorce and they would like to revert to living in the BTL property and transfer to a residential mortgage. 

If the property wasn't owned by the Limited Company I think it would be straightforward to convert the BLT mortgage to a residential mortgage (with the usual affordability checks of course) but how would this work when the property is owned by the limited company (which is of course, their company), as presumably, you couldn't swap to a Residential mortgage while the property is owned by the Company, rather than an individual?

Can any mortgage broker offer any suggestions of how this would work? Thanks for reading - I'd be grateful for any pointers I can pass on as my family member is really struggling.

(Goes without saying that putting the property in a LC was a huge mistake in retrospect!)

homeless9

So, my 4 month remortgaging window is live now. Say I locked in a deal now....as far as I am aware I can cancel that deal and select a better deal during this 4 month window...

My question is... generally - how many times can you cancel a deal to change to another one? Surely you can't keep cancelling and changing deals every time a better deal comes along otherwise you might be cancelling and changing every few days....so how does this all work? thanks.