Mortgage Raising Capacity Report
If you have been told by your solicitor or the court you need to provide a Mortgage Capacity Report you may be wondering what it is or why you need one. Mortgage capacity reports form an important part of specific court processes and this guide explains everything you need to know about them.
The good news is obtaining a mortgage capacity report is straightforward and you can provide the court with the information they need with relative ease.
Let’s explore mortgage capacity reports including what they are, why you need one and how to get one.
What is a Mortgage Capacity Report?
A mortgage capacity report is a court ordered document to be used as evidence. The court will request a mortgage capacity report to assess your ability to borrow money.
Commonly, Mortgage Capacity Assessment Report are used in divorce proceedings but there may be other legal situations you find yourself in when a mortgage capacity report is required. The most common usage is to assess whether you can obtain a mortgage to buy out your ex-partner’s share of the property.
Why Do I Need a Mortgage Capacity Report?
Unfortunately, divorces are more common than people would like to believe. It is estimated that 42% of marriages end in divorce and this figure has been increasing in recent years.
In cases of divorce where you own a property, a court will likely request a mortgage capacity report when deciding how to split the assets you both hold. Part of this consideration will be whether one party has the ability to buy the other party’s share in a jointly owned property.
The court will use a mortgage capacity report to decide which partner is most likely to be able to obtain a mortgage and buy out the other party. It may be the case that the court requests mortgage capacity reports from both parties to decide the issue fairly.
What Information will I Need to Provide?
There are several pieces of information you will need to hand to obtain a mortgage capacity report. These are:
Any current mortgage information including the total amount left to pay
- A property valuation
- Details about your income and expenditure
- Information about any other assets you hold such as investments or pensions
- How your finances will be impacted by the divorce
- Additional financial information such as dependents or childcare costs
Using this information, you will be provided with a report that evaluates your affordability (how much you can borrow) alongside a mortgage product that fulfils the requirements in the report.In some cases, your mortgage capacity report will state you are unable to borrow the necessary money.
Because a mortgage capacity report forms the basis of a legal judgement you should ensure all the information you provide is as accurate as possible. Keeping the information accurate keeps you in compliance with the court order and offers you protection from the court misunderstanding your situation and making a detrimental ruling.
Mortgage Capacity Reports and Outcome in Court Proceedings
A mortgage capacity report is a bit tricky in terms of reliability. A court will view the report as evidence of your financial situation and use this information as a reliable source on which to make a legally binding decision.
Unfortunately, the actual report is not as infallible as the court system might lead you to believe and you should be wary that although a mortgage capacity report says you are able to borrow money — in practice you may not be able to. This is because mortgage capacity reports are different to mortgage applications and the criteria of a court in assessing financial situations is different to a mortgage underwriter.
As a result, a Mortgage Raising Capacity Report is unregulated by the FCA and you have very little consumer protection if you are unable to borrow the money as outlined in a report.
Finally, lenders change their affordability criteria and products on a regular basis, and you may find by the time your court case concludes, your ability to borrow or the product you intended to use is no longer there.
How Much Does a Mortgage Capacity Report Cost?
The cost of a mortgage capacity report varies depending on the broker you choose to compile it. A report from Boon Brokers can cost as little as £149 is straightforward and there is clearly no mortgage capacity. However, the level of complexity involved to compile the report tends to increase the fee you pay.
There are instances of complex mortgage capacity reports costing over £1000 with other brokers. This is more likely if you have multiple mortgaged properties or are a high net worth individual.
You can apply for a joint mortgage capacity report with a new partner. Again, this adds a level of complexity to the report. Boon Brokers charge £499 for a joint mortgage capacity report.
Website: https://prestigemortgagesolutions.co.uk/mortgage-capacity-reports/
