Withdrawing a mortgage application - what happens??

ladybouf

We have an application for a 5 year fixed rate through a mortgage broker which has begun to seriously concern me. My husband and I jointly own a small percentage of shares in the company which we run and of which we are directors. The lender has done a search on us and is accusing us of owning twice the number of shares we own (ie that we own the % each not jointly) and they are demanding to see the past three years of accounts for the company, plus 6 months of business bank statements. They have been extremely aggressive in all communications. Whilst we have absolutely nothing to hide, this is a private mortgage and nothing to do with the company, our income is entirely salary. I have therefore been reluctant to provide the information, but they now say if we do not provide it they will automatically decline despite the fact that we have ample income to cover the mortgage and are looking to borrow only 40% of the property's value. I am so concerned by their treatment of us that I would now like to withdraw the application and apply elsewhere, but my question is what will happen? Will it go on my record that we have had the mortgage declined even if we withdraw the application? Advice greatly appreciated. (the lender has not had expenses, ie the 'free' valuation has not yet been carried out)

Robert_Sterling

I am an unbiased observer of your situation.
The fact that you are angry at the potential lender for using due diligance when checking your application would discouarge me from lending you money.

opinions4u

ladybouf wrote: »

We have an application for a 5 year fixed rate through a mortgage broker which has begun to seriously concern me. My husband and I jointly own a small percentage of shares in the company which we run and of which we are directors.

What is the percentage? Do your joint shares mean you have effectively have total liability for the total shareholding?

The lender has done a search on us and is accusing us of owning twice the number of shares we own (ie that we own the % each not jointly) and they are demanding to see the past three years of accounts for the company, plus 6 months of business bank statements.

They are effectively treating you as self employed. Because they believe that you own over a certain percentage of the company that provides your income.

As directors and shareholders, you know and understand the state of the firm's finances. You are legally responsible for them too. So why be secretive?

They have been extremely aggressive in all communications. Whilst we have absolutely nothing to hide, this is a private mortgage and nothing to do with the company, our income is entirely salary.

It has everything to do with the company that you part own. This isn't, in the lender's eyes, the same as an employee owning a tiny stake in a plc getting an income reference. They believe you are a substantial shareholder (in my underwriting days for a major lender, 5%+ was considered substantial) in the firm that pays the salary.

I have therefore been reluctant to provide the information

In which case they will be reluctant to lend

but they now say if we do not provide it they will automatically decline despite the fact that we have ample income to cover the mortgage and are looking to borrow only 40% of the property's value.

In fairness to you, this does seem harsh. But if the underwriter suspects that you are trying to withold information he/she feels is relevant, what do you exepect them to do?

I am so concerned by their treatment of us that I would now like to withdraw the application and apply elsewhere, but my question is what will happen? Will it go on my record that we have had the mortgage declined even if we withdraw the application?

No, it will go on record that you withdrew the application.

What percentage of the company do you actually own, and how do you hold shares "jointly"?

I'm fairly sure a half decent broker should be able to get this case through with a reputable lender though.

ladybouf

Robert_Sterling wrote: »

I am an unbiased observer of your situation.
The fact that you are angry at the potential lender for using due diligance when checking your application would discouarge me from lending you money.

I'm not angry, I'm concerned. And I have no problem with them using due diligence, I have a problem with them accusing me of lying - 1) because they refuse to believe we only own 12% not 24% despite us providing written confirmation and 2) because they persist in treating us as self-employed although we are not.

ladybouf

opinions4u wrote: »

What is the percentage? Do your joint shares mean you have effectively have total liability for the total shareholding?

They are effectively treating you as self employed. Because they believe that you own over a certain percentage of the company that provides your income.

As directors and shareholders, you know and understand the state of the firm's finances. You are legally responsible for them too. So why be secretive?

It has everything to do with the company that you part own. This isn't, in the lender's eyes, the same as an employee owning a tiny stake in a plc getting an income reference. They believe you are a substantial shareholder (in my underwriting days for a major lender, 5%+ was considered substantial) in the firm that pays the salary.

In which case they will be reluctant to lend

In fairness to you, this does seem harsh. But if the underwriter suspects that you are trying to withold information he/she feels is relevant, what do you exepect them to do?

No, it will go on record that you withdrew the application.

What percentage of the company do you actually own, and how do you hold shares "jointly"?

