Dax McLean, Author at Mortgageable

Mortgages for bankrupts & discharged bankrupts in 2023

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

Bankruptcy does carry negative connotations and although bankruptcy is very serious and impacts a credit record, it is not a permanent state.

This guide will discuss the duration of time that bankruptcy will affect a credit history and explore the options to obtain a mortgage following the bankruptcy.

What is Bankruptcy?

Bankruptcy is one of a number of types of personal insolvency. Bankruptcy can be used as a tool to clear debts and credit issues however it does come with some strong consequences.

When a person is declared bankrupt their financial affairs are delegated to a Trustee of Official Received who will draft a Statement of Assets and Liabilities to establish how much can be repaid to creditors.

There are positives and negatives when considering bankruptcy. The process will protect the person from the stresses of being chased for debt.

However, there are long term consequences associated with bankruptcy including that some professions cannot practice following being made bankrupt.

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The bankruptcy would be recorded on a personal credit file including details of whether it is active or discharged and the date the bankruptcy commenced.

In addition, the bankruptcy will be recorded on the Bankruptcy & Insolvency Register which can be viewed by anyone, free of charge and therefore could impact future employment, the ability to rent a property or arrange to apply for future borrowing.

When Can a Mortgage be Applied for Following Bankruptcy?

A discharge following bankruptcy will typically complete a year following the event, however, the record of bankruptcy will remain on your credit history for a further six years.

It is generally a waiting game as to when to apply for a mortgage, especially within the immediate years following a bankruptcy as an applicant would be deemed too much of a risk to lenders.

However, by the fourth or fifth year following a bankruptcy an applicant may be able to obtain a mortgage depending on their other personal circumstances such as meeting affordability checks, levels of deposit and records of income and expenditure.

Which Mortgage Lenders Accept Bankrupts?

There is no list of lenders that are guaranteed to accept a mortgage application after a bankruptcy.

The majority of lenders review and accept mortgages from those who have had discharged bankrupts on a case by case basis.

Lenders will consider a variety of different factors including your income, expenses, credit history and overall affordability.

There are certain steps you can take to improve your chances of getting a mortgage approved.

You should strongly consider seeking the assistance of a mortgage broker if you have experienced financial difficulties in the past.

A broker will be best placed to advise on which specialised lenders would be appropriate and the likelihood of being accepted for a mortgage.

Can I get a mortgage after declaring bankruptcy and being discharged?

Getting a mortgage approved after being discharged from bankruptcy can make the process more difficult, but certainly not impossible.

Typically, high street lenders will be reluctant, but there is usually a range of specialised lenders available.

As well as the number of lenders available being limited, you will usually find that the mortgage deals offered are less competitive since a bad credit mortgage is considered a higher risk to the lender.

For this reason, mortgages offered after a bankruptcy tend to be offered at a higher interest rate than average and many may also request a larger deposit than usual.

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How long after bankruptcy can I get a mortgage?

During a period of bankruptcy, it isn’t unusual to have restrictions imposed on your borrowing.

Bankruptcy terms dictate that you cannot apply for a mortgage until you have been officially discharged.

This usually takes up to 12 months depending on the court’s decision. The more time that has elapsed, the more chance you have of a lender approving you for a mortgage.

Post-bankruptcy, the point at which you will become eligible to apply for a mortgage differs from lender to lender.

If you apply for a mortgage immediately after the point of discharge then you will need to meet very strict criteria, have a substantial deposit, and find yourself subject to higher fees and rates.

As more time passes, the bankruptcy becomes less relevant from the perspective of a lender.

After 4 or 5 years, a lender will most likely see you in the same light as everyone else but more so if your credit history has been clear of any issues since discharge.

You will also find that more lenders in the market will consider an application at higher loan to value rates, the longer you have been discharged.

For example, if you have been discharged over 4-5 years and have kept a good credit record, you may be able to borrow up to as much as 90-95% LTV.

If eligible, these lenders may be able to offer you more competitive rates too.

If you have been recently discharged, then you will find it significantly harder but can still obtain a mortgage through at least a 25% deposit will be required in a lot of cases.

If you’re unsure about your eligibility, please get in contact with one of our specialist advisors to discuss your situation.

Improving a Credit Score

It is highly recommended that while an applicant is waiting for the time to pass following a bankruptcy that they keep a clean credit record, ensuring that all payments are made on time.

In addition, it would be worthwhile taking the time to improve your credit rating by undertaking some simple steps as follows:

Check your credit report – Request a free report from a reputable credit referencing agency and review the content. If any errors are contained, either contact the company directly or the credit reference agency with whom the report was run to investigate and make the necessary corrections.

It is also worthwhile checking any financial associations listed, and requesting the removal of any old information, such as links to ex-partners.

Also, always remember to cancel a free trial if started to obtain a free credit report.

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Register to vote if not already done so – By registering to vote you will be added to the electoral roll, which is another record that lenders can check to confirm the identity and address of applicants.
Apply for credit wisely – Every credit application will leave a mark on your credit file, which other lenders can see, including the history of any denied credit applications.

Therefore there will be a tricky balance between building a credit score and holding off any applications before making a mortgage application.

One approach to manage applications is to use tools that show the likelihood of being granted credit, without performing a credit search.

This provides the applicant with insight into their creditworthiness without marking their credit file.

However, it would be recommended to seek independent financial advice before making any credit applications to discuss the options, benefits and disadvantages during the critical time before making a mortgage application.

Keep credit usage low – When applying for new credit, lenders will assess the number of accounts of your credit file, not only those with any outstanding balances but also the value of available credit. The optimum level is to keep within 50% of the total credit available, representing that you are successfully managing your finances.
Build a good credit history – Building a positive credit file shows that you can borrow responsibly, make regular and appropriate payments and remain within the designated credit limit. There are financial products available that are aimed at those who are in the process of recovering their credit file, such as ‘credit builder’ credit cards. Often the interest rates will be very high therefore they are designed for the balance to be paid off in full every month to enable customers to document a pattern of responsible repayments on their credit file.

Deposits for Discharged Bankrupts

Lenders who are prepared to offer mortgages to those with a less than perfect credit history will likely seek to mitigate their risks by request higher deposits.

Typically, applicants with a clean credit history could achieve a 95% mortgage and therefore only require a 5% deposit.

However, these ratios are unlikely to be seen for someone with a bankruptcy listed on their credit file.

Depending on the duration of time that has passed following a bankruptcy, a lender could stipulate that a deposit of between 15% and 25% is provided.

Should this level of deposit be out of reach, there could still be options available such as a gifted deposit from a close family member or a guaranteed mortgage.

