Mortgage can anyone help

8 replies

cjsykes · 17/10/2018 07:03

I’m trying to find something out, basically my sister and her husband will own their home in about 2 years outright. This will be worth about 200k. They both have bad credit.
Her husband seems to think that even with very poor credit scores they will get a mortgage for another home as he can secure it against this payed off one. He won’t sell it but will rent it out.
I seem to believe that they will still need good credit to get a new mortgage even though he owns this other property??
Been googling but can’t find the answer, does anyone know if owning a property is enough to get a mortgage for another one with bad credit??
Hope someone knows the answer

Kind Regards xxx

OP posts:

Shelley54 · 17/10/2018 07:09

It depends how bad their bad credit is. But yes he will be making an application and will be assessed in the same way as any other customer. The fact he owns a house is irrelevant - he’ll be putting a mortgage on it, or a mortgage on the new house. They don’t take the existing house as collateral.

Have they got a deposit for the new place?

nellly · 17/10/2018 07:18

Maybe I've misunderstood but if they're doing it 'against' the paid off home I'm assuming the new one is worth less? And yes it is easier to get a mortgage even with bad credit if the Ltv is low. It will still be assessed by the affordability criteria though.

Eminybob · 17/10/2018 07:24

If he’s putting the mortgage on the current house and is planning to let that out, he’ll need a buy to let mortgage.
I’m not sure if BTL mortgages are assessed in the same way as residential, as far as credit checks are concerned to be honest.

But if he did want a residential mortgage, it would need to be on the new house, and the existing house wouldn’t be taken into consideration, so normal credit checks would apply.

Either way, he’s applying for a new mortgage on a property, regardless of how many other houses he owns.

Original poster

cjsykes · 17/10/2018 10:16

Thanks for your help everyone. Basically he wants a bigger house, he says as he had that house before he got with my sister it’s his house. So he has paid all the mortgage then wants to rent it out and they will get a house together which will be their house.
I just didn’t think that owning a house outright is enough to secure a mortgage. As the new house says costs 250k will all need to go into a new mortgage. And I’m sure that u need credit for that .... even if u own another house or not??

It’s just causing a few issues for her as he tells her she can’t have a baby until they move. And I don’t want her to wait expecting to be able to to find out they can’t!

OP posts:

cyantist · 17/10/2018 10:24

When you say it will be owned outright, is it that the mortgage is almost paid off or do they have savings they are planning to pay it off with in 2 years?

HollyBollyBooBoo · 17/10/2018 10:24

His credit would have to be horrific to not get any mortgage offers at all. But on a scale of bad credit the number of companies willing to loan go down and the rates go up.

Original poster

cjsykes · 17/10/2018 11:18

He has 2 years left to pay, then its paid off. Think he only has 18 grand left, and he will manage to get that paid in next 2 years

OP posts:

cyantist · 17/10/2018 11:46

I agree it would have to be really bad to not get any offers. What will probably help is a big deposit towards the next house, then it's a lot less risk for the banks. We had almost paid off our previous mortgage but remortgaged for a much higher amount to give us a 40% deposit for the new place and this worked well.
So if they are overpaying anything extra they would probably be better not to and to save that towards the new deposit.
They also have 2 years to try to improve their credit so it might not be terrible by the time they want to buy somewhere new.

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