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Mortgage Doctor

Every month Complete guide to Homebuying asks an expert to answer your home buying questions. This month's mortgage doctor is Ray Boulger, senior technical manager at mortgage broker Charcol.

Q. I live and work in London and I would like to buy my own property. My salary is £26,000 and I have a deposit of £23,000 but I feel reluctant to pay the present superfluous prices. I have been looking at a property in Italy which would require a mortgage of £25,000 and I would plan to repay over five years. Is it possible to obtain a mortgage in the UK for properties abroad? If not, what about the possibility of getting a standard loan to cover the purchase?

Maria Sullivan, London

A. Given the cost of buying in the UK, this is an interesting query, and one that benefits from a little lateral thinking. The basic problem is that no UK bank will lend you money to buy in Italy.

Some specialist UK-based brokers can source funds - usually from EU banks - that will enable you to buy abroad. However, as you will presumably still be working in the UK, and therefore taxed and paying national insurance as a British resident, you could consider an unsecured loan.

Egg, for example, will lend you the required £25,000 at a rate of 7.9 per cent, on a flexible repayment basis, up to a maximum term of seven years. As an alternative, you could approach one of the Italian banks, which will usually require a 25 per cent deposit - not a problem in your case - although the interest repayable will depend on the prevailing euro rates.

Q. My daughter and her partner are trying to obtain a mortgage. her partner had a house of which is now sold, but before being sold his former wife lived there, during which she missed six mortgage payments on the house. He has two County Court Judgements made against him although he isn't the guilty party. I am trying to help them by putting my name forward with my daughter to obtain a mortgage, but I am 55 years and have been told that unless I produce pension documents etc, I can only obtain a 10-year mortgage.

JB Foulkes, via e-mail

A. Your question poses a couple of interesting issues. Firstly, several mainstream lenders will happily lend to applicants aged 55 and over, for longer than a 10-year term. For example Abbey National lends to applicants up to 85 years of age, while Alliance & Leicester lends up to age 75. Both these lenders may need proof of your pension income, depending on the loan to value you want to borrow. The Halifax, however, will not ask for proof of pension income.

Secondly, there are a number of excellent schemes available to you daughter and her partner, should they want to arrange their own mortgage. Given his recent credit problems, I would suggest a lender such as Platform Home loans, perhaps for a couple of years or so, until they can remortgage to a mainstream lender. After all, your daughter's partner will have to get back on the property ladder again at some stage.

Q. I am interested in buying an ex-council two-bedroom property in a 10-storey block with 50 flats. It is in a very popular area of London and comparable flats in nearby Victorian houses cost about £500,000. The seller wants £200,000 for the ex-council one and I'm interested but fear I might not be able to get a mortgage on it although I can pay a sizeable deposit.

Liam Enim, via e-mail

A. In most cases, the lender's decision on whether or not to grant a mortgage is based on the applicant's status, together with the condition of the property. In other words, assuming that your income is acceptable for the amount you are wishing to borrow, and provided that the valuer considers the property to be adequate security for the proposed lending, you should have no trouble obtaining a mortgage.

The fact that the property is part of a 10-storey block does not make it impossible to get a mortgage, although there are certain things that the lender will need to consider, especially within the lease and title to the flat. Finally, some lenders refuse to lend in certain postcode districts however, the fact that you are buying in a popular area suggests that this is nothing to worry about in your case.

Our mortgage doctors are on hand to answer your questions.

Send your queries by email to the Editor

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Complete guide to Homebuying,
Charterhouse Communications,
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London
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