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Mortgages for discharged bankrupts summary

Although bankruptcy is a serious decision, the consequences of being declared bankrupt do not last forever!

Should you be rebuilding your credit history with the objective of seeking a mortgage, it would be highly recommended that independent financial advice is sought.

This will enable any changes to a credit file to impact a credit score and to explore the options available on the market to seek a mortgage.

High street lenders will often refuse a mortgage application from someone that has previously been bankrupt even after the discharge, however, there are specialised lenders that would analyse an application further before making a decision.

Financial advisors will be best placed to advise on which specialised lenders would be appropriate and the likelihood of being accepted for a mortgage.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Capital Raising Mortgages

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

There could be many reasons behind a requirement for a cash injection, and depending on your circumstances, raising capital on your home may be the first port of call.

This article will explore some of the options available for raising capital against property including discussing all of the necessary considerations.

What is a Capital Raising Mortgage?

The process of raising capital against a property usually involves remortgaging.

By taking out a re-mortgage, a homeowner swaps or changes their mortgage product to either benefit from better terms such as lower interest rates, or to increase the borrowing to enable a cash lump sum to be released which can be for a range of purposes such as paying for home improvements or to consolidate other debts. To generate cash, equity is released from the property.

This type of borrowing is a secured loan which means the property could be at risk if the repayments are not kept up.

Each lender will have criteria of which reasons that they will be prepared to accept a capital raising mortgage for however typically such mortgages can be used to raise finances for the following:

New purchases – The funds raised could be used to buy a new car, pay for a family event such as a wedding or funeral or put a deposit on another property.
Gifts – Capital raising mortgages could be arranged to fund gifts, for example, to enable a family member to get on the housing ladder.
Debt consolidation – Most lender will allow capital raising mortgages to be used for paying off other debts such as personal loans or credit cards. The process of debt consolidation can streamline payments and save on interest; however, the repayments are often over longer with a mortgage rather than a personal loan for example.
Investments – The funds raised could be used to fund investments such as a business expansion or the purchase of a buy to let property for example.
Home Improvements – Funds raised by re-mortgaging can be used to undertake an array of home improvements from re-decorating to extensions.

Most lenders will not be prepared to offer a capital raising mortgage for:

For the purchase of stocks and shares
Funding a business start-up
Repayment of debts escalated from gambling
To repay tax bills

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Related reading:

What is the process of remortgaging?

The re-mortgaging process is similar to that of applying for a standard mortgage, as the same information will be required to be reviewed by a lender such as:

The financial position of the applicant, including a credit history check plus proof of current income and expenditure
The value of the property that the proposed borrowing will be secured against

In addition, with a remortgage application, the lender will most likely request the purpose of the additional borrowing.

The underwriting process is also the same as with a standard mortgage, as following an application, the lender will review all of the information provided to check that the applicant and property meet the lending criteria.

A property valuation and survey will be undertaken during the application process and if the application is deemed successful, a mortgage offer can be issued.

How much can be borrowed when remortgaging?

Typically, capital raising re-mortgages will offer up to 75% of the property’s value, however, some lenders may be willing to increase their mortgage offer to 95% of the property’s value with a first charge mortgage.

A first charge mortgage is the first mortgage that has been charged against property and therefore would have the first priority before any other lending on the property.

First charge mortgages are common for residential borrowing however they can also apply to commercial property. Should any other lending be requested on a property, the first charge mortgage lender would need to grant permission.

There are a few mortgage lenders that may even offer 100% of the property’s value with a second charge.

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A second charge mortgage is technically where there are two separate mortgages in place against one property.

A second mortgage application can be made even if the applicant does not reside in the property and can be useful should the requirement to obtain additional borrowing comes at a time when the applicant would face large early repayment penalties on the first mortgage.

Another example of when a second charge mortgage may be suitable is when the first mortgage is already on preferable terms and therefore by re-mortgaging in the traditional way would cost more by paying higher interest across the whole borrowing amount.

As already discussed, the permission of the first mortgage lender would be required in order to set up a second mortgage.

As with any borrowing, the value of the mortgage offered may be tailored to the personal circumstances of the applicant and therefore the percentages discussed are often the maximum a lender would offer.

All mortgage lenders apply affordability factors, reviewing an applicant’s level of income and expenditure to ensure that the loan can be comfortably repaid.

Related quick help remortgage guides:

What are the costs of re-mortgaging?

There will be costs applicable to re-mortgaging such as mortgage application fees, arrangement fees, valuation fees and transaction fees, broker fees (if used) in addition to the interest payable.

Due to the potential costs, and the longevity of any mortgage decision, it is important to undertake sufficient research before applying for a re-mortgage, ensuring that it is the most cost-effective option to achieve the financial objective.

An independent mortgage adviser can help with the process of comparing different financial products, provide insight into the current market conditions including typical lending offers of certain lenders and ultimately find the best deal that suits the needs of the applicant.

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Capital raising mortgages summary

Re-mortgaging is a method of generating a cash lump sum for an array of purposes, however, there are a number of factors to consider when looking into a re-mortgage such as finding the most appropriate financial product, comparisons with other financial options, plus the costs involved and the affordability of the repayments.

An independent mortgage adviser can provide assistance with reviewing your personal circumstances and advising the most appropriate financial solution whilst comparing the financial products available to find the best deal.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Getting a Mortgage with a Default UK Guide

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

Unfortunately, if you have missed a loan repayment you may have a default on your credit report, resulting in bad credit.

A default is the terminology used when a negative payment record is placed on a credit report due to unpaid arrears.

Typically, when a default is applied, the lender no longer views the person as a customer, but as a debtor instead.

Defaults provide a warning light to prospective lenders regarding the level of potential risk involved as they demonstrate that the borrower has had a previous history of mismanaging scheduled payments.

In this guide, we will explore the impact of a default and the process of obtaining a mortgage with a default on your credit history.

Can I get a Mortgage with a Default?

Firstly, if you are in the position of seeking a mortgage but knowing that you have a previous default recorded on your credit report, it is important not to panic and to understand that every lender will take a different stance.

Defaults are a common reason for a mortgage application to be declined, especially by high street lenders, however simply because one lender rejects a mortgage application, does not mean that it would be the end of the journey.

To either take that first step onto the property ladder or to re-mortgage and move is still possible, it’s simply about finding a lender that has criteria compatible with your circumstances.

There are mortgage lenders that specialise in helping customers that have adverse credit and will help you find a mortgage with defaults on credit file.

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However, should you already have had a mortgage application be declined, it is important to establish the full reasons why so that actions can be put into place to rectify the concerns, before making any further applications.

