Summary
We recently helped our customer secure a mortgage in Farnborough with multiple jobs while she was also going through a divorce.
Our customer was purchasing a house for £346,000 and needed a £90,000 residential mortgage. Although she had a good credit history and a reasonable level of income, the application needed more careful lender research because her income came from aditional employment, second job and a third job. The funds being used towards the purchase were also connected to her divorce.
We found a lender that could consider the different parts of the application together and arranged the borrowing required on a 5-year fixed rate.
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The Scenario
Our customer was 48, employed and looking to purchase a house in Farnborough, Hampshire.
The property was valued at £346,000 and she required a mortgage of £90,000 over a 22-year term.
She had a good credit history and no liabilities recorded in the information provided. She also had a reasonable level of income, but this income came from multiple jobs rather than one single source.
Our customer was also going through a divorce, with funds towards the property purchase coming through this process.
The main mortgage figures were:
- Property value: £346,000
- Mortgage amount: £90,000
- Loan-to-value: approximately 26%
- Mortgage term: 22 years
- Mortgage type: Residential purchase
- Initial product: 5-year fixed rate
- Credit history: Good
The relatively low loan-to-value gave our customer a strong equity position. However, lenders still needed to be comfortable with the income being used to support the mortgage and the wider circumstances of the purchase.
The Challenge
There were several parts of the application that needed to fit the lender’s criteria.
Income from multiple jobs
Our customer had more than one job. Having multiple sources of employed income does not necessarily prevent someone from getting a mortgage, but lenders can treat additional employment differently, with some lenders not accepting 100% of that income.
The important point is whether the lender is prepared to use the income when assessing how much the customer can borrow.
Some lenders may have different requirements around additional jobs and how that income is assessed. For our customer, we therefore needed a lender that could consider the income from her multiple jobs rather than looking at only one part of her earnings.
This was particularly important because the amount she could borrow depended on the lender being comfortable with her overall income position.
Mortgage affordability
The amount our customer wanted to borrow also needed to fit the lender’s affordability assessment.
While the £90,000 mortgage represented only around 26% of the property’s £346,000 value, loan-to-value is only one part of a mortgage application.
A lender will also assess whether the borrowing is affordable based on the customer’s income and circumstances.
We therefore needed a lender that could take a suitable view of the multiple sources of income while providing the mortgage amount required.
What We Did
We reviewed the customer’s full circumstances rather than simply comparing residential mortgage rates.
One of the most important points was identifying lenders whose criteria could accommodate multiple employment incomes.
A lender offering a competitive mortgage would not have been suitable if it could not use enough of the customer’s income for affordability purposes.
The aim was to find one lender that could accept the overall application rather than solving each issue separately.
In particular, we needed a lender that could:
- Consider the customer’s multiple jobs
- Provide the £90,000 mortgage required
- Assess the borrowing against her available income
- Work with the wider circumstances surrounding the property purchase
- Offer a suitable fixed-rate mortgage over the required term
After reviewing the available options, we identified a lender whose criteria could accommodate the case.
The Solution
We found a lender that could consider the income from our customer’s multiple jobs and provide the borrowing she required.
This meant she could proceed with the purchase of the £346,000 house in Farnborough.
The mortgage arranged was:
- Property value: £346,000
- Mortgage amount: £90,000
- Loan-to-value: approximately 26%
- Mortgage term: 22 years
- Mortgage purpose: Residential purchase
- Initial product: 5-year fixed rate
Why the Solution Worked
The lender’s criteria suited the important parts of our customer’s circumstances.
In particular:
- Multiple jobs could be considered, allowing the lender to assess the relevant income available to support the mortgage.
- The required £90,000 loan was achievable based on the customer’s overall circumstances.
- The 22-year mortgage term was acceptable for the customer’s circumstances.
- A 5-year fixed rate was secured, giving the customer stability of her mortgage payments for the next 5 years.
The key was finding a lender whose criteria worked with the overall application, rather than focusing on one individual part of it.
The Result
We successfully secured the £90,000 residential purchase mortgage our customer needed for the house in Farnborough.
The mortgage was arranged over 22 years on a 5-year fixed rate.
This allowed our customer to move forward with the property purchase while dealing with the financial changes connected to her divorce.
Our customer was very happy that she could purchase the property based on her income.
What This Case Shows
This case shows that having income from multiple jobs does not necessarily prevent someone from obtaining the mortgage they need. However, different lenders can take different approaches to additional employment income, so lender choice can make a significant difference.
It also shows why it can be helpful to look at the whole financial position when arranging a mortgage following a divorce. The deposit or equity available is important, but the lender also needs to be comfortable with the customer’s ongoing income and the amount being borrowed.
For somebody looking for a mortgage in Farnborough with multiple sources of income or following a change in personal circumstances, it can therefore be worth checking how different lenders will assess the application before proceeding.
Looking for a Mortgage with Multiple Sources of Income?
If you are buying a property and earn income from more than one job, Kerr & Watson can review how lenders may assess your earnings and look at suitable residential mortgage options based on your circumstances.
Contact Kerr & Watson to discuss your mortgage requirements and find out what options may be available.
