We had done mortgages for Craig a few times in the past for him and his wife. So it was sad to receive a call to say he and his wife Emma had now separated. Craig wanted to transfer the house in Hull into his sole name. They had agreed to split the equity in their home between them 50:50.
The idea then was for Craig to arrange Remortgage Advice in Hull to buy out Emma. Pay off the current mortgage and raise a small additional amount to pay off a credit card debt.
Craig is an HGV driver, and he was concerned about whether he would get a mortgage in Hull or not. His credit history was excellent. However, he had changed employers a few times during the past 18 months, including a period of self-employment.
Back when Craig called, he was actually between jobs, but he offered a new role with one of the companies he had worked for in the past. I explained to Craig that while some Lenders need you to have been in your current job a certain length of time or require you to prove you have had 12 months’ continuous employment.
In any case, others can accept a job offer letter, coupled with a contract of employment signed by both employer and the new employee. When you remove someone from the deeds, this is called a transfer of equity, and there is more legal work to be done.
Luckily, in this case, the split was reasonably amicable. The house got transferred into Craig’s name, and Emma received her share of the equity. Which she went on to put down as a deposit on an onward purchase. Suppose you can relate to this scenario and need some Specialist Mortgage Advice in Hull. Get in touch, and book your free mortgage appointment to see if one of our Mortgage Advisor in Hull can help.
We tend to find a lot of buy to let landlords in Hull like to create a property portfolio as a means of funding their retirement. Not everybody likes to use a pension plan, but they do understand how the property market works. I know that over the past 20 or 30 years it has been a very strong long-term investment, despite the ups and downs.
In this case study, we will take a look at one way we helped a customer to take her initial steps to become a Landlord.
Carol is a self-employed mum with two children, and she is a Director of two small businesses in the Hull area. She and her partner had quite a lot of equity in their home and were interested in raising some capital in order to purchase a low value buy to let property, potentially at an auction. Carol felt that she was able to get some bargains at auctions, but she never had the money to attend one of these as a cash buyer.
She looked into Remortgage Advice in Hull for the possibility of Remortgaging her property. But had been told previously that it wasn’t possible unless they could provide an address for property they were looking to buy once they’d done this – a proverbial “chicken and egg” scenario.
Carol also mentioned that once or twice a year, she would receive a dividend somewhere within the region of £3000, from one of the companies she was in partnership with. She also mentioned that she had been prone to wasting some of that cash when she received it, perhaps unexpectedly.
I could tell that Carol was always very busy, but also a very savvy businesswoman. The dividends she received could easily be put towards an investment, as there was never anything she was specifically spending it on. I recommended that she take out an offset Remortgage in Hull that Carol and her partner could secure against their home.
I found a Lender who was more than happy to release funds on completion, in order for it to be assigned to a future Buy to Let mortgage in Hull (without wanting to know the address of the specific property). Carol simply deposited the additional funds into the offset savings account that you get with that type of mortgage, and left the money to sit there until she needed it.
The offset savings accounts will not attract interest, though it is instead offset against your mortgage balance. To clarify, Carol had £85,000 surplus funds from a overall remortgage of £215,000. While the money is sitting in the savings account, Carol only has to pay interest on the £130,000 difference between the two figures. The £85,000 is on instant access and was available to jump into at any point in time.
Three months after her remortgage had completed, Carol found a suitable property that was in a state of disrepair. It was likely not able to have a mortgage on it itself, but Carol had saved up enough funds to buy the house outright.
Carol secured the property at a knock-down price of £55,000, but this amount needed to be brought up to the total of £70,000 to cover all of the legal costs and a refurbishment program of works.
A further nine months went by, and with all of the work completed, Carol had no trouble finding a tenant to start paying rent. The house was now worth around £90,000, and we were able to raise a remortgage of £67,500 against it to help fund the purchase of a second buy to let property.
Carol has no intention of changing career paths and becoming a full-time Landlord, but she can now see a way into the future where she might own three or maybe even four properties in the future, as a way of funding her retirement plans.
She loves the flexibility that her offset mortgage allows her to have, and while she may still ‘squander’ some of her dividend from time to time, which she is free to do, without fail, half of it at least is deposited back into her offset savings account each time. This means her money will essentially “do the work for her”, reducing the overall amount of interest that is repayable on the mortgage.
If you are interested in offset mortgages or building your investment property portfolio, please feel free to book a free mortgage appointment. Our Mortgage Advisors in Hull will be happy to help you in any way they can.
It can be more challenging to get a mortgage if you have had credit problems in the past. Still, Gareth and Maria’s situation got trickier in that Gareth had not long since he quit his job to pursue his hobby as a Graphic Illustrator as a new profession. In this case study, we discuss the importance of taking Mortgage Advice in Hull as soon as possible to give your application the best possible success chance.
