As a Mortgage Capacity Advisor my main role is to ascertain the amount of mortgage lending a divorcing individual or couple can borrow to help them negotiate a fair settlement.
Although each individual or couples’ circumstances differ, and each assessment is unique, it is this type of assessment that I am often involved in.
However, more recently I have received several enquiries for, what I have come to call, a ‘Reverse Mortgage Capacity Assessment’.
This is where the amount of mortgage lending required is already known and what I am instructed to explore is how much income will be required to achieve the required level of borrowing.
The ‘income’ in most cases refers to maintenance payable by the ex-spouse. However, it could also refer to any form of income required to achieve a certain level of borrowing.
This could relate to an individual who is looking to increase or decrease working hours; switch roles or seek new employment.
With regards to maintenance income, whether spousal or child, I am often instructed to explore how much maintenance is required to achieve varying borrowing amounts, which, for example, could range from £100,000.00 – £500,000.00 in intervals of £100,000.00. This can help highlight how much additional income is required to achieve suitable housing.
The results of these reports often vary drastically due to mortgage lenders varying criteria regarding maintenance income. Some mortgage lenders are happy to use 100% of maintenance income if there is a Child Maintenance Service Agreement or Court Order in place.
The payment of maintenance will usually need to have been in place for several months, typically 3-6 although some lenders require 12 months history of this income with Bank Statements to prove it.
Many mortgage lenders will only consider a percentage of this type of income and some will not use this income whatsoever.
What is interesting and important to know for the negotiation of maintenance, is that large amounts of spousal or child maintenance may not always have the desired effect where mortgage borrowing is concerned. This is because many mortgage lenders are uncomfortable lending to those who rely heavily on maintenance income.
Therefore, it is important to be sure that the amounts agreed will help and not hinder any mortgage related plans.
Natasha Palmer is a qualified Mortgage Advisor at Simpson Financial Services Ltd with offices in Coventry and Leamington Spa.
With over 10 years experience in Financial Services Natasha starting her career in Financial Administration. She became qualified to advise on Mortgages, Protection and General Insurance in 2008 and then spent the next 4 years advising home owners, first time buyers and small businesses on the most appropriate lending and protection solutions.
Becoming a Director of Simpson Financial Services in 2010 she then went on to win the Insurance Institute of Coventry’s Young Achiever of the year award in 2010/11.
Her career in Mortgage Capacity Assessments started over lunch with a with a local family solicitor one day who asked if she could provide mortgage capacity details for a divorcee having difficulties negotiating future housing needs with their soon to be ex. Natasha began producing Mortgage Capacity Assessments from that day on.
She can be contacted at firstname.lastname@example.org and you can check out her services on the website: mortgagecapacityassessments.co.uk.