I'm fairly sure a half decent broker should be able to get this case through with a reputable lender though.

Thank you for your more constructive answer. I have absolutely no issues with these people wanting all the available information on us, as I said we have nothing to hide. What is distressing for us is that they have 'unearthed' entirely incorrect information. My husband and I own 12% jointly, and they refuse to believe we do not own 24% jointly, despite us proving written confirmation of the exact share breakdown which adds up to 100%! Also they are persisting in treating us as self-employed and have repeatedly asked us to provide self-employed SA forms although we have repeatedly reminded them we are not self-employed. I have not spoken to the lender directly as we are using a broker, but the broker has told me he intends to lodge an official complaint against the handler - this doesn't help my situation though and has me concerned that whatever is going on between them is going to affect my outcome.

opinions4u

ladybouf wrote: »

I'm not angry, I'm concerned. And I have no problem with them using due diligence, I have a problem with them accusing me of lying - 1) because they refuse to believe we only own 12% not 24% despite us providing written confirmation and 2) because they persist in treating us as self-employed although we are not.

You are a significant shareholder in the company.

You are a director in the company.

You could quite conceivably be making decisions to pay yourself a salary out of capital at a time when the business is trading at a loss. Show them the accounts unless you are trying to hide something.

I think the lender is behaving responsibly.

ladybouf

opinions4u wrote: »

You are a significant shareholder in the company.

You are a director in the company.

You could quite conceivably be making decisions to pay yourself a salary out of capital at a time when the business is trading at a loss. Show them the accounts unless you are trying to hide something.

I think the lender is behaving responsibly.

Thank you, I can really see your point. I suppose I didn't really explain myself properly but I have been concerned that somehow providing the information would implicate the company in the responsibility of the mortgage, something I have no authority to do. It helps to see things your way. However it doesn't change the fact that they are refusing to believe our shareholding, something I don't really know what to do about.

Trollfever

through a mortgage broker

Have you discussed these issues with your broker?

ladybouf

Trollfever wrote: »

Have you discussed these issues with your broker?

Yes, he feels the situation has been badly and aggressively handled and called me on Friday afternoon to say he was lodging an official complaint against the case handler. The handler has apparently repeatedly refused to transfer the broker to his supervisor.

silvercar

Clearly your future income is dependent on the performance of the company, which is why the lender wants to see company accounts before making their decision to lend.

I was in a similar situation and was happy to provide details of accountant, 3 years of accounts and bank statements. I thought this was entirely reasonable.

While it is clear to me that your status is set as employees of the company (for tax and other reasons), it is just as obvious to me that your future income is dependent on the company. It is therefore entirely reasonable for the lender to look into the company. Firstly because your future ability to pay the mortgage depends on the outlook for the company and secondly because it is very easy for people employed by their own company to manipulate (in a totally legal way) their income to suit themselves.

It is your choice to withdraw the application. I doubt one withdrawn application on your credit record would be damaging- it would look like you had found a better deal elsewhere or that you didn't proceed with a purchase.

I would fully expect another lender to take the same view, so I don't see that you gain.

ladybouf

silvercar wrote: »

Clearly your future income is dependent on the performance of the company, which is why the lender wants to see company accounts before making their decision to lend.

I was in a similar situation and was happy to provide details of accountant, 3 years of accounts and bank statements. I thought this was entirely reasonable.

While it is clear to me that your status is set as employees of the company (for tax and other reasons), it is just as obvious to me that your future income is dependent on the company. It is therefore entirely reasonable for the lender to look into the company. Firstly because your future ability to pay the mortgage depends on the outlook for the company and secondly because it is very easy for people employed by their own company to manipulate (in a totally legal way) their income to suit themselves.

It is your choice to withdraw the application. I doubt one withdrawn application on your credit record would be damaging- it would look like you had found a better deal elsewhere or that you didn't proceed with a purchase.

I would fully expect another lender to take the same view, so I don't see that you gain.

Thanks, silvercar, it is really helping to see other people's points of view on this - my concern was that it in someway implied the company was responsible for the mortgage by providing this information. Simply looking into the company's performance as a basis for our income is of course reasonable and I have no problem with providing that information, we are proud of how the business is doing! It all seems to have got a bit out of hand because I didn't understand why they wanted to see the information. I'm a designer, I'm not good with financial matters!