Most lenders expect you to have some form of earned income and if, after divorce, your only source is maintenance and tax credits, it will be more difficult to obtain a mortgage particularly in the current economic climate where lenders have tightened up on their borrowing regardless of your income.
Having said that, there are no set criteria on how much you can borrow, and each lender has their own limits. You might have a current lender that you know and trust, but it will not hurt to shop around for a better deal. However, if you do decide to apply to various mortgage companies be aware that too many checks within a short timescale could adversely affect your credit score. In addition, the mortgage market changes frequently and “Approvals in Principle” are only valid for a short period of time and can leave a footprint on your credit history.
Other factors to take into account:
• A deposit of at least 20% will secure the better mortgage interest rates.
• Not all forms of income are fully taken into account by mortgage companies
• Some lenders will only accept maintenance as income if there is a payment record of 6-12 months (and possibly a Court or CSA Order)
• Only a percentage of tax credits may be allowable against borrowing
• If you are self-employed be prepared to present 2-3 years of accounts no matter how good your cash flow
• If your ex-spouse remains on the mortgage, this is likely to affect your future house purchase elsewhere. All existing borrowing (mortgage, credit card or loan) is taken into account and could reduce future lending.
Whether you’re buying a house or flat, contact our team of specialist Property Lawyers today so that we can assist you through the process. And if you’re still at stage of thinking about a divorce and need specialist family law advice – call our expert divorce solicitors on 01722 422300, 01264 364433, 01980 622992 or 01202 834450– remember, the first appointment is absolutely free.