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Beckie Pepperrell, Residential mortgage expert at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
I have a property I bought in 2010 but I missed two payments because I lost my job. How will this affect me when remortgaging?
Answer
I currently have a tracker rate mortgage but I’m a bit worried that the interest rate could go up soon. With inflation above the 2% mark it looks increasingly likely the Bank of England might raise rates. Is it a good idea to get a fixed rate mortgage or should I stick with a tracker?
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Question
I currently have a tracker rate mortgage but I’m a bit worried that the interest rate could go up soon. With inflation above the 2% mark it looks increasingly likely the Bank of England might raise rates. Is it a good idea to get a fixed rate mortgage or should I stick with a tracker?
Answer
There is never a definitive answer to that question as it depends on so many factors and your appetite for risk. Ultimately only you can decide which is best for you but if a rise in interest rates would stretch your budget then fixing is a good idea, particularly now whilst rates are at historic lows. We have even found some fixed rates that are currently cheaper than their variable rate counterparts.
Also, think about whether you might want to redeem the mortgage early for any reason as fixed rates usually have early repayment charges and trackers/variable often don’t. Get in touch if you want to discuss this in greater detail.
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Question
My wife and I are in our early forties (I’m 42 and she is 43). We have got £25,000 in savings between us and a joint income of £45,000. Is it possible to get a mortgage at our age and what is the longest term we can get? Are banks and building societies willing to lend? Will they mind if we are still paying in our 70s?
Answer
Most mortgage lenders will give you a mortgage up until your named retirement date. If you want to continue paying the mortgage after that you will have to demonstrate to the lender that your pension, and any other income you may receive, will be sufficient to make the repayments and provide you with enough to live on. As you might expect, every lender is different which is why it’s worth using the services of an independent broker who can match products to your specific circumstances and requirements.
If you and your wife planned to retire at 70, you could reasonably expect to be offered a mortgage term of at least 25 years, if not 28 years. In addition to a multiple of your joint income, (say 4.5 x income), the lender would also assess your ability to pay the mortgage every month now and if rates were to rise by, say 2%. To do this, they would look at your income and expenditure to get an idea of how you live and conduct yourselves financially. The lender would also run a credit check. Do get in touch if you would like a tailored quote.
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Question
I’m a potential first-time buyer and clueless about how buying a home works. I have my eye on a property and so I’m looking to get a mortgage offer in principle. How will my bank determine how much I can borrow?
Answer
Lenders look at your overall situation taking into account your monthly income and expenditure such as food/clothing/utility bills etc. They also look at the size of your deposit, your credit profile, unsecured debts, pension contributions and any financial dependents. All these elements help the lender decide whether to offer you a mortgage and if so, how much.
Based on the information you provide an experienced broker can quickly work out which lender and rate best suits your circumstances. They should then be able to get you an Agreement in Principle (AIP – sometimes called a Decision in Principle) from a lender. AIPs are not a formal mortgage offer – just a basic statement from a lender confirming that they will lend you a certain amount if you match their borrowing criteria and pass their underwriting process. However, AIPs carry a lot of weight with estate agents and vendors as they demonstrate you are serious about buying and can follow through with your offer.
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Question
I live in London and my monthly outgoings mean that it is very hard to save up enough of a deposit to buy a property on my own. I’m thinking of getting together with three friends. Do lenders offer mortgages that cover this sort of thing?
Answer
Yes – there are several lenders that allow up to four people on a mortgage. Some will only allow the two largest incomes to be used for affordability purposes in terms of calculating how much they will lend, but some will take all four incomes into account. This way of borrowing is becoming increasingly popular and can be a good way to get on the housing ladder
Bear in mind that in time, your circumstances are likely to change and you might want to buy out or sell to the other parties so make sure you are all agreed on this. You may even want to take legal advice and get a contract drawn up. Also, you will probably want to register ownership of the property as ‘tenants in common’ which means each of you can own different shares in the property, and you can pass on your share in your will if you die, rather than have it automatically go the other owners. Again, get in touch if you want to look at specific options.
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