For those going through financial proceedings for divorce, it is becoming commonplace for the Court to request evidence of Report Mortgage Capacity Report. 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 ‘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.


The mortgage capacity assessment report is a detailed investigation into the level of mortgage a person is likely to be successful in obtaining based on your specific circumstances. The assessment is more reliable than a visit to your bank or by using one of the many online mortgage capacity calculators available. 


The assessment is often required during divorce proceedings when proof of mortgage borrowing is required. Your mortgage capacity assessment needs to be credible, realistic, and accurate and will help you in a number of ways.


Find out how much you can borrow with Prestige mortgage Solutions. Call us on 0330 135 8047 to talk with our experienced team or book an appointment for a time convenient to you.


Why do I need a Mortgage Capacity Assessment?

 


The Mortgage Capacity Report is commonly used during divorce or separations. In a lot of cases, this is requested by the courts to decide on financial splits of existing assets. Generally a solicitor requests this on behalf of their client.


Your mortgage borrowing assessment needs to be credible, realistic and accurate and will help you in a number of ways:




Credible

The mortgage capacity report gives your financial settlement greater creditability when dealing with your solicitor and/or court staff including the judge presiding over your family court proceedings. It can be used by the other party (ex-partner and/or their solicitors) to help the divorce settlement

From the Legal Representatives perspective it can be considered “Best Practice” in the way mortgage capacity is demonstrated.




Explanatory

The mortgage capacity report does not recommend a specific lender and product, however, it will provide example illustrations providing current market interest rates, the monthly Repayments and will demonstrate all other likely mortgage costs.

Each Mortgage Raising Capacity Report is different to reflect the your personal individual circumstances.
 


Detailed

If you require your own as well as your partners mortgage capacity for divorce purposes then we can be instructed on a joint basis. This will provide you with two reports detailing both parties mortgage capacity.

An independent mortgage capacity report can often paint a far more accurate and unbiased picture rather than relying on the word of one lender where all of the terms of borrowing are not clear and theycan only provide lending information based on their own product

We can also provide details of your mortgage capacity based on any number of financial scenarios. If you require several scenarios based on different situations, this is also fine.
 


Reliable

The assessment is more reliable than a visit to your bank or by using one of the many online mortgage capacity calculators available.

Whilst going direct to mortgage providers can provide that specific lender affordability details, a mortgage is not secure until such time as a full mortgage offer has been made.  As an independent mortgage broker we will be able to give clients advice as to the likelihood of being able to obtain a full mortgage offer and advise which lenders are more suited to your individual needs.

The Courts at a first hearing will usually direct the divorcing couple to obtain sales particulars for properties that they believe suitable for themselves, as well as properties they believe suitable for their spouse.  In addition, the Court will also require evidence of the mortgage capacity the respective parties may have. The parties are usually informed to serve evidence of mortgage raising capacity 8 weeks before the Financial Dispute Resolution Hearing (FDR) in the form of a brokers certificate setting out:



There is permission for each party to file and serve mortgage raising capacity for the other within 14 days if they dispute that which has been provided.


The amount that you can get from multiple lenders can change dramatically. Different lenders have different factors that are taken into consideration and therefore approaching one lender for a mortgage figure doesn’t provide a true reflection of the market based on your circumstances


Our report is more thorough than just checking your bank. We’ll check with several lenders and ensure the figures entered on the affordability calculators are correct.


We’ll be doing a short questionnaire to get your needs down on paper. The Assessment Letter is given to you and only you. Unless you have told us they should be sent elsewhere.


What information should I know to help generate my mortgage capacity report?

There is some key information that you need to know to ensure that your report can be started.


There is then the potential different scenarios that you should consider, based on maintenance payments, childcare and your current work situation (if that needs to change to support your family).



Mortgage Amount

You’ll need to know the outstanding balance of any mortgages you currently have – residential and buy to let mortgages must be included.


You might already know this information but the easiest way to gather this is to ring your current mortgage provider(s) or log on to your online banking. If you require any further mortgage advice, our mortgage brokers will be able to give you financial advice on this.


Property Value

Understanding the value of your property is critical, in most cases the equity in your marital home and buy to let properties is your biggest asset.


You can get a rough guide on property prices by using helpful tools on property websites like zoopla.co.uk.


We would also recommend getting your property valued by local estate agents who has a proven track record within your area.


Income Details

We would ask you to understand all earned income that you receive.


This will allow us to build the capacity report and potential scenarios if you had to reduce or increase your working hours post-divorce and how this would affect your potential mortgage borrowing in the future.


Liabilities / Expenditure

We would ask that you have a good understanding of your monthly commitments, from debts to everyday spending like food, fuel, and every month bills council tax/utilities etc as lenders will take these into consideration when looking at your loan capacity.


If you are unsure of your debts held or your current credit status you can complete a request for your Credit File HERE

Website: https://prestigemortgagesolutions.co.uk/mortgage-capacity-reports/