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  • FIRST POST
    • Writerillbe
    • By Writerillbe 3rd Aug 17, 8:32 PM
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    Writerillbe
    Failed mortgage application for £300k with a 5% deposit - help!
    • #1
    • 3rd Aug 17, 8:32 PM
    Failed mortgage application for £300k with a 5% deposit - help! 3rd Aug 17 at 8:32 PM
    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!
Page 1
    • Thrugelmir
    • By Thrugelmir 3rd Aug 17, 9:21 PM
    • 55,160 Posts
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    Thrugelmir
    • #2
    • 3rd Aug 17, 9:21 PM
    • #2
    • 3rd Aug 17, 9:21 PM
    Is the "other" owned property being sold?
    ď ďBull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.Ē Sir John Marks Templeton
    • Writerillbe
    • By Writerillbe 3rd Aug 17, 9:32 PM
    • 6 Posts
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    Writerillbe
    • #3
    • 3rd Aug 17, 9:32 PM
    • #3
    • 3rd Aug 17, 9:32 PM
    Yes, but there is no equity in it. Product of the house price crash.
    • amnblog
    • By amnblog 4th Aug 17, 10:48 AM
    • 9,740 Posts
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    amnblog
    • #4
    • 4th Aug 17, 10:48 AM
    • #4
    • 4th Aug 17, 10:48 AM
    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.
    • getmore4less
    • By getmore4less 4th Aug 17, 11:08 AM
    • 29,763 Posts
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    getmore4less
    • #5
    • 4th Aug 17, 11:08 AM
    • #5
    • 4th Aug 17, 11:08 AM
    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.
    • Writerillbe
    • By Writerillbe 4th Aug 17, 11:12 AM
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    Writerillbe
    • #6
    • 4th Aug 17, 11:12 AM
    • #6
    • 4th Aug 17, 11:12 AM
    No clue as to what that 'stuff' might be? I.e any examples?
    • getmore4less
    • By getmore4less 4th Aug 17, 11:14 AM
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    getmore4less
    • #7
    • 4th Aug 17, 11:14 AM
    • #7
    • 4th Aug 17, 11:14 AM
    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.......
    Last edited by getmore4less; 04-08-2017 at 11:20 AM.
    • SeduLOUs
    • By SeduLOUs 4th Aug 17, 11:17 AM
    • 2,073 Posts
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    SeduLOUs
    • #8
    • 4th Aug 17, 11:17 AM
    • #8
    • 4th Aug 17, 11:17 AM
    No clue as to what that 'stuff' might be? I.e any examples?
    Originally posted by Writerillbe
    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?
    Last edited by SeduLOUs; 04-08-2017 at 11:19 AM.
    • Writerillbe
    • By Writerillbe 4th Aug 17, 11:38 AM
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    Writerillbe
    • #9
    • 4th Aug 17, 11:38 AM
    • #9
    • 4th Aug 17, 11:38 AM
    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 😂
    • Writerillbe
    • By Writerillbe 4th Aug 17, 11:43 AM
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    Writerillbe
    *****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.
    • SeduLOUs
    • By SeduLOUs 4th Aug 17, 11:43 AM
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    SeduLOUs
    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?
    • getmore4less
    • By getmore4less 4th Aug 17, 11:47 AM
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    getmore4less
    Is that with or without the overtime?

    if with then the total on the budget is still £2500pm spending every month.

    how big are those car loans?
    • Writerillbe
    • By Writerillbe 4th Aug 17, 11:52 AM
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    Writerillbe
    We currently put that whole amount (and more) into savings, but when we move we want to put £400 minimum into savings and use the remainder to decorate, possibly actually go on holiday because we haven't been for 3 years due to saving. To be honest we'll probably put more than £400 into savings once we move, but just being conservative about it.

    Also the £1,026 figure is what we have leftover taking the new mortgage into account - we currently have more as paying only £1200 or so for mortgage and rent.

