I resigned up with a new deal with my existing provider about 6 months ago and they were only £10 more expensive than the best deal, didn’t need to show anything which was very handy.
Yeah, product transfers are always cushdy.
I have been told that this is the reason you shouldn't pay off your mortgage in full if you plan to need another mortgage in the future, i.e. keep a very small amount on the existing mortgage as then when you need a new big amount you don't have to start from scratch and it is far easier. Is this true? (apologies for any derail of thread!)
If you're trying to remortgage in the future, you'll still have to go through the procedures. I presume you mean if you are looking to raise capital for a bigger mortgage?
Whenever you're looking to raise funds, they'll always need proof of income, and affordability etc.
We always get 3 months bank statements, even if the lender may not always require them due to low LTV or mortgage amount. Just for our compliance, so we can check for anything that looks strange, or any undisclosed financial commitments etc.
Product transfers are easy because you are switching the balance to another scheme with your current provider.
I work for 3 brokers based around London, and part of my job is doing what Matt says above. I go through the bank statements to correlate all their financial information, as we have to ensure the clients are not going to be overstretched if taking the new mortgage. Any gambling transactions are always incorporated into their expenditure, and the lenders will obviously see them, too.
I was meaning capital for a new mortgage yes - we may be in a position to pay off our mortgage later this year but will be wanting to move in a few years time to a more expensive property, we would need a new mortgage then. My wife was working full time when we took out our current mortgage but is now part time and may not be working at all when we move. Because of this someone told us we should keep a small amount on our existing mortgage rather than pay it all off as when we move there won't be issues with getting an increased mortgage with our current provider whereas we may struggle to get a new one from scratch.
I have heard the same about leaving a small balance rather than paying off completely,
It isn't going to avoid the fact that they will need to know your exact income now.
All of their affordability calculations for a new/increased mortgage will be based on your current income and you will have to tell them that your wife is no longer working.
Vast majority of lenders will want to re-assess extra borrowing based on your circumstances when extra funds are applied for.
There are the odd exceptions. I think (from memory) Barclays/Woolwich customers have an auto drawdown facility with pre-agreed limits.
Another way around this is to arrange an offset mortgage at outset, where your interest payments are calculated on total debt minus any savings.
This route would enable you to “pay off” debt by keeping funds in savings which can be drawn out at any time. Some people have their whole debt covered by savings and pay no interest but retain control. This can also be very tax efficient for higher rate tax payers.
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