Mortgage affordability rules

by In Ethel's House, Finances, Renovations Tagged , , , , , , Leave a comment

Interesting article from the FT about the Bank of England’s overhaul of mortgage affordability rules.

Basically instead of stress-testing applications to 3% above bank rate, lenders must now stress-test applications to 3% above their reversion rate, i.e. their standard variable rate.  For me that means my lender will now have to judge my application against a rate of 7.24% for the residential and 7.99% for the commercial.  I’ve run the numbers myself this evening and we’re definitely okay on the commercial side.  The residential – I don’t know.  I think we’re okay; they told me when I first applied that they’d lend us something like £168,500 maximum (that was taking into account the 0% card payments), but we were capped to £135,000 because of loan-to-value, so I hope that’s enough wiggle room to deal with the extra.

It occurred to me this week that I never rang back the holiday letting agency after they came for their visit last month, and as we get closer to decorating, I thought it might be a good idea to see if they had any tips for me, so I dropped them an email and the rep who’d come out to see me rang me back a couple of hours later to say how delighted she was to be taking on the houses and to have a chat.  Basically there is no fixed checklist to getting a 4* rating (which is what I’m going for) and the house doesn’t have to be completely 4* throughout, a few 3* items, as long as they’re not major items, will not lower us a grade.  Basically for a 3* think ‘Good’, for a 4* think ‘Very Good’.  Tesco crockery is fine as long as it’s Tesco Finest not Tesco Value, as it were.

It does mean I have to rethink my furnishing budget, as my plan of upcycling secondhand stuff is very likely not going to be acceptable.  I’m going to need two leather sofas, a king-sized bed, three 3ft single beds, 3 chests of drawers, 5 bedside tables, 2 wardrobes and a kitchen table and chairs (already have an oak coffee table), along with all the other stuff you expect to find in a comfortable holiday cottage, like a decent television, soft Egyptian cotton bed linen, fluffy towels, pictures on the walls for rooms that don’t have a feature wall (apparently this gets you extra points towards 4*) and everything you might expect to find in your kitchen at home.

First on the very big shopping list though is the kitchen appliances.  I sent Dougie a text the other day, as we passed him on the road and gave him a wave, to check that I was correct in my assumption that I needed to get David to lay the floor downstairs and then I needed him and David on site together for a day along with all the kitchen appliances so that they could talk layout and wiring before David starts installing the kitchen units (and I cannot WAIT for that to happen because they’ve been taking up 80% of my study since October!)

In the meantime, I am plastering on (I’ve nearly caught up with Mick now, just one more wall to go until I’m at a stop because he hasn’t finished the plasterboarding!) and after nearly three months of managing not to plaster my face, the final bedroom ceiling got me!

(The headphones are because I’ve been listening to Rob Dix’s excellent property podcast while I work – check out his website at propertygeek.net)

Another week bites the dust

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Despite it being busy again work-wise, I have started plastering the final bedroom!!  I’ve nearly caught up with Mick, who still hasn’t finished plasterboarding the dormer window in that room, but we had a more urgent job today – finishing off the fencing for the garden so it was clear where the boundary was when the surveyor comes to measure it tomorrow.  Graeme and his team had done two sides of it, but I’d asked them to leave the third, because it was going to be formed from us rebuilding the old wooden fanks (sheep handling system) which had collapsed.

The remaining rails were hammered back into place and new fenceposts put in where needed.

Et voila!  We still need to re-do the rest of it.  The sheep will come in through the gate at the front of the picture and there’ll be another gate at the far end of this and possibly a gate in the middle so it can be split in two if needed.  There’s a gate into the enclosed pen to the left and that will be narrowed so it tapers to one sheep’s width (a race) for dosing/treating/injecting them one at a time.  There’ll be a guillotine gate at the end of that, operated by a rope, so one person can keep sheep flowing through the race without having to move, and then we’ll make another holding pen at the other end of the race, so sheep can go through it in either direction.

Reverse angle.

Everything’s got a bit overgrown around the front as well.

However, a few neighbours wandered past and decided to give us a hand!  (Not sure where they came from, there shouldn’t be any sheep loose in the village at the moment, but grateful for the chomping.)

A tale of two sanders

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I took a break from the plastering today and decided to work on the staircase instead, which meant getting these two out.

And putting the dodgy-looking mask on.

