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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk/
Tel: 0345 345 6788
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Question
Contributing to equity but not on mortgage – where do I stand?
I am about to move in with my boyfriend. He owns his own flat and pays the mortgage on the property and I will be contributing some money each month to support the household finances, including the mortgage.
My parents suggested to me that it might be a good idea to get something formal drawn up before I move in and start making financial contributions. They said I will be helping him build up equity in the home and therefore it was important my financial role in this was put in writing.
I wondered whether there was a way my name could either be added to the mortgage or if there was some other process which would help register my involvement in helping with repayments?
Answer
By and large, the mortgage deeds need to match the title deeds. If you were to be added to the mortgage, you would also need to be recorded as a legal owner of the property. Your boyfriend may or may not be open to this.
Assuming this is not the way you guys decide to play this, then the advice your parents have given is excellent – I would suggest asking a solicitor to help you put something together which you both sign.
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Question
How do we repay the loan on the Help to Buy scheme?
My partner and I are looking at using the government’s Help to Buy scheme to buy our first property. We are currently looking at some new build properties in Kent and we are really impressed with what we could potentially buy with our money. We have two children so we need a three or four bedroom house and we also have £15,000 saved up so we think we could be eligible for something suitable.
We have one concern, however, which is regarding the mortgage. Do we need to get a special type of mortgage for
Help to Buy which will incorporate the loan repayments? Also, what happens when we need to start paying interest after the initial five-year period? Should we save money up in the first five years to help pay this or are there mortgages which can help?
Answer
If you use a Help to Buy scheme, then you will need to take a Help to Buy mortgage. This mortgage does not incorporate the loan repayments – these are paid separately.
Setting money aside to help cover the higher payments after five years is a great idea; however, when a mortgage lender is assessing your affordability on the mortgage, they are also taking into account that you will need to make these payments in the future and thus will base the affordability calculation on this.
It may be that at this time, you are able to remortgage and raise sufficient money to pay back the loan, although this is not guaranteed.
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Question
Will a lodger’s rental payments be included in affordability assessment?
I am looking at buying my first home and to subsidise the mortgage payments I plan to get a lodger. Will the potential rent be taken into consideration by a mortgage lender as part of their assessment of my income?
I am hoping the additional income will mean I can get a bigger mortgage and therefore move to a slightly more desirable area. As there is no history of this income on my paperwork, will the lender need some kind of assurance from my tenant and will they need to check their bank accounts etc?
Answer
While this is a great idea in terms of helping you out financially, I am afraid that the vast majority of lenders will not take lodging income into account when assessing how much they will lend to you.
However, there are a couple of lenders who will, so your best option is to speak to a mortgage broker who can make sure you approach the right institutions who will be able to assist you.
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Question
Application rejected because of a blip – will I face a consequence?
I have just applied to remortgage through a broker who found me a really good deal with a lender. I have a very high equity stake in my property – 70% and all my finances are in order.
However, the lender sent back a query because they found something called an ‘undisclosed commitment’ on my accounts. The only transaction I had not declared was a transfer which my parents pay into my account so I can pay my son’s school fees.
I notified the lender of this but the ‘undisclosed commitment’ was still pending. I cannot work out what this might be. I have a bit of a credit card debt, but I have declared this. I am not sure how to proceed. I am also concerned I will get into trouble for this and may face a consequence. Any help would be great.
Answer
It’s always so frustrating when this happens. Your best option would be to obtain a copy of your credit file to see if something is showing on here that you had not thought of.
We come across this fairly often, and it is usually something minor which the applicant has forgotten about.
If the credit report does not shed any light on this, I would simply send the credit report to the lender, plus your bank statements to show that you have no commitments which are not showing – hopefully this will alleviate their concerns.
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