For those going through financial proceedings for divorce, it is becoming commonplace for the Court to request evidence of capacity to mortgage. Whilst this may be a worthwhile and logical exercise for some, for a number of individuals the prospect of paying for a full report may feel somewhat unfair, especially if their financial circumstances quite obviously deem them unable to secure mortgage lending.
Those who consider themselves as one of the following may know, from previously failed attempts at securing a mortgage or through their own investigations, that they are in no position to obtain mortgage lending:
- No Earnings – Whilst mortgage lenders will accept a variety of income types, if an individual is unemployed or relies solely on benefit or maintenance income with no earned or other income being received, lenders will not consider them for mortgage borrowing.
- Bankruptcy – Once Bankrupt, credit cannot be obtained for up to 6 years whilst the bankruptcy is recorded on credit file. During this time, it is highly unlikely a bankruptee can secure mortgage lending.
- Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA) – Mortgage providers are highly unlikely to consider an individual for borrowing if they have an outstanding IVA or DMP.
- Age – All mortgage lenders adhere to minimum mortgage term criteria. For the majority of lenders, 5 years is usually the minimum acceptable term. Certain lenders may consider a 2-year term whilst others may only accept a 7-year minimum term. For those over a certain age and approaching retirement this could render them unable to secure a mortgage.
- Lending into retirement - If the client wishes to extend the mortgage past their retirement date and continue paying the mortgage whilst retired, mortgage lenders are likely to base their lending calculations on the applicant’s retirement income, not their current earned income. Therefore, if an individual does not have adequate pension provision, perhaps they have a reduced pension pot due to a pension sharing order with an ex-spouse, this could dramatically affect their ability to obtain lending, despite their current earnings.
The ‘No Mortgage Capacity Assessment’ – Due to the number of enquiries received from individuals in one or more of the above situations, Simpson Financial Services have now launched the ‘No Mortgage Capacity Assessment’. Whilst a standard Mortgage Capacity assessment costs £345.00, the No Mortgage Capacity Assessment costs just £175.00, providing it is clear that the client is unable to obtain mortgage lending. The new assessment is available for single reports only.
If you would like to find out more please
or call our Mortgage Capacity Expert, Natasha Palmer, free on0800 6342 111
.