Refinancing your home (for older people)

I have been approached by a pair of their early 60s, both in complete-time employment, whose hobby-simplest residential mortgage changed into due to expire, who wish to refinance

Because of their age, their contemporary lender was unable to offer a new facility and had requested that the closing balance be repaid.

Not able to make the total compensation and no longer wanting to down-length, the couple asked us to assist them remortgage and had asked that they stay on interest-best terms, retaining their monthly payments low.

With blended gross income of less than £75k pa, it might now not be honest to acquire interest-most effective terms as much as the extent of borrowing that the clients required. furthermore, each customers are already aged 60 or over, which again limits the availability of hobby-best finance.

We took the case to a lender that offers interest-most effective phrases as much as age 70, and fast acquired an agreement in principle. The valuation, but, came back decrease than expected, which extended the requested LTV to sixty four%. The lender applies a cap to hobby-only borrowing at 60% LTV, so the loan had to be restructured to part interest and part repayment.

Regardless of this, the phrases supplied nonetheless resulted in plenty decrease month-to-month repayments than their existing facility. The couple had been extra than satisfied to continue underneath the new phrases.


Does a poor credit rating prevent a mortgage ?

A common question mortgage advisers get asked is about credit scores and if a bad credit rating can prevent getting a mortgage to buy a house. Here's a typical question:

"I'm interested in seeing if I can obtain a mortgage but am worried my credit rating may be a problem.

Please could I make arrangements to speak to someone in this regard."

So in this enquiry the person obviously has some problem with some form of debt. Perhaps they are young and have to repay their student debt, or perhaps during the boom years of the noughties they overstretched themselves financially and to bridge the gap took out loans on 0% credit cards which they are now struggling to repay.

The subject of debt is of course huge, with many UK workers now on the minimum wage and zero hours contracts, what hope is there for buying a house for people in this position? The reaction has been that many people are now forced to rent houses because they can't afford the deposit to buy a house. The hour prices on the property market are also inflated as many people have chosen to invest in bricks and mortar rather than trust their money on the stock market. This has created a house price bubble as too many people, a second house is their investment and was bought when house prices were high. This keeps house prices (unrealistically) high as no one wants to loose money on their investment.

So, buying a house in todays Britain is tricky. It's tricky is you're in full time employment and have a good credit history. It's even more difficult if your circumstances aren't ideal and you think your credit rating may be a problem. Fortunately there is good news: mortgage advisers like Manchester Mortgages (http://manchestermortgages.co.uk/) are experts at finding mortgages for people with poor credit ratings. Most high street lenders will not consider many people with poor credit histories for a mortgage: this is a mistake. It's a mistake because people are increasingly running short of money and are having to work harder to make ends meet. This produces the follow-on effect that fewer people will be eligible for high street mortgages, this presents a huge opportunity for the likes of Manchester Mortgages and similar companies.

The difference an independent mortgage lender can make is huge, and in my opinion the days of the high street mortgage business model are over: these services are old and out-dated. An independent mortgage adviser will look at hundreds of mortgages from a huge number of different lenders and will also speak to them personally, describing people's credit situations (see the page specific to bad credit mortgages at http://manchestermortgages.co.uk/poor-credit-mortgages/) in detail and filling in a mortgage application with the correct information to ensure that a mortgage offer is given rather than rejected.

So in summary then, having a poor credit rating will certainly cause difficulty in getting a mortgage, and the best way of getting around the problem is to use an independent broker as described above.



What Type Of Surveys Are There?

This post discusses the various types of surveys available to home buyers available at http://www.mortgagebrokeradvice.co.uk/

WHAT IS A MORTGAGE VALUATION ?

A mortgage valuation ( or sometimes known as a valuation report )  is not a survey as such – lenders want to know how much the property is worth and to be notified of the property’s present condition.

Lenders will either use their own valuers or a valuer from their chosen panel to do a valuation report – with the valuer making comment to any repairs / reports required ie, structural report, timber and damp, electrical etc.