Each mortgage application would add a further marker to a credit file and therefore the next steps should be carefully managed.

Therefore, at this stage, it would be highly recommended that advice from an Independent Financial Advisor is sought to review the personal circumstances, details of any defaults or declined applications, and offer specialised financial advice to discuss other options available.

Financial Advisors are also best placed to find the most suitable option, on the most favourable terms available due to their insight into the lending market however they must be privy to the full circumstances in order to help, therefore it is always best to be open and honest.

If you have an individual involuntary agreement, it is still possible to get a mortgage, for more info, check our guide on how to get a mortgage with an IVA.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

Are Some Defaults worse than others?

Quite simply, yes. The severity of default will depend on the type of agreement that payments have been missed within.

There are two types of defaults, depending on the type of credit agreements, as follows:

Regulated credit agreements – A default may occur following a missed repayment and subsequently, the borrower failing to respond to a Notice of Default issued under section 87 of the Consumer Credit Act 1974. Once a default notice has been received, a borrower would have 14 days to make the outstanding payment, or the default will be added to the borrower’s credit report.
All non-regulated credit agreements – Where agreements are not regulated, a default recorded on a borrower’s credit report represents that the lender has concluded that the relationship between lender and borrower has broken down.

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How Soon After a Default can I get a Mortgage?

A default will remain on a credit report for six years following the event, regardless of any payments made to clear the debt.

Can a Default be Removed from my Credit Report?

If a default reported on a credit report is accurate, it is unlikely to be removed either by the lender themselves or a credit reference agency.

In this case, the default is legally bound to be reported for the duration of six years, after which it will be removed automatically.

However, if the default is incorrectly reported, it can be disputed by directly contacting the relevant lender.

The lender has a responsibility to accurately amend the information if they have made a mistake.

Unfortunately, errors can occur and therefore it is important that credit files are checked regularly to ensure that the information stored on the file is up to date and accurate.

How Soon Following a Default can I Obtain a Mortgage?

The timing of the negative event on an applicant’s credit history will be key.

The longer duration of time that has passed since the default being added to a credit file, will help as the default is less likely to impact the ability to obtain a mortgage and if successful, the mortgage terms offered.

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Can I get a Mortgage with a Satisfied Default?

Unfortunately, as we have briefly discussed, the repayment of the debt does not clear the default on a credit file and therefore the duration of time that has passed since the default was recorded is more of a concern to potential lenders.

However, by satisfying a default, a borrower’s credit score is likely to improve, which may in turn assist the hunt for a mortgage as some lenders will categorise the risk involved slightly differently.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

How Much Can I Borrow If I Have a Default?

Typically mortgage lenders who are willing to lend to those with adverse credit history may have tighter affordability checks than high street lenders which may impact the total value of any mortgage offer.

Should the maximum level of borrowing offered to be limited due to risk factors involved, higher deposits are likely to be needed.

Typically, lenders will offer to lend up to x5 your annual income if you do not have any blemishes in your credit history.

If you have defaults, you are likely to find it difficult to get a mortgage approved, but this not mean it’s impossible.

You will usually need to provide a large deposit and will be offered less competitive interest rates as you are seen as a greater risk.

If your adverse credit history is more than 3 years ago, lenders may be more willing to lend up to 4x your annual income.

How can my income affect getting a mortgage with a default?

The majority of lenders accept 100% of your basic salary, but only 50% of overtime and other additional income.

Some lenders will request a minimum of 3 years self-employment, while others are satisfied with just 12 months.

It’s common for lenders to demand those in employment to have been in their current role for at least 1 year.

The mortgage amount will also be impacted by your outgoings and other financial commitments, as these can impact how much you can afford to pay back each month.

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Should I Check My Credit History?

It’s always a good idea to check your credit history to see if you have anything else on your file that may negatively impact your chance of having your mortgage approved.

Even though there isn’t a set credit rating that lenders will be looking for, maintaining a healthy credit rating will improve your chances of your mortgage being approved.

Although please note: Different lenders use different credit rating agencies (CRAs) when checking your report.

Therefore, checking your reports at different providers is a good idea as they may vary.

It’s also important to know how many and when any defaults you have taken place.

Lenders will want to know this, as many have a threshold to the amount and severity they will consider.

Where can I find my credit report?

It’s possible to check your credit history for free once annually from each agency.

So, apart from time, there is no barrier to check the information before you submit your mortgage application, especially if you suspect you may have a history that would lead to being declined.

The report will also show you late payments, arrears and the presence of any CCJs, IVAs or bankruptcies, all important to be aware of when preparing to make a new mortgage application.

How to Get a Mortgage with a Default Summary

We have discussed the factors involved with being issued a default and the impact that defaults have on credit files and the ability to obtain mortgages.

As such, it is highly advisable that a copy of a credit file is obtained before applying for a mortgage to check the report for any inaccurate data.

Details of the credit report can also be provided to an Independent Financial Advisor, who can advise the financial options currently available.

Give us a call on 03330 90 60 30 to speak to an advisor, or contact us for mortgage advice that’s personal to you and takes your credit history into account.

That way you’ll know where you stand in the mortgage market and we can guide you on your route to securing a suitable loan.

Buy to Let Mortgages for First Time Buyers

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

Typically, a first-time buyer is often thought of as buying their own first property to live in themselves, however, if you have desires of becoming a landlord when you first purchase a buy to let property, this guide will help navigate you through the process.

There may never be a perfect time to take that first leap of becoming a landlord and there are many factors to consider including:

Being knowledgeable of a wide range of legislation.
The additional costs involved when renting out property.
The costs of financing the purchase of a buy to let property.

Buy to Let Mortgages

A buy to let mortgage is a method of borrowing that is specifically for landlords who plan to let out a property, and not live in it.

Typically buy to let mortgages usually have higher interest rates attributed to them compared with standard residential mortgages.

However often landlords will seek interest-only mortgages where the monthly repayments only cover the interest due, leaving a capital balance at the end of the mortgage term.

Being a first-time buyer can be slightly more challenging in any circumstances as lenders assume there are further risks involved without a history of mortgage repayments, however for a first-time buyer seeking a buy to let mortgage, the risks to lenders will increase further.

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As such, buy to let lenders to first time buyers are likely to request higher deposits, typically around 25% of the property price to be put down to be able to proceed with a purchase.

Should the large deposit required to proceed with a buy to let mortgage be out of reach, there may be other options available such as a joint application with a family member, a gifted deposit or a guarantor mortgage.

