Using Shares portfolio to get a better mortgage deal

Leakingtile79

Hello All,

I have a question related to mortgages. Currently, I am looking into buying my first house. I have a shares portfolio which provides around £7K of dividends a year, with a value of £160K (Both ISA a nd non-ISA). My intention is not to sell it, but to use it to get a better deal for the mortgage. Is this possible? Is it worth mentioning this in mortgage meetings with the advisor too? Apart from this, Ive got a full time job too.

MAny thanks in advance,

Mark_d

It depends on a number of things, such as the size of your mortgage and the amount of deposit you have.

It might be worth selling some shares if it makes a significant difference to the mortgage rate.  This could be the case if you're going from a 95% LTV  to a 50% LTV.

When I took out my mortgage I already I had a 50% LTV.  I used my share portfolio to qualify for an interest only mortgage.  But now I'm thinking the most efficient way to repay the mortgage is through the tax free lump sum from my pension.

So I can cash-in my share portfolio and enjoy it before retirement

user1977

As above, selling some of the shares (and then decreasing your LTV) is the only likely way to help you get a better mortgage deal. The capital value of the portfolio is of no help to the lender as they can't get at it even if they repossess. I don't know whether any take into account the income from the shares but I don't think that's a normally accepted way of "topping up" your assessed income.

DavidT67

Leakingtile79 said:

Hello All,

I have a question related to mortgages. Currently, I am looking into buying my first house. I have a shares portfolio which provides around £7K of dividends a year, with a value of £160K (Both ISA a nd non-ISA). My intention is not to sell it, but to use it to get a better deal for the mortgage. Is this possible? Is it worth mentioning this in mortgage meetings with the advisor too? Apart from this, Ive got a full time job too.

MAny thanks in advance,

The dividends aren't a guaranteed income stream, so unlikely to be considered in a mortgage income assessment. 

Are these shares held within an ISA or SIPP ?  If so they can't be used as loan collateral.

If in a general investment account then you are talking about margin lending / lombard lending against the value of the portfolio.  Some retail brokers offer that service, the margin and rate depends on the volatility of the holdings, but is unlikely to be lower than a residential mortgage rate.

theartfullodger

amazingly (who'd have guessed) - different lenders have different procedures and rules for assessing mortgage offers. Suggest you speak to a couple of mortgage brokers and ask if they have heard of any lender being prepared to go this way: Doubt it, but you never know..

Leakingtile79

Thanks for the replies, I was not expecting so many!
I did think about selling some of my portfolio, but Id rather keep it, although it seems it wont add anything to get a better mortgage deal (also the capital tax gain can destroy the idea of selling part of the portfolio to increase the available deposit)
Regarding dividends to be used as a "income" So they cannot be used in any form as extra income to bulk up the income? Any experience in the room?
Thanks!

Albermarle

Leakingtile79 said:

Thanks for the replies, I was not expecting so many!
I did think about selling some of my portfolio, but Id rather keep it, although it seems it wont add anything to get a better mortgage deal (also the capital tax gain can destroy the idea of selling part of the portfolio to increase the available deposit)
Regarding dividends to be used as a "income" So they cannot be used in any form as extra income to bulk up the income? Any experience in the room?
Thanks!

As already suggested, speaking to a mortgage broker could be your best bet for an accurate answer. 

poseidon1

Leakingtile79 said:

Thanks for the replies, I was not expecting so many!
I did think about selling some of my portfolio, but Id rather keep it, although it seems it wont add anything to get a better mortgage deal (also the capital tax gain can destroy the idea of selling part of the portfolio to increase the available deposit)
Regarding dividends to be used as a "income" So they cannot be used in any form as extra income to bulk up the income? Any experience in the room?
Thanks!

Barclays as a mainstream mortgage lender is probably a reasonably representative example of how many lenders view non guaranteed or unfamiliar income sources.

In Barclays case they refused to accept any of my sources of non guaranteed income for remortgage purposes ie  investment portfolio, ISA income, Sipp drawdown income, Deposit interest [ fixed and variable], commercial property rent. Indeed remortgage was not granted until the state pension started flowing and borrowings were solely based on that income source alone.

Looking forward, if I want more significant borrowings, will probably have to either consider equity release or flexible arrangements via a private bank.