How much income do I need for mortgage of 180K

[merrywidow]

House is worth about 420K, my H died and I wasn't on the deeds. I want to take over mortgage and am self employed. have enough income and can produce three years of accounts for one business which I know won't be enough, and the rest of income will be coming from a business I have only had for a year + a pension.

TIA

Go onto the website of any of the mortgage companies - eg Nationwide - and they will have calculators. Try this one:

portal.nationet.com/nationwide/affordability/(wzlft245kr50wcbtcfmzsgn2)/start.aspx

Then you could go though it a couple of times and alter what you put in for your income to see what it comes up with.

Usually they won't take a pension or self employment you have only had for a year into account. But maybe the lender will be more sympathetic in the circumstances? It might be worth you seeing an IFA to get proper advice. Hope it works out for you.

lurk

(sorry I can't help - but this is the size of our mortgage and my dh is self employed although wasn't when we got the mortgage and am interested to know if he earns "enough")

irony is, I am already paying H old mortgage, now they want me to jump through hoops and come up with loads of information and there is more than 50% equity.

I don't know if it has changed lately but a single borrower used (before the madness of people borrowing 5x salary and more) to be able to borrow 2.5 times income, so that'd be around £70kpa for a £180k loan.

I can't see why they wouldn't take a pension in payment into account - arguably it can be a more reliable type of income than salary, and you'd have a decent wodge of equity.

I think you'll find it easier because of the amount of equity you have but the best thing to do is see an IFA and see what they think they can sort out for you. Good luck!

and I am only 43 and have a good credit rating

Sorry about your husband. Have you also checked all possible life insurances that he has? Most lenders require the person with the loan to have life cover in case they die which will pay off 100% of the loan. It would be unusual that he did not have that. Wonder why he never put you on the deeds too?

About 2.5 to 3x income is the teaditional multiple and I don't see why that could not include pension. There are fewere (none?) self certified mortgages around these days but if you go to a good mortgage broker they can probably make sure you're fine particularly as there is so much equity. More to the piont though is whether you genuinely think you can afford it and also bear in mind interest rates could well double and presumably as yo're over 40 you might not quite get a 25 year repayment mortgage, might have to be shorter.

Yes can afford it Xenia; can't find any life insurance policy and he died over a year ago leaving no will. H was control freak, wouldn't even let me know how much mortgage was until a few months before he died ( thats another thread altogether in different section! ).

Think I may try broker anyway; I have been paying H mortgage of nearly £1400 per month (repayment) anyway with no issues.

I think it might be sensible to ask the mortgage lender to send you photocopies of all their paperwork. I have never been allowed to take out a mortgage without protection in place in case of death. There may wlel be a policy. Either they force you to take one out of theirs at the time or else you have to supply details of an existing policy and their interest in it is noted on the policy. All this will be in their records, the original mortgage or remortgage application form. Would be awful to miss this if in fact the whole loan should in fact be paid off and you carry on paying so it's worth checking.

Also the life policy is sometimes kept by the mortgage company which may be why you can't find it. They keep it as a kind of security with the property deeds. Don't take no for an answer. I remember when we once remortgage they said they'd lost the life policies and we were moving lender. We had to write quite a few times through lawyers before they admitted our record o having sent them was correct and they had found them.

if they say they have none then ask for written details of why they would allow a loan without life policies and ask if they have ever let this happen before and if so why as most lenders don't. It seems very strange to me indeed.

I agree there should be a policy to cover payments/pay off the motgage upon death. I would be very surpirsed if there isn't one.

Interesting point Xenia and Cece, I have been told this before. The first mortgage was taken in 1999, but he had remortgaged since with an additional two mortgages so there are three on the property all with the same lender ( Alliance ). They are all repayment mortgages and after looking but finding no evidence of policies I heard that it wasn't necessarily the case that you had to have policies with those type of mortgages.

I will do a bit of digging through paperwork again this weekend.

Its hard to say now. We got 115k on £6 and £6.50 an hour wages in 2005. Its changed now though and got really hard so its difficult to say

I've never been made to take out a policy with repayment mortgages, so i guess it can't be compulsory.

I've never taken out payment protection either (had mortgages since the late 90s). It is also often cheaper to have a straightforward life cover than payment protection, which is very expensive IMO.

We have always had repayment mortgages and 100% of those required us to have a life policy. Do do look because it might be worth £180k to you. Do what I suggest above which is ask for copies from all the lenders of the application forms and files as it might have a boxed ticked saying "life policy" requirement satisfied or something.

The lenders aer often worried someone will die with 24 years to go on the loan and £200k outstanding and they whistle for their money. Therefore many many of them are absolutely strcit about making sure there is a life policy that they see it and importantly that they hold on to the original policy documents 0 they will hold them, not you as that's their security. However I am not saying they all require it. They would be commercially stupid not to require it. I am talking here about cheap term life insurance which si what we always had and still have (not payment protection which can be a waste of money).

Most mortgage companies will ask that you have Life Cover to repay the mortgage in the event of your death, however most companies do not make it compulsary.

The whole time I was working as a mortgage advisor/underwriter I was never asked by a lender for confirmation of life cover.

Some lenders will insist that they have a copy of life insurance docs for you as a borrower, however these days it is rarely the case I am afraid.

I would however check with them. if you have not already done so it may be worth checking with the bank for direct debits that may have been paid out to a life insurance company too.

Failing that there are many calculators that you can use online that would say whether you are eligible for a mortgage of that amount. You will find that some will be flexible in relation to pension payments to you as well, and possibly even the business that you only have one years accounts for. You may find yourself subject to a higher interest rate on that basis though.

Jon Charcol (I think that is how it is spent) is a great source of information, and they can advise on many different situations in relation to mortgages.

Whatever happens good luck.

I got offered 180k on a salary of 45k and putting down 25% deposit.

Hth

Xenia - we have life cover on the part of our mortgage that is an endowment mortgage but not on the repayment part. We do have seperate term cover though which could be used for it as we also have good death in service benefts. I think they may have asked us if we had life cover when we took out the mortgage but that's all.

It depends on so many things like your age, when you can draw your pension, childcare cost, interest rates. You really need to see an IFA. If you are in Yokrshire, I can recommend an exellent one.

It's very interesting because it shows how lax mortgage companies got with repayment mortgages. When we got our first in the early 80s it was very hard to get any sort of loan eveni f you'd saved with that body for 10 years (just as it is becoming now) and they'd want to take possession of the life insurance policies, see originals etc. Then they got all lax and loaned money to anyone without basic protections to ensure payment back on death. I would imagine they are getting back to being stricter again. Anyway it's worth checking. If nothing else there might be an arugment they were in the wrong for not making him take out payment protection and a n argument, probably very weak, i they failed to advise him to take it out they were at fault and should cover the shortfall although I wouldn't put money on your winning that case.

Ii thought about gettnig rid of my very large life coever last year which is expensive - term assurance - as I'm so fit but I am not aloowed under a mortgage taken out only renewed about 2 years ago not to have the life cover. So even today it's still a big issue for sensible lenders.

I have never been asked to have life cover and I have had 2 mortgages on different properties so far.

Interesting. It's very lax, isn't it? If you were a bank after the crash and you were trying not to be exposed you wouldn't want a load of mortgaeg payers dying and not leaving enough assets to pay off loans and they never used to allow that risk and it seems now they do.

You can go for term insurance i think they call it that. But only with a repayment mortgage. The premium goes down as the amont of capital goes down as it paid off:appears to be cheapest form of life insurance.

We bought new house 2 years ago, repayment mortgage. We were asked for proof of life insurance policy (Halifax)