Unless the lender is offering a free valuation you will have to pay for the cost of this basic report on application of the mortgage.

If any further reports are required such as Timber and damp these usually have to be arranged and paid for by the purchaser unless the vendor of the property is prepared to pay / go halves on these costs.

WHAT IS A HOMEBUYERS REPORT ?

A Homebuyers report is a more detailed survey than the mortgage valuation / report.

It will advise on any major problems such as subsidence, and obvious rot etc.

However the surveyor will not lift up floor boards or drill any holes but provides a more in-depth report than a valuation report – it also costs more.

Again any defects will require more detailed reports as mentioned above.

WHAT IS A BUILDING SURVEY ?

These cost the most but are a more comprehensive detailed report and are usually for very old, timber framed, unusual , listed or thatched properties with the surveyor going in the attic, checking behind walls and looking between floors and ceilings.

They will usually contain estimates and costs and advice for any defects found.

WHAT TYPE OF VALUATION SHOULD I HAVE ?

As everyone has different levels of experience within the house buying process speak to your mortgage broker who will be able to advise you on what report / survey in your particular circumstances should undertaken bearing in mind the condition and age of the proposed property to be purchased. 
 
WHAT IF LENDER WILL NOT LEND THE FULL AMOUNT REQUESTED ?

If after having one of the above reports / surveys done and repairs / work has to be done to the property the lender will require written estimates for the full cost of said repairs – in certain cases the lender will then place what is called a RENTENTION on the mortgage.

For example if you are buying a property for £ 125,000 and require a mortgage of £ 110,000 with you putting in a deposit of £ 15,000 and repair costs are £ 5,000 the lender will reduce your mortgage to £ 105,000 meaning on completion you will have to increase your deposit to £ 20,000.

The lender will then normally give you up to 6 months to have the repairs / works done and will either accept receipts / guarantees provided by the companies who have done the work or send a valuer back to re-inspect your property ( usually for a fee ) and will then increase mortgage back up to £ 110,000 and forward you the £ 5,000 which was previously retained. 
 
Please ensure you fully discuss your valuation / survey requirements with your mortgage broker prior to submitting a full mortgage application to the lender.



What Documentation do I need when applying for a mortgage?

When applying for a mortgage lenders will need to see two things. Also, RECORD KEEPING IS ESSENTIAL...

1. DEPOSIT

A deposit for the property this can be as little as 5% but the bigger the deposit the better the rate, and proof that you can afford the mortgage over the selected term.

The deposit can come from various sources IE savings, Gift from Close relatives (Parents/Grand Parents) or in some case equity within the property ( you would need to seek advice before committing to purchase the property).

2. INCOME

Lender will want you to be able to prove that you can afford the mortgage in every case and they do that by looking at your income whether you are employed or self employed.

They will then look at what credit commitments you have already and will usually deduct these from your income to establish affordability.

It is vitally important that when you apply for a mortgage that you can prove your income.

Typically what lenders will look for is the following:

  • Proof of Identification typically Passport or Driving Licence
  • Proof of residency of current address
  • Last three years address history
  • Payslips (usually last three if paid monthly but could be more dependent on how you are paid)
  • If Self Employed SA 302’s and Tax overviews (These can be obtained by you accountant or directly from HMRC).
  • Bank statements
  • Mortgage Statement if already a homeowner.
  • Details of existing credit commitments (which could include credit card statements, Loan Agreements)
  • Or any other document that they feel is necessary.

Therefore it is vitally important that when applying for a mortgage or any other loan for that matter you are able to prove you are the person(s) applying and that you can afford the loan.

You will need to be able to provide to the Bank,Building Society or Specialist lender the original documents.

If using a broker you can usually provide the original documents to them and they will forward certified copies to the lender.

Record keeping is essential and throwing away important documents could result in a long delay in applying for a mortgage or in some cases refusal.

So if you are at the point of thinking about applying for your first mortgage or are thinking about buying your next property ensure that you have got all the correct documentation as the lenders will want to see them.