In addition to the deposit, there will also be other costs of obtaining a mortgage such as application fees, arrangement fees, valuation fees, transaction fees and of course the interest payable.

Stamp duty will also be likely to be due as although you are maybe a first-time buyer, to purchase a property for letting out will exempt the purchase from any discounts.

Other Considerations When Seeking to Become a Landlord

In addition to obtaining a mortgage to finance the buy to let project, significant research will need to be undertaken into what legal responsibilities you will be taking on as a landlord, plus the costs of letting out a property and the administration involved. Firstly, let’s look at the legal responsibilities.

Legal Responsibilities

There are a number of legal responsibilities that a landlord will need to ensure that the property is compliant with before letting it out including:

Energy Performance Certificate, or EPC – Current legislation for privately rented properties requires that an EPC must be undertaken, and the advertised property must have a minimum performance rating of an E grade. Should an EPC be issued at less than an E grade, improvements must be made to the property to boost up the score before marketing.
Safety – Electric safety inspections must take place and the outcomes must be documented.
Compliance – Landlords must comply with the Tenant Fees Act and Tenancy Deposit Schemes.

In addition to complying with current legislation, a landlord is also responsible for ensuring that they are kept up to date with forthcoming changes to legislation and implementing changes as and when required.

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Tenant Rights

Before marketing a property to let, it is highly recommended that significant research is undertaken into Tenant Rights. The consequences of not understanding the rights of tenants can result in large fines or even personal prosecution.

In summary, a tenant’s basic rights include:

The right to live in a property that is safe and kept in a good condition. The tenants also have the right to view the EPC for the property that they rent.
The right to have their deposits returned at the end of their tenancy.
The right to be protected from unfair eviction.
A tenant also has the right to know who their landlord is.
A tenant has the right to live within a rented property undisturbed.

Need more information? Read our related quick help guides:

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Other Costs of Letting Property

As we have briefly mentioned, there are other costs to be aware of when letting out property, including:

The costs of marketing and renting out the property – Some landlords use a letting agent to assist with the management of renting out property including advertising, undertaking viewings and the necessary legal checks on the tenants, however, these services also come with a cost.
Furnishings – Properties can either be leased furnished or unfurnished, however, either way, to protect both the tenant and landlord, an inventory should be undertaken at the beginning of a lease documenting the condition of the property and any furnishings.
Maintenance costs – Ad-hoc costs of repairs and maintenance will need to be paid to maintain a rental property appropriately.
Insurances – Buy to let insurance will cover the property itself as well as landlord liability, however it is also highly likely that building insurance will be needed as this is often a requirement from the lender.
Taxes – We have already mentioned the initial stamp duty due when purchasing a property, however, there are other taxes to consider when letting out property including income tax and capital gains tax. For specific tax planning advice, it is highly recommended that specialised financial advice is sought.
Missed payments, rental disputes and periods of unoccupancy – A landlord should
also, be mindful of circumstances that could result in lapses of rental income such as
the gap between tenants or a tenancy dispute and plan for such events.

Buy to let mortgages for first time buyers summary

Becoming a landlord is an exciting opportunity however there are many elements to thoroughly research and consider, including all of the responsibilities that will also be taken on.

All of which is in addition to navigating the mortgage market and the mortgage application process.

However, our friendly team of financial advisors are at hand to provide help and advice on which specialised lenders would be appropriate and the likelihood of a first-time buyer applicant being accepted for a buy to let mortgage with specific lenders.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Secured Loans for Self Employed People

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

Being self-employed can bring many benefits such as independence, flexibility, a self-designed career path in an industry of choice or where the passion lies, which is often what people dream of as per the famous saying ‘choose a job you love and you will never work a day in your life!

However, being self-employed can also carry negative connotations such as the perception of inconsistent income, and therefore obtaining a loan when self-employed can bring additional hurdles, especially should a self-employed person not have accounted for many years or at all.

Lenders, especially those found on the high street often deem self-employed applicants as higher risk and therefore obtaining loans can be trickier.

Often even if loan offers are achieved, the terms are usually not as favourable as an employed applicant may be offered.

However, over recent years the financial market has been diversifying and is also more understanding that each case is unique, with every borrower having different requirements and backgrounds.

Therefore, should you be looking for a self-employed loan for a range of purposes such as investing in extra equipment or expanding your business, it would be worth exploring the market to find the best interest rate and terms available.

In this guide, we will examine the financial options that self-employed people may have when looking to borrow money for their business.

What are self-employed loans?

A loan for a self-employed person is a method of borrowing money for a range of purposes. The loan can either be secured against an asset such as property, or unsecured, based solely on the credit history of the person and associated business.

Typically, secured loans will be offered with lower interest rates due to the decreased risk to the lender, as an asset is linked to the loan as collateral.

Secure self-employed loans are typically used to fund business developments whereas personal loans are usually only available for personal uses.

Repayment periods can vary depending on a range of factors as set by the lender and type of financial product, however, they can be either short term loans, between 1-5 years duration, or over much longer periods of up to 30 years, suitable for larger projects or investments.

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How do self-employed loans work?

Loans for the self-employed are available as unsecured or secured payments. A secured loan means that you guarantee the loan repayments with your assets e.g. property, while unsecured loans do not involve your assets.

An unsecured loan is typically more costly due to higher interest rates.

A self-employed loan can be a long or short term solution, it all depends on the amount you want to borrow and your credit rating.

Related quick help guides:

Short term loans can aid cash flow for example, whereas the longer-term loans would be useful to spread the cost of more costly business purchases.

As with any borrowing, the offer of a loan will be based on criteria set by the lender which could include a review of personal credit history as well as how long the business has been established and trading.

One consideration with any borrowing includes the consequences should the situation arise where repayments cannot meet. In which case, the business or linked asset (if secured) could be at risk from legal action and ultimately possession by the lender.

As already briefly mentioned, typically a high street lender would not usually offer competitive secured homeowner loans to self-employed people, however when they do, the interest rates may not be the most competitive, therefore specialised lenders are often approached to explore the wider market for the best offers.

Applying for a self-employed loan

The application process for borrowing money is often similar no matter the type of financial product and purpose. Typically, the process will initially require gathering the relevant information to be submitted and reviewed by the potential lender.

What do I need to apply for a self-employed loan?

Proof of an applicant’s full name and personal address details covering the past 3 years
Company information including the type of industry it operates within and legal entity status
Company tax returns (SA302)
Business bank statements
Evidence of any income sources, such as rental income for landlords

As with any borrowing, it is highly recommended that plenty of research is undertaken before making an application and committing to a financial product, and therefore by approaching a broker, all options can be extensively explored to find the most suitable product for the applicant’s needs, along with the best terms.

