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  • FIRST POST
    • ndf9876
    • By ndf9876 13th Mar 17, 1:30 PM
    • 60Posts
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    ndf9876
    Opinions on potential mortgage application
    • #1
    • 13th Mar 17, 1:30 PM
    Opinions on potential mortgage application 13th Mar 17 at 1:30 PM
    Afternoon all

    I'm after a bit of unofficial advice on my situation; my girlfriend and I are hoping to apply for a mortgage in September this year, but we're worried we won't get accepted anywhere (and I'll explain this in a minute).

    So it'd be a joint application, I earn £55k, partner £23k. This will, we hope, change imminently as our salary reviews are due - but not by masses.

    All being well, at the time I apply for the mortgage, I will have a balance of around £2k on a card with a £4k limit. I repay this at around £300/month to try and blast it. No other credit (apart from a £300 overdraft I do not use). I had two late payments (a '1' on my credit file) on this card, from 2015. For what it's worth, I was moving house, didn't have a DD set up and - yep, stupid boy - the bills went to the old address.

    Partner has a balance of £400 on a Next credit account with a £5k limit. She has a £250 overdraft but again, not used. One late payment on this for her from early 2016 (a '1' on her file) because she forgot to pay the bill.

    She has a son who lives with us - we pay £150/month childcare for things like after-school club and breakfast club.

    We don't live lavish lifestyles, exotic holidays or cars that are expensive to insure and maintain. We shop very nicely at Aldi, and we're well aware that we'll need to pay close attention to our bank statements from now on.

    So, what's the catch? I had about 6 payday loans in 2016, with the last one taken in August and repaid in September (all on time, no problems.). I had 4 in 2015, too.

    We applied for a mortgage in September 2016 and were - unsurprisingly - declined, even by Precise. Since then I've worked my noodles off to repay debt and get money saved.

    We're realistically going to be looking at a 92% mortgage based on a purchase price of £340k. I save a lot of money (£1300) every month - and I should say that using savings to repay the credit card is not an option at all (unless I want to find myself single again).

    Given all the above, does anyone have any opinion or thoughts on whether or not we'll be able to get a mortgage? If we have to wait then fine - we'd rather not, but if that's the only option then so be it. My thoughts are that, if anything will sink the application, it'll be the presence of PDLs on my file.

    For what it's worth, my credit "scores" (and I know full well what they mean - or rather, what they don't) are all on the Good / Excellent scale.

    Thanks in advance for any frank, honest advice or opinions anyone has - we're honestly screwing ourselves in knots over this.
    Last edited by ndf9876; 13-03-2017 at 1:49 PM. Reason: Correcting spelling which made some of the information misleading
Page 1
    • spadoosh
    • By spadoosh 13th Mar 17, 1:40 PM
    • 4,098 Posts
    • 5,228 Thanks
    spadoosh
    • #2
    • 13th Mar 17, 1:40 PM
    • #2
    • 13th Mar 17, 1:40 PM
    Really you should be quite attractive to a lender. It seems you do pay but can get behind and dont mind paying higher interest rates. I would assume the problems with your applications are solely down to affordability. Put simply there isnt going to be many lenders out there willing to lend you the amount you want.

    Your top end of the mortgage calculators without any consideration in to expenses (the child will be a big one).

    Think you either need to save longer or reduce your expectations on the property.
    Don't be angry!
    • ndf9876
    • By ndf9876 13th Mar 17, 1:52 PM
    • 60 Posts
    • 33 Thanks
    ndf9876
    • #3
    • 13th Mar 17, 1:52 PM
    • #3
    • 13th Mar 17, 1:52 PM
    @spadoosh - the decline in September 2016 was, we were told, down to the payday loans. I've not touched them since, and would never, EVER touch high-cost, short-term borrowing with a bargepole ever again.
    • spadoosh
    • By spadoosh 13th Mar 17, 2:07 PM
    • 4,098 Posts
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    spadoosh
    • #4
    • 13th Mar 17, 2:07 PM
    • #4
    • 13th Mar 17, 2:07 PM
    Through a broker?

    I see your pitfalls as

    1. Your above the top end of how much you can borrow.
    2. Your affordability isnt hitting the right buttons (children, payday loans, saving, credit cards, available credit)
    3. Youve had payday loans.

    A few missed payments doesnt normally get rejected mortgages, using payday loans doesnt normally lead to rejecting mortgages providing you can afford the mortgage. They mightve done solely for the payday loans but think it mightve been the culmination of a few.

    You should be able to apply again fairly soon by the sounds of it then. Although i would want to be near certain i would be accepted and that would mean painting myself in the best possible light. Little/no debts, decent banking record, healthy deposit and affordable property.

    Just be wary of putting yourself in a vulnerable position for the sake of rushing in to a house. Houses will still be for sale in a few years your ability to buy/move/afford a house might not.
    Don't be angry!
    • ndf9876
    • By ndf9876 13th Mar 17, 8:06 PM
    • 60 Posts
    • 33 Thanks
    ndf9876
    • #5
    • 13th Mar 17, 8:06 PM
    • #5
    • 13th Mar 17, 8:06 PM
    Yep, so the September 2016 rejection was through a broker - New Build property, offered a few incentives if we used their company. Had an AIP from Woolwich, only to be declined at full app - it was heartbreaking. So we're leaving it a full year to put that well and truly behind us, as well as having a year clear of payday loans, a year of sensible money management and so on.

