MORTGAGES & REMORTGAGES
Purchase and remortgage requests are the cornerstone of our regulated finance department. With tighter regulation and a vast array of lender criteria it is essential clients understand their legitimate options. “What is the best option?” or “What is the cheapest option?” are consistent questions we hear. `Best` is a subjective term and worth remembering the different client priorities create different funding compromises. One example is the lender who offers the largest mortgage capacity may not have the cheapest rate, or the cheapest lender may have an issue with a client’s income structure due to commission or bonus structures. With this in mind, clients often ask the most important themes for Residential funding. We have summarised the top 5 below:
- Affordability. Every lender decides how they view your spending habits and therefore how much disposable income they believe you have left for mortgage purposes. School fees, pensions, credit commitments and household bills are all viewed differently and needs to be understood at the outset to see if they negatively affect your case.
- Employed Income. Every lender interprets your current and historical total paid income differently. This includes bonus, allowances, monthly commission and pay rises. It is not uncommon for the same client to get 30% variance on loan sizes by approaching different lenders.
- Self-employed Income. Sole trader and limited company are the most common categories. Limited Company has the greatest variance which needs careful examination to ensure you are being viewed correctly and favourably. The most important initial questions will always start with: How many years’ accounts do you have? Shareholding? How do you remunerate yourself- Salary, Dividends? Or do you just take what you need leaving retained profit in the company? The answers have a substantial effect on lender choice and capacity.
- Deposit and loan size. The most lucrative products come from the larger deposits. In 2017 25% minimum represents a sensible balance for Residential Lending.
- Credit Profile. Often overlooked but seemingly innocent and defendable oversights can cause havoc with a lending application. Be careful to maintain a good credit profile and, if in doubt, check 3 – 6 months prior to an important property purchase’
In summary, at Carbon our role is to thoroughly understand a client’s position and objectives before advising accordingly.