Remortgaging after a reduced salary

moneysavinghero

Hannimal said:

The broker I use gets all his income from the lender, I don't pay him and he does a fantastic job  

If he does a fantastic job why are you having to ask strangers on the internet mortgage related questions. Whether his fee comes from you directly or from the lender doesn't really change things - there is still an incentive there for them to get you to switch providers so they can claim a new fee.

fewcloudy

moneysavinghero said:

Hannimal said:

The broker I use gets all his income from the lender, I don't pay him and he does a fantastic job  

If he does a fantastic job why are you having to ask strangers on the internet mortgage related questions. Whether his fee comes from you directly or from the lender doesn't really change things - there is still an incentive there for them to get you to switch providers so they can claim a new fee.

With respect, that sounds a bit cynical to me.

I'd have thought that in 4 years time, with ALL of the myriad mortgage products out there, the chances of the current lender offering the best most suitable perfect best value etc product out there, is somewhat unlikely. Possible. But unlikely.

I'm grateful my mortgage broker can find the right product for me, and happy that he gets paid for that. However, I think he would be less happy if I called him with every mortgage related question I might ever have had, rather than ask on here! Especially if it was 4 years before current mortgage product was up...

zagubov

Be aware that if you switch between very fundamentally-different types of loan with the same provider, such as between interest-only and repayment mortgages, affordability checks may kick in.

Hannimal

moneysavinghero said:

Hannimal said:

The broker I use gets all his income from the lender, I don't pay him and he does a fantastic job  

If he does a fantastic job why are you having to ask strangers on the internet mortgage related questions. Whether his fee comes from you directly or from the lender doesn't really change things - there is still an incentive there for them to get you to switch providers so they can claim a new fee.

I haven't contacted him as I am not looking for a new mortgage for another 4 years. I thought I'd ask here especially as I don't pay him for advice. I also want peoples' opinions, not just professional ones, as this isn't a question merely about mortgages. It's also a question about enjoying my life more and toggling between those two options.. You know you don't need to reply if you don't want.

yllop1101

I was in a similar situation in terms of remortgaging and taking over the sole mortgage, due to breaking up with my partner, so similar in terms of reduced income. 

I had to get my mortgage manually underwritten (I stayed with the same bank). I had to demonstrate that I could pay everything myself for at least 6 months, then they used common sense (in the after, after a lot of disputing) to renew my mortgage. I had a lodger too, and saved all their 'rent', which still almost went against me as the bank were arguing I wasn't paying ilevwrything independently, despite the money going straight out into a savings account. Advice then was to get the lodger to pay straight into the savings account.
My mortgage broker said with remortgaging that if with the same provider and you've kept up all payments they tend to worry less about the affordability side of things as you have demonstrated evidence of being able to make payments. This doesn't help so much if you want to switch to another lender, although I would hope that bank statements demonstrating payment would help. 

Hannimal

zagubov said:

Be aware that if you switch between very fundamentally-different types of loan with the same provider, such as between interest-only and repayment mortgages, affordability checks may kick in.

I wouldn't want to substantially change the product, although my term now is 35 years and I'd like to look into 30-year terms in 3 years' time rather than the standard 20. Even with a lower salary I'd be comfortably able to pay what I pay now and then some, as I will hopefully have done most of the expensive home improvements by then and don't need to save up for them! I am paying in mortgage for a 3-bed house what I was paying for rent for a room previously. 

zagubov

Changing the length of the term might be another trigger for a credit check. You might want to ask about that. We found that when we re-mortgaged they'd toughened up their criteria since the financial jitters of the late noughties.

Thrugelmir

Remortgaging comes at a cost. Unless the new mortgage product has incentives of some kind. There's the mortgage exit fee, legal and valuation fees to pay. Plus possibly a product fee. All has to be factored into account when weighing up whether to switch. 

Stick to the existing term and make overpayments. That way you have flexibility. Should money become tight for a while. 

Tiglet2

Re-mortgaging does come at a cost. 

After a 5 year fix, I re-mortgaged with a different lender.  I had a product fee, an exit fee and a valuation to pay for.  I also did not pay the mortgage broker.  I had free legals offered by the lender with Optima Legal (although they were representing the lender, not me).   The lender required full credit checks and I had to provide every piece of paperwork they required and then some, even though the LTV would have been around 20%. 

Optima also proved to be very slow...... so much so that I was on the standard variable rate with the original lender for several months before Optima completed the re-mortgage. 

My mortgage product is better for my circumstances now, but it did seem like a whole lot of faff.  Had I known what a long drawn out process it was going to be, I would have just switched to another fixed rate deal with the original lender where no additional checks would have been made.

MFWannabe

Hannimal said:

I have been offered a job (yay) that I would love to take (yay!). However, it would come with quite a large reduction in salary. Whilst I'd be able to live off the lower salary and undoubtedly enjoy my life just as much as I do now, I am worried about it in terms of my house. I have bought last year and I am on a 5-year-fix. I am worried that at the end of the 5 years, I won't have enough equity to qualify for a mortgage with my new salary. Does this affect remortgaging? 

My plan is that the new job would be a bit of a springboard and after a few years I would be eligible for more senior roles, so in long term this would likely make financially sense as well. However it is risky to assume that, especially in this economy! For now, it would significantly improve my QoL.

Tbh 4 years is a long way off to be worrying about it now, a lot can happen in that time 
Take the job as that is what you want to do and think about all this in 4 years time when your current fix is due to end. 

If you can make any kind of overpayments in that time even better 
In 4 years time look what your current lenders offers are and take it from there. If you stay with current lender there are no checks. 

Also it’s not always the case that current lender is dearer, ours certainly wasn’t, we got a great deal 👍