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Lending Criteria for Self-employed loans

Each lender will have its own loan eligibility criteria for approving self-employed loans. Typically, this will include:

The credit score of the applicant
The creditworthiness of the business
Income and affordability – Proof of the businesses’ income sources and typical monthly expenses will be required
Security- The amount of property equity or the total value of other assets put forward as colleterial for a secured loan

Frequently asked questions about self-employed loans

Here are some of the most common questions received about self-employed loans:

How much can you borrow?

Mortgageable can help you access loans from between £3,000 to £600,000.

What are the repayment terms?

This can vary but you may be able to choose from 1 all the way up to 30 years.

Read our complete guide on how do secured loans work?

Can a self-employed person obtain a secured loan without proof of income?

Typically, as part of the application process, proof of income is required, however, if you are newly self-employed, or do not have accounting records covering a sufficient period to prove income, there are other methods that lenders can use to review an application.

Lenders will usually prioritise reviewing the overall credit score of an applicant during the underwriting process, and therefore as long as the applicants’ credit score is sufficient, there will often be options of borrowing even if proof of income is not available.

However, there will be fewer lenders willing to offer loans to applicants relying solely on a credit score and therefore it is likely that higher interest rates will be applicable on any loan offers.

Secured loans without proof of income again will be less commonly available, however providing an asset as security, reduces the risk to the lender and therefore will likely provide more favourable loan terms.

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Secured loans for self employed summary

Lenders these days appreciate that every applicant is unique however, by using a broker an applicant can benefit from receiving inside market knowledge that can be very helpful, including the success rates of similar cases.

As with any financial decision, it is highly recommended that independent financial advice is sought before committing, to ensure that all terms are fully understood.

Independent brokers will also have access to the whole of the market, rather than just high street lenders which will often reveal a range of options and competitive prices.

However, remember that all secured loans will have consequences to owned assets if the repayments are not kept up.

Give Loanable a call today on 01925 988 055 and they will provide you with the best deals available to meet your circumstances and consider any credit history you may have. With their expert advice, they can guide you through the process and give you the knowledge and confidence it takes to acquire a secured loan that is right for you.

If you have read all the information on secured loans carefully and feel that you want to proceed with a secure loan, get in touch with one of Loanable’s secured loan experts by emailing hello@loanable.co.uk who can work with you to find the best deal for your needs and circumstances.

Further reading:

Capital Raising on a Mortgage Free Property

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

For many people, a financial aim in life is to have paid off the mortgage against a property!

However, even when this objective is achieved, situations can occur that require the need to raise additional capital.

The type of mortgage or another borrowing financial product needed would depend on the reasons behind the requirement for a cash injection, as well as factors such as age and personal circumstances.

This article will explore the options available for raising capital against a mortgage-free property including discussing all of the necessary considerations.

What is Remortgaging?

The financial terminology ‘remortgage’ can have multiple meanings as follows:

The first definition of a re-mortgage is to take out a loan against a property that is already owned outright.
The other, more common reason for re-mortgaging is when a homeowner swap or changes their mortgage product either due to personal circumstances changing or by switching to a different mortgage (often with a different lender), to benefit from better terms such as lower interest rates.

Like all other borrowings a re-mortgage lender will review an applicant before making an offer of a mortgage, reviewing:

The financial position of the applicant.
The value of the property that the proposed borrowing will be secured against.

In addition, with a re-mortgage application where the homeowner owns the property outright, the lender will also be interested in the purpose of the additional borrowing.

Throughout this article we will be focusing on the first type of re-mortgage, where a homeowner has paid off the balance of their original mortgage, however, requires a cash injection for a range of reasons such as pay for home improvements, to consolidate other debts.

We will also discuss other reasons that a re-mortgage may be suitable, such as seeking to let out a property, which may not be permitted under current mortgage terms.

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Related reading:

How much can I borrow when remortgaging?

The maximum values that a lender will typically loan via a re-mortgage will depend on two factors:

The Loan to Value (LTV) is set by each lender, however typically the maximum LTV available is around 80%, meaning that a lender may offer to lend £80,000 for every £100,000 of value in an owned property. The value of the property will be the leading factor for calculating the maximum loan value and will be independently valued as part of the re-mortgaging process.
The maximum loan offered will also depend on the personal circumstances of the applicant. All lenders apply affordability factors, reviewing an applicant’s level of income and expenditure to ensure that the loan can be comfortably repaid.

What are the costs of remortgaging?

There are costs applicable to re-mortgaging such as; application fees, arrangement fees, valuation fees and transaction fees, in addition to the interest payable.

Therefore, it is important to undertake sufficient research before applying for a re-mortgage, ensuring that it is the most cost-effective option to achieve the objective. A financial broker can help with the process of comparing different financial products that best suit the needs of the applicant.

What is the process of remortgaging?

The re-mortgaging process does not overly differ from that of applying for a standard mortgage as similar information is required to be reviewed by a lender, following which an underwriting process begins, ensuring that the applicant and property meet the lending criteria.

A property valuation and survey will be undertaken during the application process and if the application is deemed successful, a mortgage offer can be issued.

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Raising Funds to Consolidate Debts

One scenario we have briefly mentioned is where a homeowner owns their property outright but would like to raise funds to consolidate debts.

The main consideration for debt consolidation is securing the borrowing against an asset, for example, the property, as existing debts may not be secured. There is a benefit to secured borrowing as typically lower interest rates would be achieved, however, there is also the ultimate risk that if repayments are not kept up to date, the asset linked to the mortgage could be seized by the lender.

With any debt consolidation exercise, it is worth undertaking research into the fees involved to move the borrowing, ensuring that the transfer will save money. Re-mortgaging often will incur costs such as arrangement fees, valuation fees and bank transfer fees, therefore it is important to ensure that there will be an overall benefit before proceeding.

Any re-mortgage offer would be subject to meeting the lending criteria and therefore, before submitting an application it is important to check that the criteria and affordability checks will be met.

It is also worth noting that some lenders do not offer mortgages for debt consolidation, and therefore for advice on which lenders to approach, contact an independent financial advisor.

Buy to Let Mortgages

Should a homeowner own their property outright however they are interested in exploring the option of renting out their current property, meanwhile purchasing another property to live in, a buy to let mortgage may be suitable. A buy to let mortgage would enable capital to be raised from the owned property, whilst being an appropriate financial product for letting out.

There are many considerations when letting out the property such as health and safety requirements, energy efficiency legislation and insurance and therefore plenty of research is required into the costs and timescales of obtaining the necessary documentation before committing.

