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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
Leasehold problem – can anyone help?
My husband and I are first-time buyers and have been finding it difficult to locate a property which works for our budget and affordability levels.
We have just viewed a flat which seems suitable and fits the bill finance-wise. The problem is it has a short lease. The estate agent said this would mean we’d have trouble getting a mortgage.
We wondered whether this, indeed, would be the case and, if so, whether we could extend the leasehold to make it mortgage-able? Could we add the cost of getting the extension to the mortgage?
Answer
Whether you can get a mortgage will hinge on how short the lease is. Most lenders want to see 75 years left when you apply, but others could be willing to take a view.
However, I think that anything below 50 years will be a real issue. It would be tricky to get the lease extension tied in with the purchase (although not impossible) – the easiest option would be to buy the property, and then do the lease extension later.
You could ask your lender to assist with the cost of this, but it would be really beneficial for you to speak to a mortgage broker, who will be able to give you some tailored advice based on the lease length.
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Question
Can I remortgage to renovate our property?
We have a three-bed Victorian house in south London and we need to extend it to create a fourth bedroom in the loft area and also widen the kitchen. The builders’ quotes are coming in at around £40k to do this and some other works to improve the house.
We are three years into a five-year fixed-rate mortgage, so we wondered what our chances were of getting a remortgage to fund the building work? Would we be able to get a deal with our current lender or could we look for another mortgage?
We are thinking sticking with our lender would avoid penalty fees – but we’d be keen to get some independent advice on this before we start making phone calls.
Answer
Both a full remortgage and a further advance from your current lender are possible options here. The best option will be determined purely by mathematics in terms of the costs of each.
Ideally, you will invest some time speaking to a mortgage broker who will be able to line up the numbers of both options, and you will be able to see which is most economical.
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Question
Trainee doctor: Can I get a mortgage based on future earnings?
I hope you can help me. I am a junior doctor and due to do pursue my specialism next year. My boyfriend works in IT but is in a junior position. We have been given £20k by my family to help us get on the property ladder and we have a similar amount in savings. We live near Manchester.
At the moment my earnings aren’t great, but they will increase next year and then will continue to rise after this. I wondered whether a mortgage lender might take this into account when assessing our affordability. My boyfriend is also going to see an increase in his salary once he has established himself. Is there anything we can do?
Answer
Lenders will not offer based on projected income figures, I am afraid – they will need the mortgage to be ‘affordable’ from day one.
However, there are some lenders who, for certain jobs, will offer a more generous level of borrowing because they know that your income will increase over time as you progress with your career.
This sounds more relevant to your income than your boyfriend’s. If you speak with a professional, they will be able to inform you about the art of the possible here.
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Question
How do I remortgage?
Sorry to ask such a basic question – I am sure people do this all the time but I feel a bit lost. I took out a two-year fixed rate mortgage with Barclays back in August 2020 and I am aware I will need to remortgage in August this year. But what do I do?
Will Barclays write to me with details of how to renew the deal? Or will I automatically switch to a new deal? I was a first-time buyer when I took out the mortgage on my flat in 2020 and I wish I had asked the person I spoke to about what would happen, but it didn’t occur to me!
Answer
Not at all basic– it’s actually a very good question! Barclays will write to you before August, either setting out the rates they can offer you, or inviting you to contact them to discuss options.
I would encourage you to do some homework to see whether this offering is as good as anything you could get from other lenders (like when you renew your car insurance).
The easiest way to do this is to use a whole-of-market mortgage broker, but you will also find price comparison sites that will help with this.
I would suggest you get going on this no later than June, to ensure that your chosen option is ready to click in as soon as your current rate ends and to avoid going on to your lender’s reversion rate.
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