Mortgage eligibility

woodpecker

Hi, I am likely to apply for a mortgage later this year. Currently I am mortgage free (we have paid off the loan on our existing property), but we are separating, so selling and splitting the proceeds.
Currently I put a large amount into an ISA every month, but going forward this money is earmarked for my new mortgage.
My question is, when I apply for a mortgage, will a lender accept that the ISA payment is going to stop/reduce, so that money will be available to use, or should I stop making the large ISA payments 6 months before applying? I don't want to jeopardise my chance of getting the mortgage I need.

MyRealNameToo

woodpecker said:

Hi, I am likely to apply for a mortgage later this year. Currently I am mortgage free (we have paid off the loan on our existing property), but we are separating, so selling and splitting the proceeds.
Currently I put a large amount into an ISA every month, but going forward this money is earmarked for my new mortgage.
My question is, when I apply for a mortgage, will a lender accept that the ISA payment is going to stop/reduce, so that money will be available to use, or should I stop making the large ISA payments 6 months before applying? I don't want to jeopardise my chance of getting the mortgage I need.

So you are saying you will use the money currently being paid into savings to pay the mortgage or you are saying you are going to need to dip into your savings each month to pay the mortgage? 

If its the former then can see there is no need to stop now, its clearly excess salary being put into savings and so won't be considered a financial commitment that will have to continue afterwards so ignored for affordability calculations.

El_Torro

The mortgage lender should be able to differentiate between necessary spending and saving / investing. That's why they ask for bank statements, etc... to make that assessment. 

I was looking at getting a mortgage some months ago and was told to leave my salary sacrifice pension contributions as they are, the lender realises that I can reduce this is if I want to in order to put more towards mortgage payments. The same principle should apply to your ISA contributions. 

So no, don't reduce your ISA payments 6 months before applying for a mortgage. At least don't do it just because you think it will increase your chances of getting the mortgage.

ACG

Money going into an ISA will not be classed as a commitment. 
They will be fine with what you are proposing - it wont even come up as a question.