How does remortgaging differ from equity release?

A re-mortgage is a significantly different financial product from an equity release. With an equity release, the ownership of the property is altered and also there are different application criteria, such as age limits. Typically, an equity release product will only be available to those over 55 years old.

Equity release is the process of withdrawing some of the equity owned from property to generate a cash lump sum, a source of regular income or a combination of both.

With equity release, the homeowner can continue to live within the property either:

Until the sale of the property,
Until a move is required such as into a care home,
Or until death.

Often the end of an equity release agreement is by the settlement of the capital plus interest payable following the sale of the property.

Equity release products can be appealing as there are no repayments due until the sale of the property, however, as with any financial decision, there are considerations and therefore it is highly recommended that independent legal advice is sought before making any commitments.

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Capital raising on property owned outright summary

Remortgaging can provide a way of generating a cash lump sum for an array of purposes, as long as the applicant meets the lenders borrowing criteria. There are a number of factors to consider when looking into re-mortgage such as sourcing the most appropriate financial product as well as the affordability of the repayments.

A financial adviser can provide assistance with reviewing your personal circumstances and advising the most appropriate financial solution whilst comparing the financial products available to find the best deal.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Is it worth buying the Freehold of my House?

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

When a property is purchased, sometimes the homeowner will not own the land that it is built on.

Therefore, during the process of seeking to purchase a property, it is always best to double-check which basis that the property and land are being sold before committing.

In this guide, we will explore what Freehold and Leasehold mean and the differences in relation to ownership.

What is the difference between Freehold and Leasehold?

The differences between Freehold and Leasehold are the type of ownership of the land that a property is situated on.

Leasehold – Leasehold is the arrangement of owning the property only and not the land that it sits on. A lease is then put in place between the freeholder or landlord and the leaseholder, enabling the use of the property for a fixed period of time. Although lease durations vary typically leases are either 99, 125, 500 or 999 years long.

One term of possessing a leasehold will commonly involve payment of ground rent. At the end of the lease period, the ownership reverts back to the freeholder. This type of ownership is common on shared properties such as flats.

A lease determines any enforcement covenants, the rights of way and access granted on the land, any repair and maintenance covenants along with details of ground rent.

Freehold – With a Freehold status, both the land and property are owned outright and there are no time limits applied. Typically, most houses are sold Freehold, however, new builds may be Freehold or Leasehold and therefore it is worth checking.

Need more help? Check our quick help guides:

Is it Worth Buying the Freehold of a House?

For houses, it’s usually worth purchasing the Freehold should this come available. The benefits of owning the Freehold of a property include; gaining more control of the property, such as deciding how much to spend on maintaining the property, and which suppliers to use, instead of paying ongoing ground rent leasing costs.

In addition to control, there is also independence from any landlords. Anyone who has had issues with a landlord in the past may see this as the biggest benefit!

However, if the property is a flat there are a number of considerations to explore before purchasing the Freehold, such as the responsibility of communal areas and facilities.

In addition, there is the complex issue that one flat owner cannot purchase the freehold of just one flat, everyone in the building would need to agree to buy an appropriate share of the overall freehold.

Shared services such as maintenance and insurance would need to be paid for and therefore there would need to be a process set up to establish the fair distribution of cost, collection of everyone’s contribution of the charges and competitive suppliers to undertake the services.

Eligibility of Buying the Freehold of a House

The Leasehold Reform Act 1967 Legislation, otherwise known as the ‘1967 Act’ gives leaseholders the right to buy the freehold of a property, however, there are a few requirements needed to be eligible to purchase the Freehold of a Leasehold property. To be eligible to buy a Freehold, the current lease must not be a commercial lease and have a duration of at least 21 years.

There are also eligibility criteria on the property itself as follows:

If the property is split into flats, it must contain at least two flats
At least 2/3rds should be owned on a leasehold basis (or both, if only two flats)
The property also must not be part of a charitable housing trust, National Trust or cathedral precinct

Should the Leaseholder and property meet the eligibility criteria, the process of valuing the Freehold would need to be undertaken, known as Collective Enfranchisement or Freehold Enfranchisement.

Costs of Buying the Freehold of a House

The cost of a Freehold will be calculated using three factors as follows:

The current value of the property
The cost of the annual ground rent
The years remaining on the current lease

The 1967 act aims to ensure a fair trade of the lease from the Freeholder to the Leaseholder however the rules of valuing a Freehold have evolved throughout various amendments made to the 1967 Act and is fairly complex to undertake without the help of professional solicitors and surveyors.

There are two valuation methods of valuing the property under the 1967 Act as follows:

Original Valuation – The property will be valued based on the original value of the site. Properties valued under this method will need to meet the value limits and the lease would need to qualify the original low-rest test. (See Section 9, 1 of the 1967 Act).
Special Valuation – Should the property not meet the criteria of the original valuation then it would be valued in the Special Valuation Basis, using a marriage value. (See Section 9, 1A/C of the 1967 Act). A marriage value is an increase in the market value of a property following the lease extension. When purchasing a Freehold, 50% of the marriage value is added on top of the cost of the Freehold.

Related guides:

The valuation method cannot be chosen and will be dictated by the qualification criteria only.

As you can imagine, the valuation process is rather complicated and therefore often requires the input of professionals, however, there are freehold cost calculators available online which may provide an estimate of the costs involved with purchasing a specific Freehold.

Other costs applicable when purchasing a Freehold include the necessary legal fees, property valuation fees, stamp duty and any Freeholder’s fees.

Leases and Mortgage Lenders

Mortgage lenders ideally like there to be at least 50 years remaining on a lease following the end of the mortgage term.

For example, if a chosen mortgage term is 30 years, the lender would often require a minimum of 80 years left on a lease. Lease lengths may be extended by agreement with the Freeholder and will often involve additional costs plus legal fees.

Is it worth buying the freehold of a house summary

There are benefits to owning the Freehold of a property, including control of the maintenance costs, however, the process can be rather complicated from valuation through to any negotiations between the Freeholder and Leaseholder, and therefore it is highly recommended that advice and support are sought from professionals throughout the process.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Buying The Freehold Of A House – Is It Worth It?

Kristian Derrick

by Dax McLeanPosted on 18th March 2021

Purchasing a property doesn’t always guarantee ownership of the land beneath it.

It’s crucial to understand the terms of the property and land agreement before committing.

This guide will demystify Freehold and Leasehold, clarifying how each affects your ownership rights.

What is the difference between Freehold and Leasehold?

The differences between Freehold and Leasehold are the type of ownership of the land that a property is situated on.

