Mortgage Capacity Reports Explained

If you have been told by your solicitor or the court that you need to provide a mortgage capacity report you may be wondering what is it and why do you need one? Mortgage capacity reports form an important part of specific court processes. 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. At Boon Brokers, we are currently completing mortgage capacity reports for clients within 1-working day.

Let’s explore mortgage capacity reports including what they are, why you need it and how to get one.

A mortgage capacity report is a comprehensive document, verified by a mortgage professional, that is requested by UK Divorce Law Courts. It is used to assess your ability to borrow money.

Commonly, mortgage capacity reports are used in divorce proceedings but there may be other legal situations where 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 is likely to 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 make a fair assessment.

What Information will I Need to Provide?

There are several pieces of information you will need 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 that 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 is vital to comply with the court order. It also protects you 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 to make a legally binding decision.

Unfortunately, the actual report is not as infallible as the court system might lead you to believe. Although a mortgage capacity report says you may be able to borrow money, in practice you may not be able to.

This is because mortgage capacity reports are different to mortgage applications. The criteria of a court assessing your financial situation is different to a mortgage underwriter.

As a result, a mortgage 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. You may find that by the time your court case concludes, your ability to borrow or even the product itself 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 and the type of report itself.

Nil Capacity Report

A report from Boon Brokers can cost as little as £149.99 if you have a nil-mortgage capacity. For example, if you have recently gone self-employed, have significant adverse credit or any other reason that results in a maximum mortgage sum available of £0, you will require a nil-mortgage capacity report.

Single Capacity Report

If you have mortgage capacity and require a Single Mortgage Capacity Report, Boon Brokers charge a flat fee of £299.99, regardless of its complexity. The reason for the increased cost is due to the additional level of work required to generate the report. Boon Brokers have to conduct mortgage affordability assessments with a whole of market range of regulated lenders.

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.

Joint Capacity Report

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 £499.99 for a joint mortgage capacity report. If your ex-partner also requires a mortgage capacity report, you can pay for a joint capacity report instead of two single reports. This will result in a £100.00 saving.

How Can I Get a Mortgage Capacity Report?

Before committing to a mortgage capacity report, it is worth asking the court if an agreement in principle would be sufficient evidence. In some cases a court will accept an agreement in principle and you will not need a mortgage capacity report.

This is very beneficial as you can obtain an agreement in principle with little to no upfront cost.

You should approach a mortgage broker, like Boon Brokers, to complete a mortgage capacity report on your behalf. Choose your mortgage broker carefully because even a minor error in the report can have a long term impact on your finances post-divorce.

Some brokers view mortgage capacity reports as an inconvenience and provide poor quality work as a result. Because there is no regulation related to a mortgage capacity report there is little help if a broker does a poor job.

Choosing a reputable broker with expertise in mortgage capacity reports can:

• Help achieve a fair outcome in court
• Allow you to explore various financial situations and outcomes
• Prevent additional legal fees

Our Mortgage Capacity Report Process

At Boon Brokers, we have created a bespoke Mortgage Capacity Report Process. The process is as follows:

1. Complete a Fact-Find

Your broker will setup your account on our online client profile system. You will receive automated correspondence via e-mail with a password set-up link. You can then login to complete a fact-find on the system.

2. Invoice

Your broker will review the fact-find and determine which mortgage capacity report is most suited to you. A suitable invoice will then be issued, which is payable on receipt. The Fact-Find will also be sent to your e-mail address for an E-Sign.

3. Generate Report

Once the payment has been processed and fact-find signed, Boon Brokers will generate your report. Our current turnaround time for the capacity reports is 1 working day.

Speak to a Specialist

Boon Brokers is a Whole of Market Mortgage, Insurance and Equity Release Brokerage. We provide detailed and comprehensive mortgage capacity reports.

Book your consultation with Boon Brokers today and discuss your mortgage capacity report further.