Self employed remove name from mortgage.

Nicoledonaldson · 12 February 2018 at 4:08PM

Hi everyone, I'm hoping you can help.

My husband and I are trying to switch from repayment to interest only on our mortgage so we can have a little more flexibility as we start to plan a family. We have a good amount of equity in the house so are not concerned about it depreciating or ending up in negative equity nor do we feel it is important for us to continue to build equity at this time (although we do intend to pay more than the interest only each month).

Initially Santander said there would be no affordability check as we are reducing our monthly payments but they then said it needed to be checked by the underwriters who have said we cannot make the switch as I am now self employed and only have 18 months of accounts. My husband's salary is more than enough to cover our mortgage and monthly outgoings so I'm not sure why my income needs to be verified at all (except for the fact that I am named on the mortgage). Would this be the case if I wasn't earning at all?

So now we are wondering whether we can
a) take my name off the mortgage and proceed with my husband's name only
b) try to switch provider (I expect we may have the same issue with my inadequate accounts)

Any advice? We just want to have the option of saving a little more each month should we start a family and ideally would not like to have to wait another 6 months to do so.

Thanks everyone!

kingstreet · 12 February 2018 at 4:32PM

Most lenders no longer offer interest-only, apart from in circumstances of financial hardship.

I'm surprised Santander is considering this. It's current new business criteria;-

We allow interest only applications provided there is an acceptable source of funds to repay the capital at the end of the mortgage.

For new customers and existing borrowers who are increasing the interest only amount:

Where any part of the mortgage is on interest only, and the combined gross income is less than £100,000, the maximum income multiple is 4.45 times income. Income may be a combination of primary and secondary incomes and proof of income must be evidenced.

Where any part of the mortgage is on an interest only basis the maximum LTV for the overall lending is 75%. Any lending over 50% up to 75% LTV must be on a capital and interest basis.

We will assess affordability on a capital and interest basis. Please use our affordability calculator to determine the client's potential borrowing.

The maximum term for the overall loan if sale of property is the repayment vehicle is 25 years.

Where any loan part is on an interest only basis the mortgage term cannot exceed the applicant's 70th birthday.

Nicoledonaldson · 17 February 2018 at 10:12PM

Thanks king street. I think I got the wrong end of the stick. They asked a few times if we are in financial difficulty and I was taking this as something that would go against us in this case but it sounds like it may be the opposite way round?

We have a good amount of equity in the house, only 16 years left and less than 50% LTV but my husband's income is around double the current mortgage payment (it would be around 8 times the interest only payment).

Can I ask where you found this information? And whether you think it is worth putting the mortgage in just his name to speed the process up/ make it more likely to be successful?

Thank you for all the information you provided it was really insightful and helpful xx

Thrugelmir · 17 February 2018 at 10:43PM

Nicoledonaldson wrote: »

but my husband's income is around double the current mortgage payment

Current being the operative word. Lenders assess affordability at far higher interest rate levels than those that people currently pay.

As an alternative have you considered extending the mortgage term. Will potentially reduce your outgoings. While still keeping you on track to repay the mortgage.

The issue with interest only mortgages is that people have good intentions to repay the debt. However tomorrow never comes. Then the debt simply snowballs out of control. With insufficient time left to repay. The discipline of having a repayment mortgage shouldn't be underestimated.

If your plan is to have a family. Then in your interests to reduce the debt as much as you can. As future rises in interest rates will ome back to bite you. Just when you least want higher outgoings.

Self employed remove name from mortgage.

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