Mortgage challenge

[MitchT]

House: £200k
Deposit: £50k
Mortgage: £150k, interest only, fixed for five years.

Plenty of results meeting the above criteria on comparison sites but phone a broker and it's "no can do for interest only - 60% max LTV and £200k minimum equity". Is this a universal thing?

Are there any brokers out there who can work with a lender to find a solution or do they all just scroll through a load of preconfigured products then then declare "computer says no" if your circumstances mean you need something a bit more specific?

Obviously there are more details than I'm going to reveal on a public forum but, ultimately, I can afford it and I have a strategy for clearing the balance.

[softtop]

I know that's it's not relevant to the question, though if you can clear that level of debt in five years, what's the need for interest only? If it was a standard mortgage, is the early repayment charge going to be such a burden when you close the mortgage in five years?

[Sarnie]

MitchT said:

House: £200k
Deposit: £50k
Mortgage: £150k, interest only, fixed for five years.

Plenty of results meeting the above criteria on comparison sites but phone a broker and it's "no can do for interest only - 60% max LTV and £200k minimum equity". Is this a universal thing?

Are there any brokers out there who can work with a lender to find a solution or do they all just scroll through a load of preconfigured products then then declare "computer says no" if your circumstances mean you need something a bit more specific?

Obviously there are more details than I'm going to reveal on a public forum but, ultimately, I can afford it and I have a strategy for clearing the balance.

If it's Residential lending, you are highly unlikely to be able to secure 75% IO lending on those figures. Your best chance would be 50% on IO and the rest on Repayment.....

The key would be house you propose to repay the loan......

[MitchT]

softtop said:

I know that's it's not relevant to the question, though if you can clear that level of debt in five years, what's the need for interest only?

Breathing space until the money to clear the debt arrives.

[BikeBikeBIke]

MitchT said:

House: £200k
Deposit: £50k
Mortgage: £150k, interest only, fixed for five years.

Plenty of results meeting the above criteria on comparison sites but phone a broker and it's "no can do for interest only - 60% max LTV and £200k minimum equity". Is this a universal thing?

Are there any brokers out there who can work with a lender to find a solution or do they all just scroll through a load of preconfigured products then then declare "computer says no" if your circumstances mean you need something a bit more specific?

Obviously there are more details than I'm going to reveal on a public forum but, ultimately, I can afford it and I have a strategy for clearing the balance.

Can you make the term so incredibly long that the repayments aspect is tiny? (The term is nominal, after all, you'll be remortgaging at 5 years.)

[MitchT]

Sarnie said:

If it's Residential lending, you are highly unlikely to be able to secure 75% IO lending on those figures. Your best chance would be 50% on IO and the rest on Repayment.....

So, £100k on IO and £50k on repayment? If so, might just about be able to make that work.

Sarnie said:

The key would be house you propose to repay the loan......

There are three components to that which would be for discussion with a broker.

[MitchT]

BikeBikeBIke said:

Can you make the term so incredibly long that the repayments aspect is tiny? (The term is nominal, after all, you'll be remortgaging at 5 years.)

Not really, because I'm 50 so I can't get a long enough term to have a meaningful effect.

[Sarnie]

MitchT said:

Not really, because I'm 50 so I can't get a long enough term to have a meaningful effect.

You would still be able to potentially lend till you are 75......

[MitchT]

Sarnie said:

You would still be able to potentially lend till you are 75......

Still prefer the short term breathing space afforded by IO. 50% on IO and the rest on repayment definitely looks like the best option, based on some quick fag packet calculations and the need to keep it as cheap as possible for the first 1-2 years in particular.

[Sarnie]

MitchT said:

Still prefer the short term breathing space afforded by IO. 50% on IO and the rest on repayment definitely looks like the best option, based on some quick fag packet calculations and the need to keep it as cheap as possible for the first 1-2 years in particular.

With the lack of equity in the property to secure full IO lending, it would be easier to source a longer term on Repayment.

Even 50% IO and the rest on Repayment will require you to meet specific requirements, such as minimum income criteria.....

[MitchT]

My gross salary is more than enough to meet the affordability criteria, but there's an existing commitment which affects this. Going IO would more than offset the cost of said commitment and it'll be finished before the five year fix is up. Also, two other events due to occur before the five year fix is up should yield enough cash to pay off at least half of the loan.

This is why I was hoping there might be something a bit more flexible out there - to respond to my situation, rather than apply a generic set of rules to a situation that is far from generic.

