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Original poster

Fricking mortgage company

26 replies

bloodymortgagecompanies · 18/03/2011 10:59

So frustrated! Dh and I have worked very hard and been very diligent in overpaying every penny into out current mortgage, which we have now paid off completely (I am 35, DH 41).

We have 2 DCs, DH is currently F/T carer for them, I work F/T. I am self employed (author) as wel as working F/T, book being published next yr, likely to make 6-12K from it.

We want to move house, have a 90K deposit. Not selling the current house, plan to rent. Have contacted 2 rental companies, have in writing we will make 800-900 pcm from renting.

Mortgage company won't take into account that we have paid our current mortgage off so early, or that I have extra income (only made 2K self-employed last year), or the rental income (have to have prrof of at least 1 month rental.

As a result, we are offered the same mortgage as a first-time buyer who has a job same as mine. So we are able to buy a house that costs same as this one (200-250K) but can't move up, despite our hard work, and despite the fact we can afford more than that.

Aaaargh.

ps (I know I am fortunate to have a roof over my head, especially one I own but still aaargh).

OP posts:
PanicMode · 18/03/2011 11:15

Do you have to use the same company - how about using a broker?!

Original poster
bloodymortgagecompanies · 18/03/2011 11:21

That's part of the problem - our paid-off mortgage was a flexible one from intelligent finance, who don't do them any more. We're having to start with a different company.

How does a mortgage broker work?

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angel1976 · 18/03/2011 11:34

Yes, contact a mortgage broker. They specialise in mortgages so they know exactly what each mortgage offer entails (things you won't find out even in the small print).

We are using one for our current house purchase and they are excellent. They found us a really good deal based on our requirements. My DH spent all weekend doing his research and found two better deals. So he went back to them and said 'well, what about these two deals?' Our mortgage broker then told us that both deals we can't get due to both lenders only willing to lend up to a certain amount so we will need a bigger deposit, which we didn't have. Some of the knowledge the mortgage broker would have come from applying for mortgages on their customers' behalf everyday. Also, they took all our paperwork and do the application on your behalf, it makes it all less painful.

We are only paying our mortgage broker £250 (fairly standard) as they make commission out of the mortgage and insurance you take out but these are all made very clear to you on the paperwork. Hope that helps and good luck.

PanicMode · 18/03/2011 12:57

Pretty much as angel1976 suggests - they will look at your requirements and trawl the market looking for a deal that is right for you. some of them will charge a fee, some will not but will get commission from the mortgage provider that you eventually run with. John Charcoal are well respected I think, or try an independent IFA.

milge · 18/03/2011 13:00

You want a let to buy mortgage via a mortgage broker, a normal domestic mortgage won't take any rental into account.
Try John Charcol.

angel1976 · 18/03/2011 13:10

John Charcol is our mortgage broker and I will highly recommend them. :)

Original poster
bloodymortgagecompanies · 18/03/2011 14:34

Thanks all. How much does it cost? Have looked on the website but can't see charges.

We don't need a buy-to let mortgage - have paid off the mortgage on the house that we are going to rent out.

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angel1976 · 18/03/2011 14:40

I found this on their website:

"Your initial mortgage consultation is obligation free. There will be a minimum fee for our mortgage service of £450, of which £150 is payable when you apply, and we will retain the commission from the mortgage lender. Alternatively, you can choose the fee only option which is typically 0.65% of the amount borrowed. The precise amount will depend on your circumstances and mortgage loan amount, and will be discussed and agreed before you make a mortgage application."

I'm pretty sure we are paying them £250 but I could be wrong?!!!! (DH deals with them mostly)

Original poster
bloodymortgagecompanies · 18/03/2011 14:50

That seems very expensive to me. but then you might have gathered I am a rather stingy character! Maybe it's worth just calling for the free consultation and see where we go from there...

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Checkmate · 18/03/2011 14:56

I use a local IFA - just google the in your area.

Remember, you'll have to pay tax on the profit you make on renting out the 1st house, but the interest on the mortgage is tax deductable. This is why almost everyone in your situation re-mortgages the house they're going to rent out, and then buys their own home with a much bigger deposit.

maggiethecat · 18/03/2011 15:00

Not sure that I agree with Milge. I believe ING direct with whom we have mortgage will consider rental income but the rental needs to be in place for a few months. Will you be buying immediately or will you rent first? If you rent first and your current home is rented then when you go to buy the rental income from your current home may be considered.

