Mortgage broker - ask me anything

Jemma01

theonenonly said:

kingstreet said:

From Nationwide criteria, for example;-

"For second job income, you can only use it where the applicant has been in the job for at least 6 months."

That's fair, and I won't be applying for a mortgage until atleast the new year anyway. Other than the time constraint, does my mate's broker mate have a point in your opinion?

Do you mind sharing more details about the job? Working hours? Is it via PAYE or self employment? is it consistent with guaranteed hours?

The bank dgaf about a job being "beneath you" that's just insane. All they care about is that it is guaranteed and stable. If this is zero hours contract, you'll probably have difficulty proving sustainability, and if you're having to work long hours, they might not like it for the same reason. Remember they'd be lending for 20+ years.

If any of this feels like it is a risky job in their view, I wouldn't declare it. I'm self employed, HSBC asked for 2year accounting.

theonenonly

Jemma01 said:

theonenonly said:

kingstreet said:

From Nationwide criteria, for example;-

"For second job income, you can only use it where the applicant has been in the job for at least 6 months."

That's fair, and I won't be applying for a mortgage until atleast the new year anyway. Other than the time constraint, does my mate's broker mate have a point in your opinion?

Do you mind sharing more details about the job? Working hours? Is it via PAYE or self employment? is it consistent with guaranteed hours?

The bank dgaf about a job being "beneath you" that's just insane. All they care about is that it is guaranteed and stable. If this is zero hours contract, you'll probably have difficulty providing sustainability, and if you're having to work long hours, they might not like it for the same reason. Remember they'd be lending for 20+ years.

If any of this feels like it is a risky job in their view, I wouldn't declare it.

Yep it's only 10 hours, one day a week, PAYE, permanent

K_S

theonenonly said:

Am I being paranoid? I recently picked up a second job that I do once a week, its the next town over, just for some extra money. I was with my friend and his friend the other day who so happens to be a mortgage broker, and we briefly spoke about how I'm going to start looking to buy as a FTB.

Straight away he advised me not to use the second income. He told me it looks dodgy and the job is "too beneath me" to be considered a real job (it is a real job, I somewhat like doing something totally different to my main job!). 

Now, he's got me a bit stressed out. Mentally, I'd been preparing myself and browsing properties online with the belief that I *may* be offered a loan based off both incomes.

Does he have a point?

@theonenonly Quick comments -

- IF you are needing to use income from the second job for affordability, then yes the lender will (one) check for plausibility and (two) usually have stricter criteria/limitations of the kind Kingstreet has mentioned above. The specific criteria, checks will depend on which lender.

- If you DON'T need the second job income for affordability, then you don't need to declare it or can declare it with 0 against it, depending on what the specific lender is and the details. That's what I usually do for clients in that situation where they have a second income but don't need it for affordability.

theonenonly

K_S said:

theonenonly said:

Am I being paranoid? I recently picked up a second job that I do once a week, its the next town over, just for some extra money. I was with my friend and his friend the other day who so happens to be a mortgage broker, and we briefly spoke about how I'm going to start looking to buy as a FTB.

Straight away he advised me not to use the second income. He told me it looks dodgy and the job is "too beneath me" to be considered a real job (it is a real job, I somewhat like doing something totally different to my main job!). 

Now, he's got me a bit stressed out. Mentally, I'd been preparing myself and browsing properties online with the belief that I *may* be offered a loan based off both incomes.

Does he have a point?

@theonenonly Quick comments -

- IF you are needing to use income from the second job for affordability, then yes the lender will (one) check for plausibility and (two) usually have stricter criteria/limitations of the kind Kingstreet has mentioned above. The specific criteria, checks will depend on which lender.

- If you DON'T need the second job income for affordability, then you don't need to declare it or can declare it with 0 against it, depending on what the specific lender is and the details. That's what I usually do for clients in that situation where they have a second income but don't need it for affordability.

Thanks. If I do plan to use the second income: using Nationwide as an example, other than what Kingstreet mentioned re 6 months, what other things are they likely to look at? Does the broker friend have a point of the job unlikely to be considered by lenders i.e. Nationwide?

K_S

theonenonly said:

K_S said:

theonenonly said:

Am I being paranoid? I recently picked up a second job that I do once a week, its the next town over, just for some extra money. I was with my friend and his friend the other day who so happens to be a mortgage broker, and we briefly spoke about how I'm going to start looking to buy as a FTB.

