Question: Our household income was £80,000 when we first took out our fixed-rate mortgage and we borrowed £360,000. Since then, my partner has stopped working after we had a son, and now we only earn £70,000 combined. Will we struggle to remortgage? What should we do?
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A drop in household income can have an impact when it comes to remortgaging because lenders assess what you can afford based on your current earnings and outgoings, not what they were when you first took the loan out. That said, it doesn’t automatically mean you’ll struggle.
In today’s market, a growing number of lenders offer higher income multiples — in some cases, up to 5.5 or even 6 times income for certain borrowers. This means that even with the change in your financial circumstances, there should be a lender out there willing to help.
Here are a few options to consider: You could stay with your current lender via a ‘product transfer’, which is simply switching to a new rate with your existing lender. Often, this doesn’t require a full affordability check, making it much easier if your income has dropped.
You might consider extending the mortgage term. This could reduce your monthly repayments and improve affordability, although it does mean you’ll pay more interest over the life of the loan.
If possible, you could look at overpaying now. If you’ve got any savings or can overpay slightly before your fixed term ends, you might be able to bring your mortgage balance down enough to make remortgaging easier.
Timing is key, too. Ideally, you should start exploring your remortgage options around three to six months before your current deal expires. That gives you plenty of breathing space and avoids the risk of being moved onto your lender’s more expensive standard variable rate.
Remember, life changes are completely normal, and lenders and brokers understand that incomes don’t stay the same forever. By getting the right advice early and exploring all your options, you should be able to find a solution that works for your new circumstances and keep your mortgage on track.
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