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interest only mortgage - will change of circumstance end mortgage deal?


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Hope someone can help with this one.

In 2009 I was made redundant but managed to change to an interest only mortgage just before the redundancy was announced. I decided not to look for another job and am a stay at home mum. My partner (who is on the joint mortgage) works full time in a relatively secure job. I did not inform the mortgage company of a change of circumstances as there was no problem paying the mortgage (only 10% of my partners take home salary). We have never missed any payments.

 

We have now put our house up for sale and the mortgage has said subject to a credit check/underwriters etc. that we can port our mortgage over to a new property (yet to be found). The amount currently borrowed is based upon both of our salaries when we both worked full time.

 

If we try to port the mortgage will the provider reduce the amount we could borrow on interest only?

If the sale of our property fell through and we didnt buy another property would the provider try and say we couldnt keep our existing mortgage anyway as one of us is not working?

 

We have a viewing on ours at the weekend and are now worried in case someone offers and we dont know what is going to happen with the mortgage?

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There are three issues here that need to be addressed,1 your change of circumstances,2 intrest only mortgage and 3,the transfering of your intrest rate to another property,ie porting,lets take the intrest only part first.The financial services authority have forced lenders to get tough on intrest only mortgages,lenders now have to test borrowers ability to pay,to see if they can keep up with payments as if they were on the standard variable rate and it rose by 2% so you can see that since the crash just how tight lending criteria has become.Add to this the fact that there is only one wage earner the above would be a concern for the lender,base rate will not stay at half of 1% forever and as you know when that rises so will the lenders standard variable rates which leads me on to the third issue of porting.

 

Porting is ,as im sure you know a way of transfering your old mortgage intrest rate to a new property,only the rate is portable,not the mortgage loan.The new mortgage will be treated just as that,a new mortgage so will be subject to all standard underwriting criteria,(and here,s the important bit) that criteria will also take into acount your change of circumstances.You will have to complete a new mortgage application and you may have to pay a mortgage release fee.If you are looking to increase your borrowing you may also incurr a higher lending charge.Your solicitor will have to send an early repayment charge waiver form to your lender,to waiver redemption charges.Thus taking into account all of the above a lender could reduce the amount you could borrow due to the all imortant change of circumstances,my advice at the moment due to the state of the market would be to stay put,its your decision but lending criteria is so tough at the moment,a change of circumstances ie one salry taken out of the eqasion would be a serious matter at this time,think long and hard before going ahead.

Edited by newstarter
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