    Sorry for the confusion! ☺️
    • getmore4less
    • By getmore4less 4th Aug 17, 11:57 AM
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    getmore4less
    If you have been saving over £1k for 3 years why only 5% deposit?

    edit: (I keep thinking of new things)
    Also if you have only been renting for 6 months there should be 2.5 years of rent saved up as well.

    How long have you had this other house/mortgage
    Is it sold?
    has it been empty for 6 months
    did you get consent to let at any time
    Last edited by getmore4less; 04-08-2017 at 12:14 PM.
    • SuboJvR
    • By SuboJvR 4th Aug 17, 6:07 PM
    • 343 Posts
    • 238 Thanks
    SuboJvR
    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 😂
    Originally posted by Writerillbe
    I think to better understand where your money is going, you should take a look at it for yourself. It really does sound like it's haemorrhaging out somewhere.
    • Feddylwyr
    • By Feddylwyr 6th Aug 17, 8:43 PM
    • 4 Posts
    • 2 Thanks
    Feddylwyr
    Partner here... All the money goes into savings, we have saved the 5% deposit for a 315k house. The amount of money able to save has increased over the last 3 years due to job changes, getting the other property to sellable standard etc. It is currently at about £800-£1k a month.

    We are paying the mortgage on one house which has been sold (Currently at completion stage) and rent a house in the city (Due to work commute)

    We literally have £400 a month between us for our entertainment, food etc and everything left over goes into the savings hence we've managed to save the 15k (now 20k due to overtime this month) This will cover the deposit and stamp duty.

    The above budget was after we did the affordability because we wanted to be in a position to save at least £400 a month. There should be closer to just over 1k disposable working out the budget if we get the mortgage.

    We just don't understand the refusal. Our broker actually appealed it to no avail being told just high risk.

    Fingers crossed with this company now.
    • getmore4less
    • By getmore4less 6th Aug 17, 9:01 PM
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    getmore4less
    what does the this post purchase SOA look like?

    For £5k pm income there seems to be a lot going out if the plan says only saving £400pm.
    • SuboJvR
    • By SuboJvR 7th Aug 17, 8:48 AM
    • 343 Posts
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    SuboJvR
    Stamp duty is £5750. Then add solicitors fees, arrangement fees, removals if applicable etc. Have you budgeted for this?
    • getmore4less
    • By getmore4less 7th Aug 17, 8:56 AM
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    getmore4less
    I suspect the overall picture is not to good, too much money going out bare minimum savings, commitment to credit(car loans) over saving to buy.


    With the house sold, which seems to have cost you a lot you money and made nothing which is quite hard these days, you should be saving loads soon especially if you give your budget a good overhaul.

    Should be at 10% deposit within 6 months easy.
    • Feddylwyr
    • By Feddylwyr 12th Sep 17, 1:02 PM
    • 4 Posts
    • 2 Thanks
    Feddylwyr
    Well sorry to have been away with work commitments and sorting this out it's been a bit of a roller coaster.

    Think there was some confusion in what we posted. On our affordability we wanted a minimum of £400 a month. We were still left with around £600 disposable after that, the majority of which would have likely been saved, used towards the house etc.

    In any case we got a mortgage. Flew through with Accord with no problems or questions asking for any more information. We have exchanged and are completing on Friday! The process would have been faster if our solicitor (who I wanted to use as he's extremely efficient and was in our sale) was on their panel, but he had dropped off due to inactivity with the lender over the last 12 months.

    Literally just transferred over the stamp duty and final payments to the solicitor and our bank account is looking somewhat lighter.

    Final cost of moving with solicitors stamp duty and deposit was about 24k which we managed through our savings and last.months payment.

    Going forward we have virtually no debt apart from a pair of car loans totalling £300 one of which ends in January.

    It's been a hard couple of years but finally made it and inches away from getting the keys to our dream home.
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