Applying for a mortgage over the years

[Gerry557]

The rules over applying for a mortgage have changed over the years. Some good some bad.

Recently a re-morgage application didn't ask about the earnings of the two people applying. I would have thought that might be question number one.

Admittedly they were applying to their current lender of the past 5 year fix so maybe they know the customers history. The were questions about affordability, how did covid affect them financially, concern over utilities. It was an interest only mortgage so the how will it be paid off question arose. Selling the house is an OK answer apparently. It's does have good LTV which is probably good. No proof was required just verbal responses.

After the financial crash I thought things went totally the other way. People refused cos they had too many haircuts. I remember one mortgage company asking a couple to rent somewhere to prove they could afford bills as they had no history.

My own experience was 3.5 times your joint earnings, on very first application. There was a period of just asking for whatever you wanted. I remember turning down some loans as I said I had concerns over payments but was assured that I could have "massive" loans.

I also wanted interest only loan and one application wanted to know about how it would be replayed at the end of the term. I mentioned an endowment (remember them) and investments. To cut a long story short they were only interested in UK investments. So my Fidelity South East Asia were useless but my Vodafone shares we fine. OK Vodafone is based in the UK but has overseas earning. Fidelity paid in sterling Vodafone in euro. Still it kept them happy. I have had to provide proof over the years copies of payslips, bank statements etc but never just on spoken word.

The most difficult time was when I was asked if I wanted more funds. I said OK only to go around the houses to be told I couldn't have extra and why did I need it. I pointed out they offered it, not me requesting it. There was also a conversation that I didn't seem concerned about 1. paying it back and 2. what I would do if there was a shortfall. 2. was eventually covered by saying at worst I would sell the house.

I said I wasn't concerned as it was an offset mortgage and the offsets were full so the monthly interest was zero. Maybe they couldn't see that.

How have your experience been good and bad. I wonder if rate rises will hit harder from a low base. Rates in the teens anyone.

[didds]

its so long ago now I really don't recall. The only mortgage I've had (well, re-mortgaged twice) was initially in 1998 - I was self employed (IT contracting). I cant recall 3.5 x salary or 4 x salary etc but do know we had 20K deposit available for a 135K loan (i.e. 155k property). And it was "self certified" - i basically showed them some accounts of the past couple of years and said "I can afford it" - this was interest only backed by ISAs so I guess I must have declared those to. This was done through a mortgage broker so maybe he did a load of spade work. Anyway there seemed very little hassle getting the 135K from the nationwide - and we had to take their insurances (buildings and contents).

We re-mortgaged after IIRC 5 years, our minimum tie in... as the law had changed (ISTR?) and they couldn't force us into taking their more expensive insurances. We ended up staying with the N/W but took our insurances elsewhere - again no hassles but then again from the N/W perspective it was only a rubber stamp and a chance to charge a couple of hundred quid for "admin". As we were saving over a ton a year on the insurances this soon paid for itself anyway.

Then after about another 5 years or so we totally re-mortgaged to the Derbyshire via a mortgage broker on a bit of a punt with a interest only mortgage based on the Swiss Libor rate. Some from what i recall pretty standard paperwork etc - I guess ten years of repayments and proof of ongoing savings/investments did its job. The Derbyshire mortgage got bought out by some other company at some time but overall we got lucky with our punt, and for a large chunk of time was paying under £500 a month for interest + investments. In the end an inheritance left to my wife plus the investments meant we could pay off five years early - no penalty charges. We could have gamed the early payment as some sums suggested at the time that we may "gain" about 5K if we stayed to term, but Brexit vote had just happened and I feared markets may become more volatile so took that _potential_ 5K hit on the chin.

didds

[Gerry557]

its so long ago now I really don't recall. The only mortgage I've had (well, re-mortgaged twice) was initially in 1998 - I was self employed (IT contracting). I cant recall 3.5 x salary or 4 x salary etc but do know we had 20K deposit available for a 135K loan (i.e. 155k property). And it was "self certified" - i basically showed them some accounts of the past couple of years and said "I can afford it" - this was interest only backed by ISAs so I guess I must have declared those to. This was done through a mortgage broker so maybe he did a load of spade work. Anyway there seemed very little hassle getting the 135K from the nationwide - and we had to take their insurances (buildings and contents).

We re-mortgaged after IIRC 5 years, our minimum tie in... as the law had changed (ISTR?) and they couldn't force us into taking their more expensive insurances. We ended up staying with the N/W but took our insurances elsewhere - again no hassles but then again from the N/W perspective it was only a rubber stamp and a chance to charge a couple of hundred quid for "admin". As we were saving over a ton a year on the insurances this soon paid for itself anyway.

Then after about another 5 years or so we totally re-mortgaged to the Derbyshire via a mortgage broker on a bit of a punt with a interest only mortgage based on the Swiss Libor rate. Some from what i recall pretty standard paperwork etc - I guess ten years of repayments and proof of ongoing savings/investments did its job. The Derbyshire mortgage got bought out by some other company at some time but overall we got lucky with our punt, and for a large chunk of time was paying under £500 a month for interest + investments. In the end an inheritance left to my wife plus the investments meant we could pay off five years early - no penalty charges. We could have gamed the early payment as some sums suggested at the time that we may "gain" about 5K if we stayed to term, but Brexit vote had just happened and I feared markets may become more volatile so took that _potential_ 5K hit on the chin.

didds

Self certified mortgages, yes I think that was about the time of the easy mortgage. Basically ask for what you want and say you can afford it with very little needed to support the application.

The bit I said I could afford was based on ignoring other mortgages but including the income from the properties. I think it was based on x5 gross. In hindsight I would have been OK if I had proceeded as rates kept falling and house prices rose. You just had to forget about cash flow.

I remember Northern Rock, which ended up with a bad bank and a good bank side. I'm not sure how the working out were calculated but the bad bank people were much better payers than those in the good bank. Maybe those taking out over 100% mortgages were better planners than the good side as they knew where they were starting from.

[staffordian]

I recall back in 1982 buying a house costing around £25k. We had a few thousand in equity from the house we were selling but could not afford a mortgage to buy it.

Luckily the builder offered an equity share sheme which we took advantage of; buying 75% and renting 25% from the builder. Despite our rent and mortgage outgoings being similar to the amount a mortgage to buy the whole thing would have been, the Halifax Building would only lend enough to buy the 75%

But within six months, I went back to them, outlining how we could just as easily afford the larger mortgage and not have to pay rent, and they agreed.

Not sure if it was my complelling argument, my silver tongued charm, a change in their lending policy or just the fact I was now not a new borrower, but whichever it was, it worked, much to our relief.

[Gerry557]

I recall back in 1982 buying a house costing around £25k. We had a few thousand in equity from the house we were selling but could not afford a mortgage to buy it.

Luckily the builder offered an equity share sheme which we took advantage of; buying 75% and renting 25% from the builder. Despite our rent and mortgage outgoings being similar to the amount a mortgage to buy the whole thing would have been, the Halifax Building would only lend enough to buy the 75%

But within six months, I went back to them, outlining how we could just as easily afford the larger mortgage and not have to pay rent, and they agreed.

Not sure if it was my complelling argument, my silver tongued charm, a change in their lending policy or just the fact I was now not a new borrower, but whichever it was, it worked, much to our relief.

I've heard several similar stories over costs not being affordable. Normally when renting costs are much higher than the mortgage would be. I think now the main issue for new buyers is the deposit rather than the payments. This might swing back a bit as rates rise. Mortgage costs increasing but a bit more interest on your deposit savings. It must be disheartening getting close to zero interest on your savings and the deposit amount needed growing with house prices at probably faster rate.