Leasehold – Leasehold is the arrangement of owning the property only and not the land that it sits on. A lease is then put in place between the freeholder or landlord and the leaseholder, enabling the use of the property for a fixed period of time. Although lease durations vary, typically leases are either 99, 125, 500 or 999 years long.

One term of possessing a leasehold will commonly involve payment of ground rent. At the end of the lease period, the ownership reverts back to the freeholder.

This type of ownership is common on shared properties such as flats.

A lease determines any enforcement covenants, the rights of way and access granted on the land, any repair and maintenance covenants along with details of ground rent.

Freehold – With a Freehold status, both the land and property are owned outright and there are no time limits applied. Typically, most houses are sold Freehold, however, new builds may be Freehold or Leasehold, and therefore it is worth checking.

Need more help? Check our quick help guides:

Is it Worth Buying the Freehold of a House?

For houses, it’s usually worth purchasing the Freehold should this come available.

The benefits of owning the Freehold of a property include; gaining more control of the property, such as deciding how much to spend on maintaining the property, and which suppliers to use, instead of paying ongoing ground rent leasing costs.

In addition to control, there is also independence from any landlords. Anyone who has had issues with a landlord in the past may see this as the biggest benefit!

However, if the property is a flat there are a number of considerations to explore before purchasing the Freehold, such as the responsibility of communal areas and facilities.

Eligibility of Buying the Freehold of a House

To be eligible to buy a Freehold, the current lease must not be a commercial lease and have a duration of at least 21 years.

There are also eligibility criteria on the property itself as follows:

If the property is split into flats, it must contain at least two flats
At least 2/3rds should be owned on a leasehold basis (or both, if only two flats)
The property also must not be part of a charitable housing trust, National Trust or cathedral precinct

Should the Leaseholder and property meet the eligibility criteria, the process of valuing the Freehold would need to be undertaken, known as Collective Enfranchisement or Freehold Enfranchisement.

Costs of Buying the Freehold of a House

The cost of a Freehold will be calculated using three factors as follows:

The current value of the property
The cost of the annual ground rent
The years remaining on the current lease

The 1967 act aims to ensure a fair trade of the lease from the Freeholder to the Leaseholder, however the rules of valuing a Freehold have evolved throughout various amendments made to the 1967 Act and is fairly complex to undertake without the help of professional solicitors and surveyors.

There are two valuation methods of valuing the property under the 1967 Act, as follows:

Original Valuation – The property will be valued based on the original value of the site. Properties valued under this method will need to meet the value limits and the lease would need to qualify the original low-rest test. (See Section 9, 1 of the 1967 Act).
Special Valuation – Should the property not meet the criteria of the original valuation, then it would be valued in the Special Valuation Basis, using a marriage value. (See Section 9, 1A/C of the 1967 Act). A marriage value is an increase in the market value of a property following the lease extension. When purchasing a Freehold, 50% of the marriage value is added on top of the cost of the Freehold.

Related guides:

The valuation method cannot be chosen and will be dictated by the qualification criteria only.

Other costs applicable when purchasing a Freehold include the necessary legal fees, property valuation fees, stamp duty and any Freeholder’s fees.

Leases and Mortgage Lenders

Mortgage lenders ideally like there to be at least 50 years remaining on a lease following the end of the mortgage term.

Is it worth buying the freehold of a house summary

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Can I Buy a House and Rent it to a Family Member?

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

Renting out property is a big financial decision and responsibility at any time, but where a family are involved there are additional factors to consider including if the type of mortgage in place permits that the property is rented.

Buying a property to rent out can be a great investment however over recent years the legislation has tightened up regarding the requirements needed to rent property including energy efficiency, health and safety and right to rent rules.

This guide will discuss the considerations involved with letting out the property to family members.

Mortgage Types and Renting

Should a property be owned outright and therefore there is not a mortgage lender involved, the homeowner can decide who he or she rents out the property to.

However, should a standard residential mortgage be in place against a property that a homeowner wishes to rent out, permission would need to be sought from the mortgage lender.

Not every mortgage lender would approve a current residential mortgaged property to be rented out, especially to family members and therefore it may be necessary to switch mortgage products or lenders to enable the lease.

If a property with a standard residential mortgage is rented out without the necessary permission, it is likely that the mortgage terms would be broken, which could incur penalties.

The most appropriate type of mortgage for renting our property would be a buy-to-let mortgage.

Need more information? Read our related quick help guides:

What is a Buy-to-let Mortgage?

A buy-to-let mortgage is a specific financial mortgage product designed for investors who wish to let out a property, and not live within it.

Typically, a buy-to-let mortgage will have the same options as a standard mortgage such as various interest options from fixed rate, variable rate and tracker mortgages, however, the interest rates can be higher with a buy-to-let mortgage.

One difference with a buy-to-let mortgage versus a standard mortgage is that buy-to-let mortgages often require high deposits, usually between 25% and 40% loan to value rate.

There are different types of buy-to-let mortgages including an interest-only option, which is very common with investors, to be able to keep the monthly mortgage repayments low.

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Where the property is planned to be rented out to a family member, a specific type of mortgage would be recommended, a regulated buy-to-let mortgage.

The buy-to-let mortgage market is not regulated by the FCA, however as lenders see letting out the property to family members as an increased risk, the mortgage needed would fall under tighter guidelines than a common, unregulated buy-to-let mortgage.

Typically regulated buy-to-let mortgages will not have the most competitive interest rates and there will be a smaller selection of lenders offering this type of mortgage product and therefore the use of a mortgage broker may be the best approach to seek the most favourable interest rate and terms.

The criteria and terms of a buy-to-let mortgage will vary between lenders however often lenders of regulated buy-to-let mortgages will be interested in the affordability of the borrower, more than the level of rental income available.

Second Home Mortgages

An alternative option to a buy-to-let mortgage could be a second home mortgage.

This type of financial mortgage product works in the same way as a standard mortgage, however, the lender is aware that the property is not the main residence of the borrower.

Again, permission would need to be sought from the lender to rent the property out to a family member.

Not all mortgage lenders offer second home mortgage and therefore a mortgage broker would be best placed to advise the options available.

How much can be borrowed?

Both typically buy-to-let mortgages and regulated buy-to-let mortgages would review the possible rental income from the property, by accessing the open market rental value.

As a rough guide of the lending criteria, the rent should cover 125%-145% of the mortgage repayments. However, as briefly mentioned already, with a regulated buy-to-let mortgage, the affordability of the borrower will also be a factor to the lender.