    I think we're probably going to have a conversation with a broker to see where - if any - improvements can be made. It may well be, as you say, that we need to increase our deposit and / or look at different properties.
    • Thrugelmir
    • By Thrugelmir 13th Mar 17, 8:53 PM
    • 52,430 Posts
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    Thrugelmir
    • #6
    • 13th Mar 17, 8:53 PM
    • #6
    • 13th Mar 17, 8:53 PM
    I doubt that the pay day loans were in isolation. What lenders will factor in is also your previous credit history. Albeit settled. A £300k mortgage is a serious long term commitment. Demonstrating an ability to manage your money well and saving a sizeable deposit will aid your cause considerably. As lenders can profile borrowers very accurately these days.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • ndf9876
    • By ndf9876 15th Mar 17, 2:27 PM
    • 60 Posts
    • 33 Thanks
    ndf9876
    • #7
    • 15th Mar 17, 2:27 PM
    • #7
    • 15th Mar 17, 2:27 PM
    Thanks for the comments - my other half is convinced that my PDLs are going to automatically bar us from any sort of mortgage, despite us actually doing rather well now in terms of banking history / behaviour, debt and deposit. I spoke to a broker who advised getting a DIP to "test the waters" - something I'm not really too keen on, as DIP = credit search = mark on my credit file.

    We're going to keep saving and doing what we're doing, and hope that the one year clear of PDLs is enough to convince a lender that we're a safe bet.
    • kingstreet
    • By kingstreet 15th Mar 17, 2:50 PM
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    kingstreet
    • #8
    • 15th Mar 17, 2:50 PM
    • #8
    • 15th Mar 17, 2:50 PM
    Some lenders don't care about PDL activity as long as it's not current. There are some lenders you would avoid as a matter of course but you should have plenty of options.

    Presumably you are not now trying to combine a LTV of 90%+ with a newbuild and cash incentives?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, 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. Please do not send PMs asking for one-to-one-advice, or representation.
    • ndf9876
    • By ndf9876 15th Mar 17, 3:04 PM
    • 60 Posts
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    ndf9876
    • #9
    • 15th Mar 17, 3:04 PM
    • #9
    • 15th Mar 17, 3:04 PM
    @kingstreet - you are correct. Our thoughts are, currently, that we'd like to go in on a conventional house, no New Builds and no incentives. The only 'incentive' is the offer of a cash gift from my girlfriend's parents to pay our Stamp Duty for us.

    We had thought of trying for an LTV of around 92% (I am projecting the amount I save each month against an estimated property price based on area). Of course, things may change, and right now we honestly have no clue if this is even feasible - I am getting the sense it won't be, which is fine - I'd rather wait and save an extra 6 months, go in at 89.99% LTV and get accepted than 92% and declined.

    I guess my frustration is that nobody is able or willing to give me a straight answer (not from these boards, where the advice is genuinely valuable - I'm talking about banks and brokers we've approached). It all seems a bit woolly - too woolly for me. I don't know if I'm being unrealistic, but I want someone with a bit of gumption to say to me "Avoid X, Y and Z because you took out 6 payday loans in 2016. A, B and C will more than likely lend you the money you need based on my past dealings with them. But you need to save up £X deposit first".
    • kingstreet
    • By kingstreet 15th Mar 17, 3:17 PM
    • 30,889 Posts
    • 16,458 Thanks
    kingstreet
    I want someone with a bit of gumption to say to me "Avoid X, Y and Z because you took out 6 payday loans in 2016. A, B and C will more than likely lend you the money you need based on my past dealings with them. But you need to save up £X deposit first".
    Originally posted by ndf9876
    You are unlikely to find a broker willing to do that until you are prepared to commit to using them. No-one likes to hand their experience and knowledge over on a plate without some certainty you won't just say thanks very much and go direct.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, 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. Please do not send PMs asking for one-to-one-advice, or representation.
    • davidwood123
    • By davidwood123 15th Mar 17, 3:20 PM
    • 60 Posts
    • 122 Thanks
    davidwood123
    ''We're realistically going to be looking at a 92% mortgage based on a purchase price of £340k. I save a lot of money (£1300) every month - and I should say that using savings to repay the credit card is not an option at all (unless I want to find myself single again).''

    Not sure I understand this. You earn and save the money.......it's yours! (unless your other half is matching the £1300 and thats the minimum you've both set yourselves)
    • ndf9876
    • By ndf9876 15th Mar 17, 3:23 PM
    • 60 Posts
    • 33 Thanks
    ndf9876
    Fair comment - and of course, completely understandable. What I want to ultimately avoid is another declined application, when with the right advice, the decline could be avoided. Even if it's just a case of saving more cash.

    To be honest, if I found a broker that steered me in the right direction, they'd get my business. What I might do is ring a couple up, explain my situation and see what kind of guidance I get back.

    I have pretty much zero experience in this area, so at this stage, honestly, any advice is golden - and to be clear, I am really grateful for all the comments given here.
    • ndf9876
    • By ndf9876 15th Mar 17, 3:30 PM
    • 60 Posts
    • 33 Thanks
    ndf9876
    ''We're realistically going to be looking at a 92% mortgage based on a purchase price of £340k. I save a lot of money (£1300) every month - and I should say that using savings to repay the credit card is not an option at all (unless I want to find myself single again).''

    Not sure I understand this. You earn and save the money.......it's yours! (unless your other half is matching the £1300 and thats the minimum you've both set yourselves)
    Originally posted by davidwood123
    OK, to clarify this a little. I've held the card for many years, I don't want her to be responsible for the bill I racked up. She doesn't match my savings at all - she earns far less than I do. I've set myself a target of whacking off between £300-£500 per month on that card, which is going to plan right now. I totally see your point, but we talked about it and I was pretty adamant that we save at a certain amount each month, and that she doesn't bear any responsibility over my debt.

    That might paint the picture a little unfairly; she dumped in a lump sum of £5k she had in savings into our joint savings account.

    If we had both enjoyed the use of the credit card then fine, I think I'd feel differently about it.
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