First time remortgage

FTR

Hi All,

Forum regular here, but I thought I'd make a new account so I can provide a bit more personal information then usual.

Today I received the MSE Money Tips email, which said that remortgages are taking a while, so getting ahead of the game is a good idea. I've then got a few questions about my situation.

The basics:

Debt
Current mortgage: £355k outstanding, 1.51% until Jan 22, then barclays SVR
Personal Loan: £14k outstanding @ 2.9%, paying c.£750 pcm.
Credit Cards (0% until late 2023): £21k, paying minimum payments of c.£340 pcm

Income
Salary: £72k plus c.£9k bonus. When I bought Barclays seemed prepared to lend 4.5x salary plus bonus, so I went with that, but others seemed to be offering as little as 4x only salary. 

Savings
~£15k, which could pay the loan off, but I am not currently doing that to give myself a bit of a buffer for overrunning costs on work on the house. All going to plan, I could use my savings to clear the loan down ahead of the remortgage, and then turn my attention to paying down the credit cards (which is entirely achievable based on my monthly outgoings before the 0% expires). 

Questions:

1. Broker or not broker? When I bought I went through a broker so I could get Quidco cashback. I felt they were unnecessary as they were another link in the chain and I ended up with the product I had already identified, but involving them got me ~£400 of cashback, so I ended up happy. 

2. When to apply? My deal ends in January, so 6 months away. The internet says offers last 3-6 months. Which lenders last 3 and which 6 months? Should I be waiting until 3 months before my fix expires to start the process?

3. How do loans and credit cards affect how much you can borrow? I was right at the limit of what I could borrow based on my income and my lender - Barclays - were generous as treating most recent bonus as added to salary. I also now have a personal loan and credit cards, which I guess will reduce what I can borrow. If I can't actually pass and affordability check to remortgage with a new lender, does that mean choosing a product with the current lender? 

4. How much should you chance it with the valuation? I bought for £465k, and have done c.£100k of work. To get a 60% LTV product for my loan of c.£355k I'd need the lender to agree to a valuation of at least £591k. If selling today, I'd expect to put an asking price of around £600k on it, but actually getting £591k might be a little optimistic.

Thanks for any pointers,

K_S

@Ftr 

2. Since covid, most offers are valid for 6 months.

3. Have a look at a couple of affordability calcs to get a very general idea of what impact debt has on your max borrowing.

https://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

https://www.nationwide-intermediary.co.uk/calculators/affordability-calculator

If you are not able to remortgage (move to a new lender), as long as you aren't borrowing more or changing term, you should be able to choose a new product with Barclays without any income verification, credit checks etc.

4. Get a reasonable estimate, apply a dash of optimism (if it makes a difference to the LTV band) and see what the lender val comes back with. No harm in slightly overestimating it, in any case the lender will use the lower of what you provide and what the valuer values it at.

getmore4less

Barclays existing customers 75% LTV 7 year fix 1.49% £749 fee.

Easy product switch use that as a benchmark for others.

Any excess funds shoul be thrown at the 2.9%

FTR

@K_S - thanks for the calculators. Playing around with them is quite enlightening. A £750/month loan repayment cuts what I'm offered by c.£120k, whereas the credit card debt seems to be simply deducted from the loan amount offered. Is having a big credit card debt going to cause more of a problem on application than the calculators suggest? 

@getmore4less yes agree that ending up with barclays for a bit longer (on their 2 or 5 year products) wouldn't be the end of the world, and (based on those calculators) I now plan to pay the loan off in the next few months, unless there are some unexpected home costs.

K_S

FTR said:

@K_S - thanks for the calculators. Playing around with them is quite enlightening. A £750/month loan repayment cuts what I'm offered by c.£120k, whereas the credit card debt seems to be simply deducted from the loan amount offered. Is having a big credit card debt going to cause more of a problem on application than the calculators suggest?

@ftr For affordability - Generally speaking, credit-card debt is factored in as monthly commitment of around ~3% of the outstanding credit card debt. So £300/month outgoing for a cc debt of 10k. Loans are factored in at the actual monthly payment.