Must I sell my property?

astryger

Here’s my situation:

I own flat worth £1.3 million, and the current mortgage is £620,000.

Issues: The current mortgage is in two names (mine and my ex-partner’s). I am looking to remortgage in my name only.

The current mortgage started in September 2023 (2-year fixed interest at 5.08%). I’ve been paying the monthly mortgage payment of over £3000 myself. (This mortgage consists of three parts: The largest part: interest only; two smaller parts: repayment).

I’ve been looking for interest only mortgages online and have seen lots of deals with payments of around £2000 per month.

I’ve found that lenders don’t care one bit about the fact that I’ve been paying £3000 a month, and that their new deals would bring this down to around £2000 per month. They’re not interested unless I earn around £120,000 a year, which is about twice as much as I actually earn.

Do I have any options other than selling the property?

TheSpectator

astryger said:

Here’s my situation:

I own flat worth £1.3 million, and the current mortgage is £620,000.

Issues: The current mortgage is in two names (mine and my ex-partner’s). I am looking to remortgage in my name only.

The current mortgage started in September 2023 (2-year fixed interest at 5.08%). I’ve been paying the monthly mortgage payment of over £3000 myself. (This mortgage consists of three parts: The largest part: interest only; two smaller parts: repayment).

I’ve been looking for interest only mortgages online and have seen lots of deals with payments of around £2000 per month.

I’ve found that lenders don’t care one bit about the fact that I’ve been paying £3000 a month, and that their new deals would bring this down to around £2000 per month. They’re not interested unless I earn around £120,000 a year, which is about twice as much as I actually earn.

Do I have any options other than selling the property?

Probably not.

Despite what you think about affordability a £620,000 mortgage on a £60,000 salary is beyond a lenders appetite for risk.

Hoenir

astryger said:

I’ve found that lenders don’t care one bit about the fact that I’ve been paying £3000 a month, and that their new deals would bring this down to around £2000 per month. They’re not interested unless I earn around £120,000 a year, which is about twice as much as I actually earn.

By bringing the monthly payments down you are no longer repaying the capital balance owed. Interest only mortgages represent a very small % of mortgages these days. The tighter underwriting criteria now relates to the pre 2007 era when they were rife. Ultimately causing lenders no end of hedaches.  10 times earnings multiple is a total no go. 

Prepare to sell and move on. 

kingstreet

There are forbearance/transitional rules lenders can use to justify lending without calculating affordability if there is no change in the amount borrowed and the borrower can demonstrate a long-term ability to pay. Whether this will work for a transfer of equity/remortgage to remove a borrower and on interest-only is a tough call.

If you haven't already done so, a chat to a broker may be a good first port of call.

Brie

So you earn about £60k and want a mortgage more than 10 times that.  

What other debts do you have?  Credit cards, overdraft, phone contract, monthly car insurance, HP?  

And presumably there is something like collateral that must be paid to the ex?

Flugelhorn

sell and buy somewhere more affordable - if you have a repayment mortgage for the lot then at least you will own it one day. 

lisyloo

One potential option is a lodger, but that depends how large a flat it is and you may have to pay tax on that.
It may not raise enough unless you have many bedrooms.

Hoenir

lisyloo said:

One potential option is a lodger, but that depends how large a flat it is and you may have to pay tax on that.
It may not raise enough unless you have many bedrooms.

Doesn't address the remortgaging issue and removing the other party though. 

Newbie_John

£3000 mortgage payment on £3700 salary.
Electricity, management fees, council tax, water, tv, internet, food.. - you can clearly see that from banks point of view you're just making it.

What if your mortgage rate goes up to 6-7% and your monthly goes up to £3700? 

Short answer: SELL.