I am looking to move house but I have recently been made redundant. I have £200,000 in savings and own my property outright. As I am currently not working, can I still arrange a mortgage of between £50,000 and £100,000?
While you are certainly in a good position from a cash and equity point of view, lenders will not lend based purely on the fact that they have ample security for the mortgage. When agreeing to advance any mortgage, the lender will not only be looking to satisfy itself that the property is worth what the owner or buyer says it is but will also want to be sure that it will be affordable.
In deciding how much you can afford, lenders will take into account your income and ongoing commitments including other credit commitments, as well as utilities, travel and childcare costs. This helps to give a more individualised approach, and the lender must assure itself that you can afford the mortgage – now and in the long term.
Unfortunately, the fact that you are currently in a period without an income means that it will be impossible to meet lenders’ affordability requirements, even though the mortgage may represent a relatively small proportion of the purchase price.
If you already have a job offer, then it could be worth taking advice and shopping around to see if a lender will agree to lend, although those that may consider it are still likely to want the mortgage to complete once you have started the job.
Mortgage lenders can also have varied approaches to a minimum period in the job or lending within a probation period, so it will make sense to seek advice from a mortgage broker to make sure you get the right match.
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