Straight away he advised me not to use the second income. He told me it looks dodgy and the job is "too beneath me" to be considered a real job (it is a real job, I somewhat like doing something totally different to my main job!). 

Now, he's got me a bit stressed out. Mentally, I'd been preparing myself and browsing properties online with the belief that I *may* be offered a loan based off both incomes.

Does he have a point?

@theonenonly Quick comments -

- IF you are needing to use income from the second job for affordability, then yes the lender will (one) check for plausibility and (two) usually have stricter criteria/limitations of the kind Kingstreet has mentioned above. The specific criteria, checks will depend on which lender.

- If you DON'T need the second job income for affordability, then you don't need to declare it or can declare it with 0 against it, depending on what the specific lender is and the details. That's what I usually do for clients in that situation where they have a second income but don't need it for affordability.

Thanks. If I do plan to use the second income: using Nationwide as an example, other than what Kingstreet mentioned re 6 months, what other things are they likely to look at? Does the broker friend have a point of the job unlikely to be considered by lenders i.e. Nationwide?

@theonenonly Depends on the specific lender, but generally speaking things like - are the total hours a week sustainable (some might have a hard cap of x hours, some might just look at it from a plausibility pov), are the jobs related, is it genuine employment (not an issue with Tesco), how long have been in the role, are you in probation, etc. etc.

If it meets criteria and plausibility, and can be sustained in the underwriter's view, then of course a second income may be considered for affordability.

kingstreet

theonenonly said:

kingstreet said:

From Nationwide criteria, for example;-

"For second job income, you can only use it where the applicant has been in the job for at least 6 months."

That's fair, and I won't be applying for a mortgage until atleast the new year anyway. Other than the time constraint, does my mate's broker mate have a point in your opinion?

I wouldn't give such an opinion without some foundation. It's true lenders apply plausibility - eg has this extra work been taken purely to increase borrowing power and can it be sustained along with the hours of the main employment. I suspect not allowing it until there's a six month history suggests to a lender it is more likely to be maintained. I would ask my BDM before I submitted an application with this income to any lender.

kimmer

Hi,

I brought a property that needed a lot of work a year ago so had to borrow on 0% credit cards to do the work. My fix will end in September and I will still have substantial credit card debt (probably somewhere around £20k). Am I right in thinking that even though it doesn't make financial sense to go from my 0% deals, that I should switch to a personal loan a few months before I want to remortgage because they would find this preferable? For context, my affordability for the mortgage itself is fine as I have no dependents so my only fixed outgoings are mortgage and bills and I have approx. £1200 a month after these have been paid. If I wasn't having to remortgage my plan would just be to keep doing 0% balance transfer deals until it's paid off, which I anticipate will be in around 5 years.

Thanks

K_S

kimmer said:

Hi,

I brought a property that needed a lot of work a year ago so had to borrow on 0% credit cards to do the work. My fix will end in September and I will still have substantial credit card debt (probably somewhere around £20k). Am I right in thinking that even though it doesn't make financial sense to go from my 0% deals, that I should switch to a personal loan a few months before I want to remortgage because they would find this preferable? For context, my affordability for the mortgage itself is fine as I have no dependents so my only fixed outgoings are mortgage and bills and I have approx. £1200 a month after these have been paid. If I wasn't having to remortgage my plan would just be to keep doing 0% balance transfer deals until it's paid off, which I anticipate will be in around 5 years.

Thanks

@kimmer      

If you do a product-switch/rate-switch/product-transfer and stay with your current lender, then your background debt, credit report, income, etc. is all irrelevant. So you should always have that as a fallback option.

If you want to do a remortgage (change lenders), then your background debt, etc. may make a difference, but it depends on the detail.

For example if your income is 75k and your mortgage is 200k, then the 20k of cc debt is unlikely to cause any trouble.

Just play around with a couple of lender affordability calculators to see whether or not it makes a difference to how much you are looking to borrow.
https://www.halifax-intermediaries.co.uk/tools-calculators/mortgage-affordability-calculator.html

How lenders will use cc debt Vs loan debt -

- for credit card debt, lender affordability calculators will automatically assume X% (depends on lender but 3% is common) of outstanding debt as a monthly commitment. For 20k of debt, that might be around £600/month commitment.

