Property TV | Property Question Time – Ep 54 – What Questions are Mortgage Lenders Likely to Ask
Bryony Billson: Okay, excellent. Well, we’re going to move on our next question, to Paul. Not such a long one for you this time Paul, but-
Paul Mahoney: Excellent-
Bryony Billson: … equally confusing for some people, “I need to remortgage my current main house. I do own two more houses, which are mortgage free, and are rented out privately. What questions are the mortgage lenders likely to ask, and is it better going through a broker, in cases like this? For example, face-to-face.”
Paul Mahoney: Okay, very broad question. Remortgaging their home, they’ve got two buy-to-lets. What questions are lenders likely to ask? They’re actually likely to ask quite a few. They’re going to want to know all about said individual’s personal financial position. Their employment, their income, is very important when it comes to a residential mortgage, because that in the main serviceability for that mortgage. Some lenders will consider the rent from the buy-to-lets, others won’t. Not knowing this person situation, if they’re not employed, then that would limit their mortgage options. But it wouldn’t necessarily rule them out, given they’re getting rent from the buy-to-lets.
Paul Mahoney: They would also want to know things like, have they ever had any credit issues in the past? Do they have any other debt obligations; credit cards, car loans, whatever it might be? Their overall financial strength really. Both from an asset, and a sort of serviceability of liquidity perspective. How are they going to service this mortgage? Also, I suppose what they’re looking to use the money for. I don’t think they mention whether they currently have a mortgage on their home. If they do, and they’re just remortgaging to get a better rate or something, then fine. If it’s debt-free like their buy-to-lets, well why do they need the money? Some lenders would want to know that. Some don’t really mind, so long as it’s not for things like gambling, or debt consolidation, or whatever it might be. But there’s a lot that goes into it.
Paul Mahoney: That kind of ties into the second half of the question, as to why it most definitely does make sense to get advice. That advice doesn’t have to be face-to-face. Mortgages advisors can advise via correspondence, almost as well as face-to-face. The only reason to do face-to-face, is you actually get to know the person, which I think in business is always a good idea. But seeking advice just gives you a much broader spread of the market.
Paul Mahoney: A lot of people, when it comes getting mortgages, or getting mortgage advice, we’ll just go to their bank. Their bank will only have a certain criteria. Now often that bank might say, “Well no, you don’t fit our criteria.” Then they’ll make the determination, “Well, I can’t get a mortgage,” which isn’t really the case. There is a very, very broad range of lenders out there, with a very broad range of criteria. Understanding that as an individual, is very, very difficult. In fact, some mortgage products are only available to intermediaries or brokers, and they’re not available directly to the public. By seeking advice, the right advice, you can get a much more broad understanding of what’s available to you. Then hopefully through that advice, end up with the best possible product, or the right outcome for you.
Bryony Billson: Fantastic, brilliant Paul. Thank you. I think getting that right advice, when someone in this situation, it seems like they do have quite a number of options available to them. That does seem to be very important, so thank you for your advice on that one. I’m sure they’ll really appreciate it.