Can Savings Influence Lending Amount?

summerday

Hi,

I might go back to full time study at some point within the next few years, which would make our joint mortgage totally reliant on my partner's earnings. We are careful spenders so I'm sure this won't be a problem. However our mortgage of 95k outstanding is based on both our incomes, and if I were to not work we would want the most competitive mortgage deal we could get. So what I'm asking is, if we had some savings built up in different accounts when we try to remortgage on just my partner's salary, would a mortgage lender teke the savings into consideration when deciding which deals/ amounts he would lend us. For example, if there was a good deal only available to someone borrowing 3x 1 person's income (£75k for my partner) would a bank look at our savings of say £20k which we could access if we had to so that our mortgage in effect would be based on just his income.

Hope this makes sense... we wouldn't want to actually pay all our savings into the mortgage, just want to know if it improves our lending prospects!

Any help appreciated.

Sarah

sandragreen44

Although this doesn't answer your question my husband decided to do a years postgraduate study to become a teacher. We had a mortgage dependent on both our wages. As we knew he would not be earning anything a few years before he did this we managed to save up the morgage for a whole year and a bit more. We didn't tell our mortgage company. As you say you may be studying in a few years time I would change mortgage company now and save up for later to pay off the mortgage.

meanmachine_2

Remortgage now, fix your rate for five years and then forget about it.

You'd be crazy to do anything else.

The mortgage company don't care two hoots what's happening in your life provided you cough up each month.

They're not a parent. You don't need to explain anything to them.

Joe_Bloggs

I would not have thought savings in this context would help you get a better deal. There is no guarantee that these savings will not be consumed by some unforseen event and hence not available to supplement the mortgage payments.
I agree with meanmachine regarding fixing for five years. If you have savings then make penalty free mortgage overpayments rather than pay tax on the interest in savings accounts. On many deals you can get this money back and take payment holidays. A good buffer of overpayments is like a poor man's payment protection insurance. You could always put additional savings in the name of the student if they don't earn enough to pay tax on interest.

J_B.