- for a personal loan, the commitment will be the monthly contractual payment. So if your monthly payment is £500, that's the commitment. If you borrowed 12k over one year with a £1,000/month payment and person B borrowed 24k over 2 years with a £1,000/month payment, you both would have the same monthly commitment in the eyes of the lender and in the most cases, the size of the personal loan itself doesn't matter.

smallblueplanet

K_S said:

kimmer said:

Hi,

I brought a property that needed a lot of work a year ago so had to borrow on 0% credit cards to do the work. My fix will end in September and I will still have substantial credit card debt (probably somewhere around £20k). Am I right in thinking that even though it doesn't make financial sense to go from my 0% deals, that I should switch to a personal loan a few months before I want to remortgage because they would find this preferable? For context, my affordability for the mortgage itself is fine as I have no dependents so my only fixed outgoings are mortgage and bills and I have approx. £1200 a month after these have been paid. If I wasn't having to remortgage my plan would just be to keep doing 0% balance transfer deals until it's paid off, which I anticipate will be in around 5 years.

Thanks

@kimmer      

If you do a product-switch/rate-switch/product-transfer and stay with your current lender, then your background debt, credit report, income, etc. is all irrelevant. So you should always have that as a fallback option.

If you want to do a remortgage (change lenders), then your background debt, etc. may make a difference, but it depends on the detail.

For example if your income is 75k and your mortgage is 200k, then the 20k of cc debt is unlikely to cause any trouble.

Just play around with a couple of lender affordability calculators to see whether or not it makes a difference to how much you are looking to borrow.
https://www.halifax-intermediaries.co.uk/tools-calculators/mortgage-affordability-calculator.html

How lenders will use cc debt Vs loan debt -

- for credit card debt, lender affordability calculators will automatically assume X% (depends on lender but 3% is common) of outstanding debt as a monthly commitment. For 20k of debt, that might be around £600/month commitment.

- for a personal loan, the commitment will be the monthly contractual payment. So if your monthly payment is £500, that's the commitment. If you borrowed 12k over one year with a £1,000/month payment and person B borrowed 24k over 2 years with a £1,000/month payment, you both would have the same monthly commitment in the eyes of the lender and in the most cases, the size of the personal loan itself doesn't matter.

In a similar vein, how do lenders view a 'flexible mortgage' debt? We hope to move next year and have an offset mortgage of £105k but only £75k outstanding. Will it be the amount that we could borrow that is counted?

K_S

@smallblueplanet Unless I've misunderstood your question, mortgage debt that is being paid off (replaced with a new mortgage) as part of the move is disregarded for affordability purposes.

It is indeed the total amount that you're looking to borrow as part of the move that will be used to assess your affordability.

smallblueplanet said:

K_S said:

kimmer said:

Hi,

I brought a property that needed a lot of work a year ago so had to borrow on 0% credit cards to do the work. My fix will end in September and I will still have substantial credit card debt (probably somewhere around £20k). Am I right in thinking that even though it doesn't make financial sense to go from my 0% deals, that I should switch to a personal loan a few months before I want to remortgage because they would find this preferable? For context, my affordability for the mortgage itself is fine as I have no dependents so my only fixed outgoings are mortgage and bills and I have approx. £1200 a month after these have been paid. If I wasn't having to remortgage my plan would just be to keep doing 0% balance transfer deals until it's paid off, which I anticipate will be in around 5 years.

Thanks

@kimmer      

If you do a product-switch/rate-switch/product-transfer and stay with your current lender, then your background debt, credit report, income, etc. is all irrelevant. So you should always have that as a fallback option.

If you want to do a remortgage (change lenders), then your background debt, etc. may make a difference, but it depends on the detail.

For example if your income is 75k and your mortgage is 200k, then the 20k of cc debt is unlikely to cause any trouble.

Just play around with a couple of lender affordability calculators to see whether or not it makes a difference to how much you are looking to borrow.
https://www.halifax-intermediaries.co.uk/tools-calculators/mortgage-affordability-calculator.html

How lenders will use cc debt Vs loan debt -

- for credit card debt, lender affordability calculators will automatically assume X% (depends on lender but 3% is common) of outstanding debt as a monthly commitment. For 20k of debt, that might be around £600/month commitment.

- for a personal loan, the commitment will be the monthly contractual payment. So if your monthly payment is £500, that's the commitment. If you borrowed 12k over one year with a £1,000/month payment and person B borrowed 24k over 2 years with a £1,000/month payment, you both would have the same monthly commitment in the eyes of the lender and in the most cases, the size of the personal loan itself doesn't matter.

In a similar vein, how do lenders view a 'flexible mortgage' debt? We hope to move next year and have an offset mortgage of £105k but only £75k outstanding. Will it be the amount that we could borrow that is counted?