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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
Mortgage following divorce
I have a question on behalf of a friend who is getting divorced. She has a mortgage with her current husband but cannot afford to buy him out nor take on the mortgage in full herself. Do you offer a service of buying a percentage of a house on an existing mortgage that she would then be able to begin buying back from yourselves in future years?
Answer
A shared ownership mortgage might be an option. Your friend could split the ownership of her home with a local housing association. Essentially she would buy a share, say 25-75% of the property, pay the mortgage on it, and pay rent on the remaining share to the housing association. To do this she would need to find a housing association willing to participate and have enough equity to own at least 5% of the property which would serve as the deposit.
An alternative your friend might wish to consider is a Joint Borrower Sole Proprietor Mortgage. This is where two people are responsible for the mortgage but only one of them is on the property deeds. In your friend’s case, this might mean she could buy out her ex-husband by raising a mortgage with a close family member. When assessing the mortgage application the lender would assess your friend’s income and that of the family member’s to determine how much they could borrow together. The family member would then be jointly responsible for paying the mortgage but your friend will own the property.
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Question
Remortgaging Tips
I am approaching the end of my introductory mortgage deal. This will be my first remortgage so I am keen to move to a competitive deal instead of my lender’s standard rate. What can I do to help get the best deal? For example, will lenders look again at my bank statements, income and such like and would it therefore be worth cutting down on spending again in the run up? Any tips would be gratefully received!
Answer
There are thousands of mortgages available to UK borrowers and the quickest way to find the best deal for you is to get a qualified, independent and whole-of-market mortgage adviser to search the market for you. They will be able to match your circumstances and preferences to the right products. Crucially, they will clearly explain how much the mortgage will actually cost you, taking into account all the fees and charges you’re likely to incur along the way. If you don’t already have an adviser in mind, we’d be happy to help!
In the meantime, here are some tips to help you get prepared:
• Make sure you’re on the electoral roll.
• Get your paperwork in order. In support of your mortgage application you’ll need to provide proof of identity, address and income, plus three months’ bank statements.
• Check your credit profile. Make sure that it is accurate and rectify any inaccuracies.
• In the three months before applying for a mortgage, try to make sensible spending decisions – remember the lender will be looking at your bank statements.
• Make sure you pay any unsecured loans on time.
• Clear your credit cards if possible, or at the very least, make sure you’re not borrowing more than 75% of your credit limit.
• Avoid applying for any new credit.
• Avoid unauthorised overdrafts.
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Question
Joint mortgage with bad-credit partner
I am in a bit of a quandary. My husband has a very poor credit history and, as such, I am nervous about him being part of our mortgage application. I could probably get a mortgage with just my salary, so finance is not an issue. However, while I feel it is proper he is on the mortgage application in name I am concerned his previous mishaps might affect our application or chances of getting the best deal if he were to be on the documents. Is there any way around this? For background, he has a history of missed credit card payments from about 18-months ago. He has been clear since.
Answer
Be honest! Lenders don’t like to be surprised and there are quite a few that will accept borrowers with some adverse credit. In my opinion, this is a job for a mortgage broker who knows the market. If you work with us, we’ll ask you both to show us your credit report so that we can match your joint circumstances with the right lender. We know the varying levels of adverse credit different lenders are willing to accept. This should help you to get the right mortgage in the best possible timeframe.
You will find that lenders often insist that a mortgage is taken in joint names if the applicant is married and living with their spouse (ie not legally separated). Equally, some lenders may accept an application in just your name but will still credit search your husband as you are financially associated with each other. So you may find that applying for a mortgage in just your name is not the solution you would be forgiven for thinking it would be!
The best advice I can offer to you, is to share your credit files with a broker (one of mine, preferably!) and let them assess how bad your husbands credit file is. Missed payments 18 months ago are actually by no means terrible, so it may be that things are not as negative as you perceive. Invariably, a good broker will find the right lender to match a borrower’s requirements taking into account all aspects of your situation, and I am quite sure we would be able to assist you to find a good deal.
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Question
Should I get an offset mortgage?
We are currently two years into a five-year mortgage deal and we are paying just over £800 a month on 1.98% fixed rate. However, someone recently told us about Offset Mortgages and we wondered whether we could save even more money by switching to one of these deals. We have around £22k saved into a couple of stocks and shares ISAs. Would we have to transfer these to benefit from the offset product?
Answer
Yes! An offset product comes with linked accounts, so you would need to transfer any balances you have into one of these linked accounts to benefit from the offset facility. The balances will not earn any interest, but you would not pay any mortgage interest on the amount you offset.
However, you should consider the early repayment penalties of your existing mortgage before you move as this may affect any immediate potential savings. Do get in touch to talk it through – we can help you work out what option is best for your circumstances.
The stocks and shares ISA will be generating a return (how much will depend on the fund’s performance) and this return will be tax free. If you were to transfer your ISA funds into a mortgage.
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