Q My wife and I bought a house four years ago. We were lucky to have been given a large amount of money by our parents, so we had a big deposit of 40% and still had enough left to do a lot of work to the house (which badly needed it). So, when we come to remortgage, we will need a loan of about half the current value of the house.
Even with a large deposit, we still needed to borrow as much as we could, which was five times our combined salary. Since then we’ve gone from one to three kids, and my wife has finished a well-paid contract, without much prospect of another one to replace it any time soon.
Our mortgage fixed term expires in a year and I’m concerned that we won’t meet the affordability checks required to shop around and secure a new deal from another bank. This means that even though we have a lot of equity in our house we’d be stuck and have to move on to our lender’s punitive standard variable rate. This just doesn’t make any sense. Am I missing something?
SW
A You are missing quite a lot, as it turns out. Pete Mugleston, a mortgage expert and the managing director of onlinemortgageadvisor.co.uk, says: “If you are currently dealing with a high street lender, it is important to understand that you have more choices beyond the standard variable rate. Lenders typically provide various fixed-rate options for you to consider. It is also important to note that when opting for a rate switch or product transfer, your lender usually does not require you to provide proof of income, details of your expenses or information about dependents. This means you can easily choose another deal without having to submit any additional documentation.”
Of course, if you wanted to switch lenders entirely – rather than just switch mortgage deals with your current lender – you would have to go through thorough affordability checks, so I suggest you don’t do that.
