The Top 5 Mortgage Hurdles

Every so often, first time buyers come across some slight mortgage hurdles. They’re not completely impossible to work around, but can often delay the process. Below is a list of the top 5 mortgage hurdles we’ve come across.

Childcare Fees

Our experience here is that families are not normally turned down for a mortgage for this reason, but it is extremely common for a lower mortgage amount to be offered.

It is most noticeable when parents have gone back to work and are paying out for childcare costs as these can run into hundreds of pounds per month. These costs are considered by lenders as an outgoing, the same as they would treat a car loan or hire purchase agreement.

Even if there are no nursery fees to pay, parents on lower-income still tend to be offered less than their peers without children. The good news though is that the amount this type of family can often be in receipt of tax credits and some lenders will take these into account as well as child benefit.

There are lenders out there that take a different approach and don’t treat the nursery costs as a specific outgoing and rely more upon Office of National statistics data for typical outgoings and this often leads to a higher maximum mortgage amount.

Divorce/Separation

It is very sad when you and your partner decide to call it a day but when you have made joint financial commitments unwinding that side of things does not always run as smoothly as you’d hope.

Here are the three main questions we get asked on a regular basis;

1. How can I remove my ex’s name from my mortgage?
2. How do I remove my name from my ex’s mortgage?
3. Can I have 2 mortgages?

Often there is a solution of some sort with the help of a mortgage expert, providing that you have enough income available and also are young enough for the mortgage payments to be affordable. 

Benefit Income

All lenders take a different view on benefit income and how much of it can be assessed.  The good news is that all benefit income such as child tax credit, working tax credits, disability benefits, pension income can be taken in to account in one way or another.  This is where the help of a reputable mortgage broker can prove invaluable and can help solve any problems you may be up against.

New Job

Often with a new job comes a bigger salary and the extra income to put towards a new mortgage.  Gaps in employment and a new job can prove to be problematic for some mortgage lenders. 

There are lenders who will work from a newly signed employment contract though even in month one or if your new job is about to start. Probationary periods are usually ok. 

Evidencing Your Deposit

The last of the mortgage hurdles in our list is evidencing your deposit. For any purchase, all mortgage lenders and mortgage brokers like us are required to evidence the source of all of the borrowers’ deposit funds. This is to satisfy UK Anti-Money Laundering Legislation, which is, shall we say, rather stringent! Your solicitor and estate agent may ask for evidence of your deposit also.

We believe, that this is the most complicated part of applying for a mortgage. Whether your deposit is from savings, premium bonds, the sale of another property, gifted from a family member or friend, from overseas family, or is from a personal loan, you are required to have the paper audit trail for the accumulation of funds. 

Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.