I have no idea what John Angie painted the paneling with, but it’s vaguely rubbery when heated and really doesn’t want to come off.  It’s taken me two sheets of 60 grit on the big sander to get this far.  I was going to paint the whole thing a matt chalk white, but thinking about it, this is the hall, and our doggy guests are going to walk straight in here and have a good shake if it’s raining – so I think I’ll paint the vertical boards and the inside panel of the stair side green to match the front door, then the bannisters and the frame around the stair side panel can be white.  Should show up splatter marks less, and I’ll make sure I do the front wall and inside the front door with kitchen and bathroom paint, so it’s wipeable!

You can see where the woodworm have had a good old munch under the paint.  No active ones, thank goodness.  This will take a little bit of wood filler to smooth out.

In other news, I finished plastering the north bedroom yesterday.  Those little dormer windows that I was insistent we opened up so you could stand in them, have 13 separate joints to plaster alone!

Finances-wise, there’s good news and bad news.  The good news is that the mortgage lender says we can have the mortgage.  The bad news is that we can only do it if we take the commercial holiday one on the same day and use the cash released to pay off the 0% cards immediately?  Why?  Well, when their underwriters looked at the residential application they realised that we were going to own three houses, but neither of the two holiday lets were currently bringing in any income.  They use set figures for each category on their affordability calculator and they took the decision to triple the lines for council tax and utilities (which I could argue is mildly unfair because two of them will be empty, but there you go) and that brought us down on the unaffordable side again while we still have the credit cards.

Of course, Ethel’s isn’t mortgageable yet because (a) it’s still sitting on croft land and (b) it doesn’t have a kitchen or bathroom.  Brian at SGRPID tells me that I should work on three to six months for the sale of the land to complete, and Mick’s taking the first two weeks of July off work so we can blitz the house ready for David to come back and lay the floor and install the kitchen, but the seller is now very nervous about timescales because her decrofting took 14 months and she understandably doesn’t want to wait that long.  I’ve spent the past few days talking to bridging loan companies and brokers, but of the ones that will consider Scotland at all, absolutely none of them will consider a house this far north, so I’m just going to have to cross my fingers and keep hassling the various solicitors.

The other solution would be to pay the cards off, which we could do from savings, but then we wouldn’t have a deposit without mortgaging Ethel’s, so we’re in the same fix.  I did vaguely think about trying to crowdfund paying off the cards by advance selling weeks, but given our quote from the agency was under £15,000 for Ethel’s and we need nearly £50,000, it’s a bit of a non-starter – and I don’t think the agency would be very pleased if I told them all the prime weeks for the next two years were sold!

Finally, we’ve been keeping up with our crofting duties.  Stuart has been up on the hill and cut our peats for us – they look like very ancient library books!

And there are a lot of them.

They’re all laid flat for drying one side now, and when we’ve had a few weeks of sun and wind, we’ll go back up and put them all into a herringbone pattern or stand them up into Stonehenge-type formation to get the other side dry.  They’re pretty big – each slab is about 3 inches thick and just under A3 paper-size.  And they’re HEAVY!

The night before last we got the first big weather-dependent job of the summer done and now have some much cooler ladies 🙂  Just haymaking to go and then I can stop worrying about the forecast for another year.

Inching towards the finishing line

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I’ve been tied up with a big project in my day job, so once again work has ground to a halt, but two bits of encouraging news on the financial front:

  1. The residential lender has been in touch to say the credit reports are back, but because I provided the version of an SA302 my accountant’s tax submission software spits out rather than a proper HMRC one, there’s a slight problem with verifying my income.  I can either write to HMRC and request they produce official ones for me (I can’t just print them off the website because that option isn’t available when your self-assessment gets submitted via accountants’ software) or they can forward my application to their head office for one of the senior lending staff to look at it, and they recommend I take the latter option because “referral route may be quicker on the basis that my head office would be happy to agree” – which sounds promising!  They also sent me a list of valuers on their panel to choose from, so fingers crossed we’re nearly there with this.
  2. SGRPID got in touch to say that the Drawings Office would be visiting on 26th June to survey the house site and garden at Ethel’s in order to prepare the sale plans.  This is amazing news because originally I was told it would be about six months, i.e. October/November.  It may actually now turn out that that side of it is ready before I’ve finished the house.

Anyway, all good incentives to carve out some time to get my overalls back on, and the upside of working flat out on something for the past week (to the extent of starting at 6.15am and closing the laptop at nearly midnight for the last two days) is that the invoice covers a very large chunk of what I need to make from the day job each month, so I don’t need to go chasing around for other work too hard for the next three weeks.