Gareth disliked his job, but the salary was excellent, and he felt he couldn’t afford to quit. He started moonlighting on the weekend as a Graphic Illustrator, and he began to see this as a viable career in itself. He eventually dived looking at Self Employment mortgage Advice in Hull, to improve his work/life balance and finally enjoy his job.
With the additional hours he could now devote to his former “sideline,” Gareth’s business quickly showed a profit. In fact, after the very first year of trading, it was profitable enough for him to consider buying a home for himself, Maria, and their adopted child and get out of renting for good.
Sadly, finances have never been Gareth’s strong point, and his negligence on such matters when he was younger led to a couple of defaults on his credit record. His credit score had improved in recent years, but the old ruins were still showing on his credit report. Therefore, there were two issues when the customers approached our Mortgage Broker in Hull for Mortgage Advice. These appeared to consist of finding them a Lender who would take a more forgiving view on his historic poor credit while also lending to him based on the year’s trading figures.
Gareth knew he would not be an easy mortgage and took the sensible step of engaging with us early on, well before they started viewing houses. He felt that getting a mortgage might even be impossible. Looking at Gareth’s Experian report, it is evident that a specialist lender would be required. Luckily his photography business didn’t need much cash to get going, and he had been quickly able to raise a 15% deposit with just a little help from the “Bank of Mum and Dad.” giving me the reason for some optimism.
Some of the less well-known “specialist” Lenders have carved out a real niche for themselves when lending to customers who have not long been Self-Employed In Hull. There is some additional risk for them in this area when so many businesses go bust in their infancy, thus to mitigate this, they insist customers put down a fat deposit. 15% was just enough, and we obtained an Agreement in Principle for Gareth and Maria, who went on to buy a family home.
Because these specialist lenders are working in carefully selected niches, they tend to charge higher interest rates than you might see advertised with High Street Banks. That said, these higher rates are by no means extortionate, and in many cases, it’s still cheaper than renting.
Just because your first mortgage ends up being with a specialist Lender, it doesn’t mean that you are frozen out of more competitive mortgage rates forever. While it’s likely that you’ll have to sign in for at least two years, if you can prove a good payment history, then a remortgage to a more well-known Lender offering a better deal after a while should be achievable.
Specialist Lenders don’t mind you seeking another deal elsewhere, and they expect that’s what will happen in a large number of cases. They see themselves as “stepping stones” Lenders, and when you come to leave them in the future, they take the funds you have repaid and look to lend it back out to new customers.
In summary, specialist Lenders play an instrumental role in the mortgage market. They will take a different view to mainstream Banks but don’t get fooled into thinking they lend to just anyone, and you have to fit precisely within their published lending guidelines.
Some employees’ incomes get made up of various elements. There is virtually always a basic income on a payslip. However, there can also be other items such as overtime, bonuses, and shift allowances.
Not necessarily all of these additional strands are guaranteed so as we learn in this case study, and lenders look at this in various ways.
Frankie, a First Time Buyer in Hull, was working for the NHS, and his payslips were incredibly complex. In addition to his basic income, he got paid different hourly rates for the various shifts he was working.
There was overtime too at the time and a half and holiday pay; in fact, one payslip had six different elements of payment on it!
His bank would not lend him and his family enough to buy the home they had made an offer on, and he approached a Mortgage Broker in Hull for a second opinion.
An explanation as to why the lenders can have an issue with multiple elements of pay on payslips. Is that these extra strands are rarely guaranteed.
Therefore, in the event of a repossession taking place. They might struggle to justify to a Regulator why they granted the mortgage in the first place based on income. Which they knew was variable.
As a result, lenders often take an arbitrary view; for example, they might take 60% of overtime if it’s on every payslip. Others take bonus into account if it’s payable monthly or paid annually, things can get very complicated!
Our group of Mortgage Advisors in Hull managed to help Frankie; in fact, we discovered two lenders who would lend him the amount he and his family needed.
Lender one had a policy of taking 100% of the shift allowance and overtime into account. As long as it might get evidenced on every payslip.
They applied an average of the last six months’ payslips to give them confidence. That the income got smoothed out and sustainable.
Lender two would also lend more than enough but evaluated the income differently. Instead of considering all the various elements individually.
They asked that we provide Frankie’s last two years’ P60’s and took an average of those.
This technique also works well for employed applicants. Who works in sales roles with low basic salary but high commission and bonus.
Frankie was delighted he contacted us for our Mortgage Advice in Hull. He knew the mortgage was easily affordable, and he knew that his income was sustainable. It was just a case of finding a lender who took a different approach.