In any event do research on ING direct - they don't deal with brokers but there are some good deals with them. We did a lot of research last year and they were the best deal for us.

Original poster
bloodymortgagecompanies · 18/03/2011 15:04

Thanks check and maggie,

Thing is, we won't have to pay tax on the rental income because Dh isn't working and we will put the rental property in his name.

We're planning to move straight from here into our next house. With infant twins and 2 dogs, renting in between would be a nightmare!

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Fizzylemonade · 18/03/2011 17:34

We use London and Country who were recommended by MoneySavingExpert. They charge no commission to you, they earn theirs from the product and they research the whole of the market.

We even had a case where they realised the best mortgage provider for us was the one we were already with so they had done all the leg work and it cost us nothing.

They are fab, evenr rang me back after my child woke up mid phone call.

BoBoo · 18/03/2011 19:29

Where are you? I could recommend one in London with no fee to you. We bought a house at the end of last year and the broker was definitely the only person in the process that I felt made my life easier rather than more difficult. And also super speedy when we were really up against it.

darleneconnor · 18/03/2011 19:37

You will have to pay tax if the annual rent is above the single person's tax allowance.

You also have to budget for months when you arent getting rent (usually 2 months pa).

If I were you I'd use the £90k to buy a renatal property and sell your current house to buy another outright or with a tiny mortgage (which is all I think You'll get on £2k self employed earnings in this current climate).

Original poster
bloodymortgagecompanies · 18/03/2011 21:44

You can't buy a garage here for £90K!

we are in the far west. Holiday rental central.

My earnings are not £2K - I am on a pretty good salary for round here - we've been offered £200K mortgage, but they won't take rental income or s/e income into account.

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vouvrey · 18/03/2011 21:52

You dont need to live close to a rental property.

So you want more than a £200k mortgage?

Hmm, you are sounding quite spoilt, you know. There has been a credit crunch...

Most people cant get the kind of mortgages they could have got 3/4 years ago.

Blame the bankers/govt.

Deux · 18/03/2011 22:17

An earlier poster suggested a let-to-buy mortgage, have you tried that? Not a buy to let mortgage.

Original poster
bloodymortgagecompanies · 19/03/2011 06:33

Aaaah, let-to-buy. No, I had mis-read. Thanks Deux.

Vouvrey, maybe I am spoilt. We would like a detatched house with a largeish garden for our boys to play in, in a quiet area. Round here you can't get that for less than 325K. We can't afford that with a 200K mortgage, even though we have a 90K deposit and own a further property. We just want our other income to be taken into account.

(and we don't want to go mad with a too-big mortgage - but a 235K mortgage is affordable for us)

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limpingbint · 19/03/2011 06:49

It would make more sense tax wise to remortgage your home that you are going to rent because then particularly if you have an interest only mortgage) you can offset the tax on the income against the interest payment. Maybe some general financial advice might be help - i would second a broker

Checkmate · 19/03/2011 11:32

Thing is, if you put the first house just in DH's name, then when you do come to sell it in years/decades, he'll end up with a much bigger capital gains tax bill than if you owned it jointly and could share that liability (because you each get an annual cgt allowance, which is non transferable).

I think as well as a broker for mortgage deals, you should speak to your accountant about the best way of setting this all up.

Original poster
bloodymortgagecompanies · 19/03/2011 12:08

Thanks Check,

Yes, we would plan to live in the house for a year or so before selling to avoid the capital gains tax.

Also thanks limping. We are meeting with our accountant in the next few weeks to get some advice.

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Checkmate · 19/03/2011 13:47

Things don't always work out as planned (if you suddenly need to sell for any one of many reasons) so sensible to get advice. good luck

herhonesty · 19/03/2011 15:03

I think you should see a proper broker. fwiw its maddness to have a mortgage on a residential property and have a rental property without one. you will be taxed on 100% of your rental income albeit after your husbnads tax free allowance. also if your dh and isnt working and you self employed, i can sort of see why you are struggling to get a mortgage. on paper, you arent exactly a good bet!

Original poster
bloodymortgagecompanies · 19/03/2011 19:53

Aaaahhhh. Please read the thread before posting, herhonesty!

The tax free allowance is over the amount we will make in a year from the property. We own a 250K property outright (have paid off the whole mortgage in 5 years).

I am fully employed plus I am self employed (in my 'spare' time). The 200K mortgage we have been offered is just based on my current full-time salary.

We have a 90K deposit in the bank.

We have no debt. At all.

I'd say we were a pretty good bet.

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