Mortgage Capacity Report

 

What is a Mortgage Capacity Report?

A Mortgage Capacity Report is a document which provides details from a number of lenders on how much you can borrow as a single applicant.

This is usually required by the courts during the process of a divorce. The report could be required for both parties or just one.

Reports should display the details of the person obtaining the report including the breakdown of their income and outgoings. Followed by your maximum borrowing potential with each Lender, which will include all the main high street lenders as well some Specialist Mortgage Lenders.

Why is a specialist Mortgage Capacity Report required?

The purpose of the report is of course to detail what you are going to be able to borrow as a single applicant. But the reason you need this, is because the report will in many cases have a direct impact in any divorce settlements.

Importantly the report will also detail if any applicant will be unable to obtain a Mortgage on their own or whether a property purchase is going to be affordable in the area they currently live in.

Benefits of a Mortgage Capacity Report

Independent: It’s completed by a specialist who isn’t involved in the process, so both parties can have trust in the report.

Reliable: A CeMap qualified and FCA regulated Mortgage Advisor has to produce the report, so you can be sure they are accurate and provided by an experienced professional. 

Detailed: The reports Mortgage Advisors provide are usually around 6-8 pages long and provide a full breakdown of all the information used for the Lenders to make a decision on the maximum borrowing. There is also a breakdown of what the party is able to borrow with each individual Mortgage Lender, high street a specialist.

Time: Obtaining a report from each individual lender would take a great deal of time. A Mortgage Advisor who is experienced in obtaining these reports can complete these requests with accuracy usually within 24-48 hours.

Useful: When you have agreed a settlement you will then be well equipped and know exactly what properties you can afford to buy. As the Mortgage Capacity Report is much more detailed than you would otherwise have if buying a property ordinarily.

Different types of Mortgage Capacity Report

Joint Mortgage Capacity Report: Two reports which detail how much each individual can borrow, and can also be used to show what they would have been able to borrow jointly.

Single Mortgage Capacity Report: A report for one person detailing their maximum borrowing capacity.

No Mortgage Capacity Assessment: A report which evidences someone is unable to borrow anything on a Mortgage.

Multiple Scenarios Report: This is a tailored report where the individual requires Mortgage Capacity Reports on a number of different scenarios. For example, how a likely change in circumstances could affect the maximum borrowing potential of a person.

What is the process?

Choose a report: Let your Advisor know which report you require. If you are unsure of this you can of course speak to your advisor or your Solicitor. 

Speak to a Mortgage Advisor: who will complete a short fact find on you and find out about your income and your outgoings.

Research: Your Mortgage Advisor will go away and obtain your maximum borrowing figures with a large number of high street as well as specialist lenders. So you can be sure that you will know your minimum, median and maximum borrowing potential.

Production of your Report: Your Mortgage Advisor will compile the report and include all the information which Mortgage Lenders consider when making their maximum borrowing decisions. As well as your maximum borrowing capacity with each lender.

Completing a mortgage capacity assessment report

What is considered when assessing how much you can borrow?

Your basic annual and sustainable income. Lender may also permit the following in their affordability calculations:

  • Self-employed with at least 1 years-worth of accounts
  • Bonus payments, commission and overtime
  • Special rates for Contractors including IT and CIS Contractors
  • Foster income
  • Maintenance income – private arrangement
  • Benefit income including, child benefit, working & child tax credits
  • Pension or investment income
  • Foreign currency income
  • Casual employment for example zero hours contracts

Outgoings that lenders will consider when assessing your affordability are, but not limited to:

  • Maintenance payments & Childcare
  • Number of dependents 
  • Credit and Store Card Balances
  • Loans and Finance agreements. For example, on a Vehicle
  • Student Loans
  • Council tax
  • Travel and living costs including utility bills

Any future changes to your income and expenditure which are likely to affect your ability to repay your Mortgage

 Affordability: Generally speaking, how much can I borrow?

This is the number one question and one of our Mortgage Advisors will be able to give you the exact figures.

It’s dependent on a number of factors including the lender, the size of your deposit and of course your income and regular outgoings. But to give you a rough answer in the simplest form, lenders will allow you to borrow up to around 4.49 to 5 times your income.

Other FAQ’s

What is Loan to value?
The percentage size of your Mortgage in relation to your property value. For example, a Mortgage of £90,000 and a property valuation of £100,000 is 90% loan to value (LTV). The £10,000 that is missing from the above would be your deposit (10%).
What is a fixed rate Mortgage?
Lenders will allow you to fix the initial rate of your Mortgage for a set period of time. In general, the longer the initial fixed period is, the higher the interest rate will be. Once this initial fixed rate is up, you should either Remortgage to a new fixed rate with a new lender or change products with your exiting lender to a new fixed rate.
How much will my monthly repayments be?
Depends on quite a few things of course. But to give you an idea, for every £100,000 you borrow (approximate interest rate of 2.50% based on a deposit of 10%), over a 25 year term, your monthly repayment will increase by £449.
How long can my Mortgage term be?
You’re overall Mortgage term, the length of which is used to set your monthly repayments, can be as long as 35-40 years.
What type of Mortgage is best?
A Fixed rate capital and interest repayment Mortgage, most of the time is going to be the best option for a first-time buyer. This ensures repayment certainty and will guarantee your mortgage is repaid providing you keep up with repayments.

Do you need documentation?

Whilst documentation isn’t always necessary, if you could have the following to hand or provide this it would assist your Mortgage Advisor in ensuring the report is as accurate as possible:

  • Latest 3 Months Payslips
  • If self-employed – your latest 2 years tax returns/SA302’s

In addition, the following documents may help you to provide the most accurate figures:

  • Latest years P60
  • Copy of your Credit Report
Mortgage Advisor in suit

We can help! Contact us to discuss obtaining a Mortgage Capacity Report

Speak to one of our qualified, regulated and highly rated Mortgage Advisors, which specialise in obtaining Mortgage Capacity Reports. Simply complete our short enquiry form and we will get one Mortgage Advisor that is local to you and which specialises in your case, to give you a call. They can answer any other questions you have, provide you with a free non-obligatory quote and/or talk you through the process in greater detail.

All our Mortgage Advisors hold the CeMap qualification (Certificate of Mortgage Advice & Practice) and are Regulated by the Financial Conduct Authority.

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