Friend of mine trying to re-mortgage, but with a high income multiplier. First mortgage advisor failed to come up with anything other than her current lender. I somewhat foolishly said I’d help look. Doh!

First port of call is her current lender, then where she holds her current account. Where would people be looking next? Any info welcome.

Flat value 155k – 165k
Loan value 125k
Salary 20k
Only other income is lodger paying 5k annually.
LTV better than 85%, but probably not quite 75% (unless the valuation was feeling ever so slightly generous)

Why on earth is she looking to borrow 6 x salary. That is pretty high and harks back to some of the mad deals around before the crash.

I would be very very surprised if there’s any one out there in the current market prepared to lend on that income multiplier. Sole applicant will generally get 3 x income, joint 3.5 x joint income.

Bear in mind any credit commitments need to come off that £20k also.

Interest rates *are* going to go up at some point in the future and your friend could well find herself stuffed.

Sorry to be harsh but they really need to think very very carefully about this and if it were my friend I would be advising them against this route.

Not harsh Danny, agree with what your saying.

But she doesn’t have a choice, she already has the mortgage, just coming off the end of a 5yr fix and is trying to re-fix while rates are low.

Fortunately she has no other commitments, and is fairly frugal.

Just trying to help a damsel in distress. She is also blonde and rides a mountain bike 😉

Why fix now? I can’t see rates moving up any time soon – but that’s the gamble of course. People are in too much debt thy can ill afford now, so raising interest rates would cause mother meltdown. Stick on variable now and try to overpay as much as possible.

might be better letting it revert to the lender’s standard variable rate – if she has a 5 yr fix chances are it could be at a higher rate than they’re at now. typical fixed rate mortgages are usually higher rate than the standard variable rate on the off-chance that the standard rate may go up at some point in the next N years

do make sure she checks though

She just hit her lenders 6% SVR. I’m thinking if she fixes for 5yrs, there’s a good chance she’ll be on more money by then etc.

ain’t no guarantee of that. lots of pay freezes going on

Given the high borrowing multiple can’t see anyone else giving her a mortgage so will have to stay with current lender and do the best she can with them. At least having a lodger should mean she can keep paying it – hope she’s told the lender and is paying tax on the income though (£4,250 is tax free though)?!

Stick on variable now and try to overpay as much as possible.

I’d be impressed if she can overpay much with a 6x salary mortgage!

Does she have past tax returns for the lodger? If so she may be able to use them to up her income to 25k PA. may sneak her into a few more lenders criteria at 5 x salary.

A daft multiple as others say, but if she does get something she needs absolute certainty which she will only get with a fixed. There is of course a premium for that certainty which I suspect she has to pay.

If rates are appearing to stay low in the medium term, then swap rates used to price fixed mortgage should also be low.

Above should not be construed as advice, it is jjust opinion.