Whatever your situation, whether you are Moving Home in Hull, buying as a First Time Buyer, or looking to Remortgage. If your income gets made up from several different sources.
We would recommend you make contact with us well in advance of making an offer. So you can be sure of your maximum borrowing capacity upfront to avoid potential disappointment.
The reality is that there are lots of people in life, who will at some point or another, find themselves in some level of debt. Sometimes, due to factors out of your control, this may spiral and leave you struggling.
In situations like this, people may feel like there’s no disposable income left after all your bills have gone out. If you’re a homeowner, one potential route you could take is a debt consolidation remortgage in Hull, which is something we explore throughout this case study.
Lacie was a divorcee living by herself; her children having moved out and onwards. Her debt had started to accumulate with legal bills post-divorce and gradually increased over the years, having to live on one income with unreliable maintenance from her now ex-partner.
As time passed, her daughter became pregnant, and as any mum would, she tried to help her daughter out financially, although arguably, she wasn’t viably able to afford doing so.
Luckily Lacie had paid her mortgage off in the past, so there existed an asset of which she could potentially borrow against. Her take-home pay was £1100 per month, and her credit commitments were taking up more than half of this amount.
She had not missed any payments on credit commitments, but she had no emergency fund to draw from. Whilst Lacie’s credit score wasn’t too bad, she was no longer able to obtain new 0% credit cards to transfer her balances.
Someone had recommended that she speak to me, to see if there were any available routes for her to take, in order to improve her financial quality of life.
When I met, Lacie was feeling quite down on her luck. She had cut back on all luxury spending, and it was evident that she was desperate to finally take control of her financial situation before it got any worse.
We explored the possibility of a personal loan, but the debts had mounted too high for that. Lacie had no family members who were able to help; downsizing was not an option, and we agreed the most suitable path to take would be to remortgage the house to pay off the debts and reduce her outgoings.
We managed to find a lender to meet Lacie’s requirements. Although because she had a lower income, it was quite difficult to find a lender who was willing to lend her enough. We managed to get her an Agreement in Principle, but regrettably, her formal mortgage application was declined.
Lacie had been using cards to pay off other cards and not then closing down the cards. The reason the case was declined was that the underwriter who assessed the situation felt that when she had transferred balances, there was a high risk that she may re-offend and get back into major debt.
Lacie was understandably disheartened. She understood the concerns, but from her perspective, she had accepted she had a problem, and by engaging us had taken a positive step to remedy her position.
Their risk was minimal in her eyes, the loan to value was under 40%, she had never missed any payments, and if the remortgage was successful, she could be an impressive £500pm better off.
All the above was indeed correct, but unfortunately customers don’t always take into account the mortgage lenders perspective. The last thing a mortgage lender wants or needs is to repossess the property. It reflects poorly on the numbers they are required to report each year.
In the event of repossession, they have the unenviable task of securing the property, ensuring it, marketing it, selling it, and paying the surplus of equity (if any) back to the previous owner of the property.
Depending on the circumstances pertaining to the property and it’s value at that point, it’s even possible that the mortgage lender could find themselves out of pocket at that point.
As such, if there is any reasonable doubt at all, an underwriter has full discretion to decline an application, even if it is within their published lending criteria.
We pride ourselves on getting our recommendation right the first time, but unfortunately this one didn’t work out that way, due to the underwriter’s choice to decline our customer at the full application stage.
Though this was a hurdle in our way, we knew this remortgage wasn’t as risky as the mortgage lender had made out, and it ought to be the right outcome for her. Lacie perhaps felt like she wanted to give up, but we went right back to work and looked to find a different mortgage lender.
Sure enough, we found one! Armed with the information we had from the previous mortgage lender, we were able to provide better supporting comments for the second roll of the dice. Contrary to the previous application and quite fortunately, it was successful!
Lacie didn’t take this step lightly. She has now secured debt that was previously unsecured and may end up paying back more interest overall, depending on how quickly she can get the mortgage paid off.
That being said, in the short term, this has worked well for her. She now has had the burden of debt relieved from her shoulders, her credit score has improved, and she has the ability to save a little more each month.
The savings we were able to help her make amounted to over 50% of her net take-home pay monthly and it has changed her life. Upon completion of the remortgage, Lacie cut up all her credit cards except one spare that she could use in emergencies only.
She has now got her financial life back to where it should’ve been, allowing to be happier and more comfortable with her finances.
If you are like Lacie struggling with debt but are a homeowner with equity please call us to discuss your options, ideally before the situation gets out of hand. The earlier you take back control of your finances the better you will feel about things.
We offer debt consolidation remortgage advice in Hull & surrounding areas.