turned down for a mortgage??

jax25

last year my partner and i decided to switch mortgage companies, and we were planning to switch from our current lender to alliance and leicester, neither of us had ever had any problems with credit before. have only ever made the odd late payment, no ccjs or anything like that. but we were turned down by them. never bothered to find out why. just stayed with same mortgage company but got a better deal. since were thinking of moving now, and out of curiousity, we both got a copy of our credit records, which had no problems on them. just wondering now why a & l might of turned us down. we have a joint income of around £45000 and about £40000 outstanding on the mortgage but the house is worth around £120000.

any one got any ideas?
also will this affect us applying to a new mortgage company if we do move?

MortgageMamma

Hi there

It is impossible to predict the actual reason why but here are a few ideas

1. You are not on the electoral roll at current address (believe it or not this does happen)

2. You do not have/ have not had lots of credit to build up your credit score, some lenders will even decline someone with a "fair" credit rating

3. Your property was undervalued and did not meet the loan to value ratio (the amount you want to borrow as opposed to the amount your property is worth.

4. There are apparent "material falsehoods" on the application form. i.e. you have not disclosed all your credit on the form

Either way, if your credit rating is fair, good or very good you have a good chance of being accepted by most lenders. If you are not taking invaluable independent advice on your new mortgage (experienced mortgage advisors know about which companies are more lenient and which are not) then the best thing you can do is get a decision in principle from your chosen lender. this is usually done online or over the phone and is basically ashortened application for a mortgage they will credit check you and see if you earn enough to borrow what you are asking for. They then give you an approval or decline to borrow on paper subject to survey and references. It does not constitute an offer of a mortgage, but can be used for your own peace of mind or perhaps to prove to a vendor that you are able to fund the purchase of the property before it is taken off the market.

Good luck, if you want anymore help send me a message

jax25

thanks for that has but my mind at ease, bit worried about applying for a mortgage and getting turned down, so dont know if we should just go for it or stick with current lender?

MortgageMamma

see an independent mortgage advisor they know different lenders lending/underwriting criteria so there will be less chance of you getting turned down. there are thousands of mortgages on the marketplace, all with different criteria and it can be confusing and time consuming going it alone.

Barney088

Credit scores are a funny thing, I set one up for a lender about 10 years ago and they work on a number of things. Typically performance of previous clients and then pigeon hole everyone else. For example of the repossessions this lender had it was more common for single women to be repossedd than single men, when a single woman was repossessed it was more common for them to be buying a flat, rather than a house so, statistically, a single woman buying a flat was more likely to be repossessed than other categories. As such, if you were this type you'd be knocked down a few points and more likely to fail the credit score.

You will never know why the lender failed you, each lender makes their own score up based on their performance. A good broker will understand the credit score system and help you paint a positive picture. As the previous person said completing the application form exactly is one good way to get in. If you've lived at your address for 3 years and 2 months, say that, not just 3 years. Lenders are cynical people and anything that isn't exact will create an impression of someone who is telling "material Falsehoods" (lies to you and me).

Best of luck this time. However, the more credit scores you go for, the less likely you are to get through, lenders would veiw this as someone who can't get credit. If lender A declined you and Lender B said no, Lender C will be scared and may well just say no to jump on the band waggon.

kenshaz

see martins article on mortgages