Failed mortgage application for £300k with a 5% deposit - help!
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Writerillbe
Posts: 6 Forumite
Hello,
My partner and I filed an application to the Post Office through a broker for a £300k mortgage (for a £315000 house) with a 5% deposit (£16-17k).! Our broker advised us that we met all of their criteria and we had the mortgage in principle agreed.
However we failed the application at the underwriter stage on our 'credit scores'. Our broker submitted an appeal as she couldn't fathom why they had failed us - our credit scores are good (on the verge of excellent) and excellent, which meets their criteria. But the appeal was not upheld because we were too 'high risk' - no further information provided.
We're trying with another lender now (Accord) with which we have easily secured a decision in principle, as we did the first time around. However, we've obviously had our confidence knocked following the rejection, and we're gritting our teeth in preparation for another. So hoping you lovely people could help with:
- advice from those who have been in a similar situation with a 5% deposit and max borrow amount of their income multiple?
- if this next lender rejects us what is the next step?
- how many lenders could we conceivably apply to without causing ourselves too much damage?
- are there any lenders anyone would recommend in this situation?
To give you some background, I earn £29k and my partner earns £38k but he breaks £50k each year in overtime. So we have an income of £67k-£79k depending on whether you take his overtime into account. And the amount we're borrowing is towards the top end of what we are allowed based on our income multiple. Neither of us have anything damaging on our record, but he did have a default on his credit card which was removed by the lender in 2014/15 because of the circumstances. This was as a result of two missed credit card payments in 2012 and now he holds an excellent score. And with mortgage payments of around £1, 500 we will still have around £400 disposable (without taking his overtime into account and which he always has every month without fail), and after accounting for all bills, food and regular outgoings such as the gym. We have also been paying rent and another mortgage for the past six months (combined cost of £1225) without any problems.
Any advice would be much appreciated!
My partner and I filed an application to the Post Office through a broker for a £300k mortgage (for a £315000 house) with a 5% deposit (£16-17k).! Our broker advised us that we met all of their criteria and we had the mortgage in principle agreed.
However we failed the application at the underwriter stage on our 'credit scores'. Our broker submitted an appeal as she couldn't fathom why they had failed us - our credit scores are good (on the verge of excellent) and excellent, which meets their criteria. But the appeal was not upheld because we were too 'high risk' - no further information provided.
We're trying with another lender now (Accord) with which we have easily secured a decision in principle, as we did the first time around. However, we've obviously had our confidence knocked following the rejection, and we're gritting our teeth in preparation for another. So hoping you lovely people could help with:
- advice from those who have been in a similar situation with a 5% deposit and max borrow amount of their income multiple?
- if this next lender rejects us what is the next step?
- how many lenders could we conceivably apply to without causing ourselves too much damage?
- are there any lenders anyone would recommend in this situation?
To give you some background, I earn £29k and my partner earns £38k but he breaks £50k each year in overtime. So we have an income of £67k-£79k depending on whether you take his overtime into account. And the amount we're borrowing is towards the top end of what we are allowed based on our income multiple. Neither of us have anything damaging on our record, but he did have a default on his credit card which was removed by the lender in 2014/15 because of the circumstances. This was as a result of two missed credit card payments in 2012 and now he holds an excellent score. And with mortgage payments of around £1, 500 we will still have around £400 disposable (without taking his overtime into account and which he always has every month without fail), and after accounting for all bills, food and regular outgoings such as the gym. We have also been paying rent and another mortgage for the past six months (combined cost of £1225) without any problems.
Any advice would be much appreciated!
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Comments
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Is the "other" owned property being sold?0
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Yes, but there is no equity in it. Product of the house price crash.0
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Your broker is best placed to assist you, and the decision from The Post Office does not affect the view from Accord.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
combined income of £4,400-£5,000
£1500 going out on mortgage £400 spare on the lower amount
Your list of spends must look very generous at £2,500pm.
Maybe there is stuff in there that is causing the underwriter to think hard about lending to you.0 -
No clue as to what that 'stuff' might be? I.e any examples?0
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show us the list.
edit :
eg if you do the normal stuff
£200 council tax
£100 bills
£50 internet/phone
£20 mobiles
£250 food
£200 running costs for 2 cars
£150 fuel
£1k more than covers most peoples run of the mill stuff.......0 -
Writerillbe wrote: »No clue as to what that 'stuff' might be? I.e any examples?
What are you spending £2,500 a month on?
Do you have debts, car finance agreements, expensive gym memberships or other contracts?
All this will be taken into account, and if they think you'll come unstuck from a period of your income dropping even temporarily then they are going to be concerned what it means for them.
I don't know much about what specific lenders actually think in terms of mortgages, but £400 a month disposable income compared to a £1,500 a month mortgage doesn't look to me to be a lot of wiggle room. How will you cope if/when the interest rate on the mortgage rises?0 -
Sorry, I've got it wrong! My partner does the budget planning and I've misinterpreted what he said - will try and edit the post.
We have £626 disposable, £1,026 without savings. This doesn't take include what we spend monthly on holidays (£50), entertainment i.e meals out etc (£400), as all of that has been factored into the budget - so £1026 is what we have left over after that. We both have car loans and mobile phone contracts, but again all of these items have been factored into the budget. We've even accounted £60pm for dog food, which did make our broker giggle 😂0 -
*****amended*****
We have £626 disposable, £1,026 including savings. This does not include what we spend on holidays, eating out and other entertainment as all of that has been factored into the budget. At the moment we're putting the £1,026 into savings for moving.0 -
Is that REALLY what you have left each month or just what the piece of paper tells you?
If you really have £1000 left every month after everything (incuding holidays and all of your entertainment), why are you only putting £400 in savings?0
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