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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
Between homes: Should we remortgage?
My partner and I are buying a new build home, which is currently under construction and will not ready until October. In the meantime, we are due to remortgage on our current property. We are not sure whether to remortgage to a better deal, and then port the mortgage when we come to actually buy our new home in October, or switch to our lender’s standard rate (which is expensive).
The problem with switching to our lenders’ rate is that although it will only be for six months, we will be paying around £150 more per month in interest! However, if we remortgage, our new home is more expensive so even if we port the mortgage, it is likely we will end up paying more! What can we do?
Answer
That’s quite a conundrum you have there! There are lots of things you need to look at before making a decision. If you port the current mortgage, will you need extra borrowing and what interest rate will your current lender charge for this?
How does this, plus the current rate you have compare to what you could get if you took a whole new mortgage on the next place but paid the standard variable rate (SVR) on your current deal for the next six months?
You would benefit from speaking to a mortgage broker and it would be worth asking them to look at options for a remortgage on your current place, for a deal with no early repayment charges (ERCs) to tide you over, and then throwing this into the mathematical melting pot! Good luck!
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Question
Shared ownership mortgages
I am considering shared ownership as a way to buy my first home. I have a small deposit at the moment of around £7,000 but I hope this will increase to around £12,000 by this time next year, when I hope to buy. Is this enough for a shared ownership mortgage?
I also wanted to find out whether there are specialist shared ownership mortgages, or if I can just use a standard mortgage?
Answer
When taking a shared ownership mortgage, you will need to put down at least a 5% deposit on the purchase price of your share of the property, but most lenders like a 10% deposit.
There are special mortgages for this type of purchase, and they are available from reputable high street lenders, so the pricing is not punitive owing to the mortgage being a shared ownership deal.
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Question
Getting a mortgage with friends
A group of friends and I have come up with a plan to get onto the property ladder – we are thinking of buying our first property together. There are three (possibly four) of us who are interested and we could probably all put together enough of a deposit to put down about 15% on a £300,000 home.
We wondered whether it is possible to get a mortgage with as many as four applicants and also whether there would be any problems with us all paying different deposit proportions but then paying equal amounts on repayments?
Additionally, one member of our group has had historic credit problems (within the seven year timeframe on which credit reports are assessed) but has been saving hard ever since and has not had any further misdemeanors.
Answer
That’s a great idea and something we are seeing an increasing number of first-time buyers considering. There are some lenders who will accept up to four applicants on a mortgage. However, the majority will only use the income of the two highest earners when looking at affordability, with a small handful of lenders using the income of all the applicants.
In terms of ironing out the deposit amounts, you would need to get a solicitor to put together some form of deed or document. This will confirm the deposit amounts each person has put in, so that when you need to either change the ownership structure or sell, everyone is given the right amount of money. This is separate to the mortgage and will not affect your ability to obtain the finance.
Lastly, all of you will be underwritten as part of the mortgage application, so without knowing the severity of the credit problems or how long ago they took place, it is not possible for me to say whether this will be an issue. The best advice here would be to get their credit file and then speak with a mortgage broker who can advise you of your options.
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Question
Shortening my mortgage term
I have been a homeowner now for nearly 15 years and have owned three properties in this time. I have around 60% equity in my home and I am due to remortgage in November.
My mortgage currently has a 25-year term but I wondered whether I could increase my repayments on my new deal, and reduce the term. Is this something a lender would consider? And by how much could I reduce the term?
Answer
The quicker you pay off your mortgage the better, as this will save you money in interest. Remortgaging is the perfect time to adjust the term, so you are thinking along the right lines.
I am afraid I cannot tell you by how much you can reduce the term, as this will depend on your budget for the monthly payment. Lenders tend to have a minimum term of five years, but I suspect this may be too much of a reduction!
My advice here would be to find out what sort of rate you will be able to get for your new deal, and then play around with a mortgage repayment calculator (there are lots available to use for free, online). See which term gets you to a monthly payment which you are comfortable with. Alternately, this is something a broker would be able to help you with.
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