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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
Extending my lease
I own a flat with 66 years remaining on the lease, which I understand affects the value of the property. What are the first steps I need to take to get the lease extended? Should visit my mortgage provider, hire a solicitor or have a surveyor round first?
Answer
To get a mortgage to purchase a leasehold property, most lenders prefer the lease term to be a minimum of 75 years, although there are exceptions to this rule. The shorter the lease, the lower the amount your flat will be worth. To extend your lease you should contact your solicitor in the first instance. If you need finance to purchase the extension, this can be done in tandem, but I suggest you use a broker who can ensure that all parties work together. Do get in touch if you’d like us to help.
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Question
100% mortgage – is this a possibility?
I have heard there are some mortgages which provide, with parents help or a guarantor, a 100% loan to borrowers. I am a first-time buyer, I earn a good salary of £60,000 (plus bonuses) and I have the offer of financial support from my parents. I haven’t got anything saved towards a deposit but I wondered, with the backing of my parents, I could attempt to get a mortgage anyway? Do you think a lender would consider me?
Answer
As you have support from your parents, you do have a few options. The most straightforward is for your parents to give you the funds for a deposit as a gift.
Alternatively, you could also consider a guarantor mortgage. This is where your parents guarantee to pay the mortgage for you, if for any reason you can’t. Only you own the property and only your name will appear on the deeds. Your parents simply provide the security for the loan by putting a lump sum into a savings account with the lender which they cannot withdraw for a set number of years or until you have paid off an agreed amount. Alternatively, the lender takes a charge on your parent’s property. If you go down the guarantor route, some lenders will allow you to borrow 100% of the value of the property.
With your parents’ help, you could also consider taking advantage of one of the Government’s Help to Buy schemes which you could get with a deposit (from your parents) from as little as 5% loan to value.
In terms of borrowing, you should be able to raise four to five times your salary, so £240,000 to £300,000.
Do get in touch if you’d like us to talk you through these options in greater detail.
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Question
Joint mortgage – safeguards for the future
My partner and I are not married but we are about to buy our first home together. I worry about what might happen in the future if we split up. I have provided the majority of the deposit (about 90%) and will be paying a slightly higher proportion of the repayment (about 70%). If anything were to happen, is there a way I could have the fact I own a greater proportion of the property recognised at the outset? Would I get my ‘share’ of the property if we were to go our separate ways?
Answer
The only way to do this is draw up a legally binding contract which reflects the ownership apportionment. An experienced property lawyer can do this for you.
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Question
Unusual salary structure
I work part-time at a school as a music teacher but I also run my own teaching business outside my contracted hours. I actually earn more through my private lessons than working at the school yet I am having problems finding a mortgage. This will be my first home and I am applying for the mortgage on my own so it’s all a bit daunting. I earn £17,000 through my school work and approx. £18,000 per year privately. I have a deposit of about £19,000 and I am interested in properties around the £130,000 to £145,000 mark. I have been teaching privately for about five years, but gradually building up the business so my accounts don’t look great for the first three years, but are getting healthier all the time. What can I do? Or should I give up hope of being a homeowner?
Answer
Lots of lenders are comfortable with borrowers who have multiple income streams as long as they can show a trading period of at least year or two. You should be able to borrow around four to four-and-a-half times your income, although you can get five times income with a handful of lenders. For you, this means that you could borrow up to £157,500 which is more than you actually need, especially as you have a healthy deposit too. Do get in touch if you’d like us to explore the most suitable mortgage options available to you.
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