Re-mortgaging after redundancy

Emma18

Hi, hoping for some advice please.
We have a repayment mortgage with Santander and our deal comes to an end in December 21.  We are happy to get a new deal with Santander again (as we did last time).
My husband was made redundant at end of December 2020, but very fortunately a big company and he had full redundancy, so we have enough cash to continue paying bills for at least 18 months/2 years.  I work part-time.  
Hubby has set up his own business, but it's really early days and we don't yet have much of an income.  What will happen when we have to re-mortgage/look for deals in September/October time?  We are worried that as we can no longer prove he has a regular income, that they will not agree to give us a deal?
Hubby is 53, I am 47.  We have £175k currently outstanding on the mortgage (we made 2 big overpayments one at the end of 2020 (the max we could do) and again in January 21 - but can't overpay anymore without incurring a charge).  Our current monthly payment is £1,650 at a fixed rate of 1.89%.  
I earn roughly £900-1000 a month, averaged out across the year.  The mortgage was agreed on hubby's former monthly income of around £4k - so we're not sure they would agree to lend the same amount now?
(sorry, there is more!)
The other option we currently have is for him to take early pension.  We could take a 25% tax free lump sum - and we think we could get the mortgage down to around £70k when we re-mortgage.  The monthly pension amount would then cover the monthly repayment.  This seems on one hand a no-brainer... and we are of course really tempted to do this, clear a huge chunk of the mortgage and to some degree, take the pressure away if his business doesn't go well, enjoy life a bit more going forward instead of working every hour etc.  Of course, the issue is that if we wait to take the pension a further 18 months - or 6 years, when he's 60, the lump sum and monthly payment amounts increase.  
Is it overall best to clear the mortgage, whatever you do?  Clear the debt?  I think generally that is true, but with interest rates so low, we'd never be able to borrow money at such a cheap rate as 1.89% - so is it better to keep the higher mortgage and invest the money elsewhere (although we are not high risk kind of people!).

Thanks in advance for any advice

K_S

@emma18 With regard to options at the end of your current fix - for staying with Santander using a product-switch/rate-switch/product-transfer with no change term or additional borrowing, there should be no income checks, credit checks, underwriting etc.

Emma18

Thank you K-S.  We did wonder that, but didn't want to get to that position and find we are asked and not prepared.  Tbh, we haven't told them about the redundancy, which I think we are probably supposed to - but there will be no problem paying them the monthly amount going forward, until the redundancy runs out.  And hopefully by then my husband will be earning again.  

K_S

Emma18 said:

Thank you K-S.  We did wonder that, but didn't want to get to that position and find we are asked and not prepared.  Tbh, we haven't told them about the redundancy, which I think we are probably supposed to - but there will be no problem paying them the monthly amount going forward, until the redundancy runs out.  And hopefully by then my husband will be earning again.  

@emma18 It's a standard process, see here for details - https://www.santander.co.uk/personal/mortgages/existing-customers/change-your-mortgage

I can't tell you what to tell your lender or not, but post-completion afaik there is no obligation to inform your lender about the redundancy or other changes in income.

lonibra

Who told you this nonsense? Unless you need their help because you are struggling to make payments there is no need at all to tell your bank if you have been made redundant or gone off on a year long unpaid holiday. It's none of their business unless you make it their business.

HobgoblinBT

Unless your husband is covered by an exception, the minimum age that you can take a pension is 55.  When you take a pension, you are restricted to future pension contributions of a maximum of £4000 per annum, so taking a pension early could lead to serious consequences, particularly as your husband is/has been a high earner.

dimbo61

I would just pay the bills for the rest of the year and see where you are in December.
You could sign up to a 2 year deal and use the lump sum to pay down some of the mortgage debt if you want to in 2 years time when your husband's is 55 and claims his pension

Emma18

HobgoblinBT said:

Unless your husband is covered by an exception, the minimum age that you can take a pension is 55.  When you take a pension, you are restricted to future pension contributions of a maximum of £4000 per annum, so taking a pension early could lead to serious consequences, particularly as your husband is/has been a high earner.

Yes, the company he worked for allows you to take pension upon redundancy if you'd been working for a minimum no. of years, so it is an unusual situation that he could take it now.  We didn't know about the restriction of future pension contributions though, so thank you - that's really helpful.