Failing a solution I'll have to continue renting at £200/month more than an IO mortgage would cost, which is frustrating, especially when it's wholly unnecessary.

[Defcon5]

OP is clearly hiring a hitman to off his parents to claim his inheritance

[Dingu]

MitchT said:

My gross salary is more than enough to meet the affordability criteria, but there's an existing commitment which affects this. Going IO would more than offset the cost of said commitment and it'll be finished before the five year fix is up. Also, two other events due to occur before the five year fix is up should yield enough cash to pay off at least half of the loan.

This is why I was hoping there might be something a bit more flexible out there - to respond to my situation, rather than apply a generic set of rules to a situation that is far from generic.

Failing a solution I'll have to continue renting at £200/month more than an IO mortgage would cost, which is frustrating, especially when it's wholly unnecessary.

Unnecessary in the opinion of the one receiving the money not the one lending it out.

[MitchT]

Dingu said:

Unnecessary in the opinion of the one receiving the money not the one lending it out.

I get what you're eluding to but to me it doesn't make sense to say I can't have IO while servicing my other commitment if I've been told that I would meet the criteria for repayment if it weren't for the other commitment, when the former is actually more affordable than the latter. Also, in the case of the former, I could afford to make overpayments of at least £200/month from Day 1.

The 50% on IO and rest on repayment that Sarnie eluded to would work, but again, if I have to qualify for repayment in order to qualify for 50% on IO and the rest on repayment the it defeats the object. It's like saying you don't qualify for a cheaper product that you can comfortably afford because you don't quite quality for a more expensive product that you can't quite afford.

[SV_WDC]

Mortgage brokers have access to a list of products which might be on better terms than what you can find online or approaching a bank yourself. Some will work with you/the lender to make things happen but they aren't going to be able to override the fundamentals of a product to suit your specific needs unfortunately

Most banks will have a policy on what they can/cannot do for lending so once you get into that ballpark it will simply be 'computer says no'

[-Cappo-]

MitchT said:

My gross salary is more than enough to meet the affordability criteria, but there's an existing commitment which affects this. Going IO would more than offset the cost of said commitment and it'll be finished before the five year fix is up. Also, two other events due to occur before the five year fix is up should yield enough cash to pay off at least half of the loan.

This is why I was hoping there might be something a bit more flexible out there - to respond to my situation, rather than apply a generic set of rules to a situation that is far from generic.

Failing a solution I'll have to continue renting at £200/month more than an IO mortgage would cost, which is frustrating, especially when it's wholly unnecessary.

Probably best you click on Sarnie's profile.....

[Sauce]

I would 100% recommend emailing Sarnie and sitting back while he sorts it out for you.

[MitchT]

-Cappo- said:

Probably best you click on Sarnie's profile.....

I'm aware of Sarnie's line of work. As he hasn't encouraged me to get in touch to try to work something out I'm assuming he doesn't feel it'll be possible.

My alternative solution is to buy something cheap that needs fixing up, but is habitable in the meantime, and tolerate it until the aformentioned cash boosts arrive, then go to town on it.

[-Cappo-]

MitchT said:

-Cappo- said:

Probably best you click on Sarnie's profile.....

I'm aware of Sarnie's line of work. As he hasn't encouraged me to get in touch to try to work something out I'm assuming he doesn't feel it'll be possible.

My alternative solution is to buy something cheap that needs fixing up, but is habitable in the meantime, and tolerate it until the aformentioned cash boosts arrive, then go to town on it.

I haven't read the PH rules recently but I believe you're not allowed to promote your own business on here, which may explain why Sarnie hasn't reached out. It's extremely easy to get banned these days.

But I've no axe to grind, I don't know Sarnie and have never dealt with him, just read good comments about his services on here.

[Steve H]

MitchT said:

I get what you're eluding to but to me it doesn't make sense to say………..

Try not to allow sense to come into it, using sense is no longer how the system works.

Not many years ago I was trying to renew a mortgage to a fixed deal because I was on 0.5% above base tracker which had been brilliant for over a decade until the rates started climbing, and it was not far from running out and defaulting to a much more painful rate. Like the OP, it would have been handy to get something in place to last just a few years while I got a few other ducks in a row.

The mortgage was for roughly 15% LTV and we had well over double the income required for affordability and an excellent broker but still couldn’t get approved for reasons that made zero sense but meant what I was looking for wasn’t within the "normal" category.

A couple of hurdles that shouldn’t have been there were successfully overcome by the broker talking to the lender but the final one was apparently insurmountable so in the end the stupid managed to overcome the obvious and the mortgage was refused.