The amount that can be offered by a lender will also depend on the deposit available to be put down by the borrower. Typically, a borrower should expect to have a deposit of at least 10% of the purchase price, and for a second residential mortgage, at least 25% deposit for a buy-to-let mortgage.

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What should I Consider When Renting to a Family Member?

Contract – Although you might not think it is necessary to put a proper contract in place when renting property to a family, it is highly recommended that you do so. When someone makes regular payments for a service, it could be seen that an unwritten tenancy agreement has been put in place, protecting the tenant and therefore a contract is recommended to protect the rights of the landlord.
In addition, should the property have a regulated buy-to-let mortgage in place, then the lender will require that an assured shorthold tenancy agreement (AST) contract is in place.
Tax implications – No matter who the property is rented out to, stamp duty would need to be paid on the purchase of the property and rental income will still need to be reported for income tax and capital gains tax reporting.
Maintenance costs – Another reason to ensure that a contract is put in place is to have a written agreement listing who is responsible for the costs of repairs and maintenance. It is highly recommended that an agreement is put in place to ensure that there is no grey area regarding responsibilities, which can result in disputes.
Insurances – Insurances will be required covering both the property itself (often, building insurance is a requirement of the mortgage lender), and the contents. Again, it would be worth clarifying who is responsible for the insurances within a contact.

Can I buy a house and rent it to a family memory summary

Buying a property to rent to a family member can be complicated and should be researched thoroughly before making a commitment.

As we have discussed, a buy-to-let mortgage is quite different to a standard residential mortgage and therefore there are many factors to review, including the level of rental income that could be gained, both on the open market and via a family member as well as the tax implications.

Borrowers exploring this option are highly recommended to obtain independent financial advice, ensuring that the best financial product is sought for the personal circumstance and that their interests and investments are protected.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Does my ex have to pay half the mortgage?

by Dax McLeanPosted on 18th March 2021 | Updated 20th January 2023

Does your ex have to pay half the mortgage after separation? This is an extremely common situation and in this post, we will provide some answers and clarity.

Separating from a previous partner can be a stressful and emotional time as previous memories of buying a property together soon disappear once divorce and separation proceedings have started, and the reality of splitting finances kicks in!

It is also not unknown for tensions to run high during such scenarios resulting in one partner moving out and refuse to maintain their contribution towards the mortgage repayments.

In this guide, we will explore the legalities of splitting the costs of a mortgage once a couple has separated.

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Joint Mortgages and Couple Separation

Where both parties are listed on the mortgage, the responsibility of ensuring that each of the mortgage repayments is paid in full does not change following a couple’s separation.

Both parties are equally liable to the mortgage lender and therefore should there be any pause or default in the monthly mortgage repayments, the lender would be in touch with both parties.

The responsibility to the mortgage lender does not change despite a revised living agreement and therefore monthly repayments should not cease during any disagreements.

Should repayments cease, the consequences of any additional costs or repossession would also sit equally between both parties.

However, where one party is not listed on the mortgage deed, they will not be responsible for maintaining the mortgage repayments.

Need more help? Check our quick help guides:

What Should I Do if My Ex-Partner Stops Paying Towards the Mortgage?

Should an ex-partner (who is listed on the mortgage) advise that they are no longer willing to pay their share of the mortgage repayments, the first step is to contact the mortgage lender as soon as possible.

Lenders who are kept informed of any circumstance changes are often more willing to show leniency upon the case and even offer reduced monthly repayments or switch the mortgage to an interest-only product while negotiations between both parties are ongoing.

It would be strongly recommended that further advice is sought at this early stage from both a legal and financial perspective to review all options available.

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Can an Ex-Partner’s Name be Removed from the Mortgage?

Yes, technically an ex-partner can be removed from the mortgage via the process of a transfer of equity. The ex-partner will need to have agreed to be removed from the mortgage before approaching the lender to make the change.

However, affordability criteria would need to be met for the remaining party to reassure the lender that the mortgage can be covered. If the request is refused by the lender, other options can be explored.

Related guides:

What are the Other Options if The Request to Remove the Ex-Partner from the Mortgage is Refused?

It is highly recommended that further advice is sought before exploring further options and making any commitments where financial matters are concerned.

Other options to explore include:

Explore if an agreement can be made between both parties to continue jointly paying the mortgage. If mediation has not already been attempted between both parties, it may be worth a try. If an agreement can be concluded, it may result in both parties continue to make equal payments, especially if one party has moved out however an agreement would protect both parties’ interests and retains the property, even for investment purposes.
Another option is to replace the ex-partner on the mortgage with another person who can afford to contribute towards the mortgage repayments, perhaps a family member could assist with stepping in to retain the property.
Alternatively, there is the option of seeking to move and downsize to a smaller property. This option would require agreement from both parties to sell the property and also would involve additional costs such as estate agent fees, legal costs and stamp duty on a new property.
Another approach is to apply for a court order to remove the ex-partner from the title deeds of the property but not from the mortgage itself. This would mean that the ex-partner would not have any further claim to the property but would still be responsible for the mortgage repayments.
Another avenue via the courts is to obtain a court order to enforce that the ex-partner continues to pay. This however can be a lengthy process.
Lastly, should the current mortgage provider decline a request of removing the ex-partner there may be the possibility of completing this with an alternative provider? It would be worth investigating if as a single person one partner could meet the affordability criteria with a different lender to re-mortgage in one name only. To explore this option, it would be highly recommended that advice from an independent financial advisor (IFA) is sought. An IFA can assist with individual cases and has plenty of market knowledge to advise the differences between affordability criteria of various lenders.

Further Free Advice

In addition to legal and financial professionals, there are other contact points to obtain free advice as follows:

Citizens advice provide free advice across a range of issues including relationship breakdowns, debt, negotiating with creditors and repossessions. Their national adviceline phone number is 0800 144 8848.
StepChange Debt Charity provides free expert debt advice, aiming to get finances back on track. Their phone number is 0800 138 1111.
National Debtline Charity provides free and independent debt advice. Their national adviceline phone number is 0808 808 4000.

Related guides:

Does My Ex Have to Pay Half the Mortgage Summary

We appreciate that separation is an emotive topic however protecting the interests of our clients is at the forefront of our business.

We, therefore, offer an extensive service, taking the time needed to understand the individual circumstances of each case, exploring the various financial options available.

We ensure that the risks and all other considerations involved are fully explained so that each individual can make their own, most suited decisions and future plans. We also always treat all clients with the utmost care and confidence throughout the process.

We highly recommend that an appointment is made with our friendly specialist financial advisors before committing to any decision or the financial avenue.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: