Want to borrow up to six or seven times your income if so a Remortgage may not be your best option.
Debt consolidate and capital raising options
Most mortgage lenders limit borrowing to 4 to 5 times your income but we have access to specialist second mortgages that may stretch this to 6 to 7 times your income allowing you to borrow more.
How does it work? Well you keep your current mortgage and take out a further one which is often referred to as a second mortgage or a secured loan on the property. It’s ideal if you need more than a traditional remortgage can offer.
Jon is a plumber with last year’s net profit was £29,000. He is looking to clear his expensive credit cards and needs to borrow £40,000.
Existing mortgage £160,000 with Halifax
Debt consolidation £40,000 to clear credit cards
Total borrowing needed £200,000
Typically traditional mortgage lenders would cap out at 5 times his income which would only provide him with £145,000 (£15,000 less than he has already). However, using a second mortgage with a 7 times income multiple he could potentially borrow £203,000 (£3,000 more than needed) to clear his credit cards.
Why are second charge lenders so generous? Well they appreciate that if you are servicing debt at a higher rate than them without issues then lending at 6 to 7 times your income should be fine. Second Mortgage are also normally much smaller then your traditional first charge mortgage which represent a smaller level of risk for the second lender.
Niche Advice offers appropriate advice on high income multiple mortgages including those up to 7 times your income, to find out more please complete the Contact form on our website or call T: 020 7993 2044.
You are consolidating your existing financial commitments, you should therefore be aware that whilst this may mean you will make short term savings, over the long term, you may end up paying more. This is because you may be extending the period of the loan. You are also transferring previously unsecured debts to a mortgage which is secured on your home. The reason you want to consolidate your existing debts is to reduce your monthly outgoings.
Please also be made aware Lenders tend not to look favourably on applicants that have a repeated history of debt consolidation so future finance for this reason may be hard to obtain.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.