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 a remortgage 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 we will see how a Mortgage Advisor in Hull may help.
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.
Many people like the idea of creating a property portfolio to fund their retirement.
Not everybody is a fan of pension plans, but they do understand the property, I know that over the past 20 or 30 years it has been a sound long term investment despite the peaks and troughs.
In this case study, we look at one way we helped a client take her first step on the road to being a Landlord.
Robin is a self-employed mum of two, who is a Director of two small businesses in Hull. She and her partner had a substantial amount of equity in their home and were interested in raising some capital to buy a low value buy to let property, possibly at auction.
Robin felt she could get some bargains at auctions, but she never had enough money to attend and be a cash buyer.
She had looked into Remortgaging her house in Hull for this purpose before but had been told it wasn’t possible unless they could provide an address for the onward property they wanted to purchase – the proverbial “chicken and egg” scenario.
Robin also mentioned that once or twice a year, she received a dividend in the region of £3000 from one of the companies she was a sleeping partner in, and she has been prone to wasting some of that cash when it arrived, perhaps unexpectedly.
I could tell that Robin was a very busy person but also an astute businesswoman. The dividends she received could be put to better use as she never had it earmarked for anything specific.
I recommended an offset Remortgage in Hull for Robin and her partner secured on their home.
I found a Lender who was happy to release funds on completion to be assigned to a future buy to let purchase without insisting on a specific property.
Robin simply deposited the additional funds into the offset savings account that comes as part of the mortgage, and these monies simply sit there until she needs them.
The offset savings accounts do not attract interest but instead is offset against the mortgage balance.
To clarify, Robin had £85,000 surplus funds from a total remortgage of £215,000. While the money is in the savings account, Robin only pays mortgage interest on the £130,000 difference between the two figures.
The £85,000 is on instant access and was available whenever she needed it
Three months after completion, Robin identified a suitable property that was in a state of disrepair. It was probably not mortgageable itself, but of course, Robin had access to liquid funds to buy the house outright.
Robin secured the property at a knock-down price of £55,000, but this amount needed to rise to a total of £70,000 to fund legal costs and a refurbishment program of works.
A further nine months went by, and with the works all done, Robin had no trouble finding a tenant. The house was now worth £90,000, and we raised a remortgage of £67,500 against it to fund the purchase of property number two.
Robin has no intention of becoming a full-time Landlord, but she can now see a way forward to owning three or maybe even four properties in the future to fund her planned retirement lifestyle.
She loves the flexibility that her offset mortgage brings, and while she still ‘squander’ some of her dividend, which is her right to do. Without fail, half of it at least is deposited back into her offset savings account, her money working “for her” to reduce the total amount of interest repayable.
If you are interested in offset mortgages or building your investment property portfolio, please get in touch, and our Mortgage Advisors in Hull will be happy to assist you.
Many people are, to a greater or lesser extent in debt at some point in their lives. Sometimes due to personal circumstances, this can spiral out of control. When this happens, it can feel that once you have paid all your bills at the start of the month, there is little or no disposable income left.
One route out of this for some applicants is to consider a debt consolidation remortgage in Hull, as we explore here in this case study.
Deborah was a divorcee living on her own; her children have flown the nest. Her debt had started to accumulate with legal bills after her divorce and increased gradually over the years, having to live on one income with unreliable maintenance from her ex. Finally, her daughter became pregnant quite young, and as any mum would, she tried to help her out financially, although arguably, she couldn’t afford to do so.
Luckily Deborah had paid her mortgage off some years ago so that asset was there to potentially borrow against. Her take-home pay was £1100 per month, and her credit commitments were taking up more than half of this.
She had not missed any payments on credit commitments, but she had no emergency fund, and while Deborah’s credit score wasn’t too bad, she was no longer able to obtain new zero% credit cards to transfer her balances.
She was recommended to me to see if there were any options available to improve the quality of her financial life.
When I met, Deborah was feeling quite low. She had cut back on all luxury spending, and it was evident that she was desperate to take ownership 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. Deborah had no family members who were able to help; downsizing was not an option, and we agreed the right way forward would be to remortgage the house to pay off the debts and reduce her outgoings.
We managed to find a Lender to meet Deborah’s requirements. Although it has to be said given her low income, it was hard to find a lender who would lend her enough. We managed to get her an Agreement in Principle, but regrettably, when we submitted the formal mortgage application, it was declined.
The reason the case was declined was that the Underwriter who assessed the situation felt that because Deborah had been using cards to pay off other cards and not then closing down the cards.
When she had transferred balances, there was a high risk that she should re-offend and rack up debts again.
Deborah was devastated. She understood the concerns, but in her eyes, she had accepted she had a problem, and by engaging us had taken a positive step to remedy her position. To her, their risk was minimal – the loan to value was under 40%, she had never missed any payments, and if the remortgage was successful, she could be a whopping £500pm better off.
All the above was indeed correct, but clients don’t always appreciate that taking a property into possession is the last thing a Lender wants or needs. It reflects poorly on the numbers they are required to report each year. In the event of repossession, they have the considerable hassle of securing the property, ensuring it, marketing it, selling it, and paying the surplus of equity (if any) back to the previous owner.
As such, if there is reasonable doubt, then an Underwriter has the 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 this one didn’t work out that way due to the Underwriter’s adverse comments at the full application stage. However, we knew this remortgage wasn’t as risky as the Lender had made out, and it ought to be the right outcome for her.
Deborah perhaps felt like she wanted to give up, but we went back to the drawing board to find a different Lender. Sure enough, we found one and armed with the information we had from the previous Lender. We were able to provide better supporting comments for the second roll of the dice, and luckily this time, it was successful.
Deborah 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.
However, 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 can save a little 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, Deborah cut up all her credit cards except one to use in emergencies only, and she has now got her financial life back on track.
If you are like Deborah 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.