Declined for Mortgage

ohgr

Hi, in a nutshell myself and the wife have now been declined twice for a mortgage (once by HSBC and once by C&G) based on credit scores. Both our credit scores are fine (991-995 out of 999 on Experian), we have no missed payment, ccj’s or defaults. The only issue would seem to be that we are not on the electoral roll (which I have now rectified but it takes a month to register by all accounts). We do have outstanding credit card balances and two loans between us, but the affordability of a mortgage at roughly £700 pcm is totally fine.

We have been turned down on two 90% LTV values, so basically my question is it better to save more for a higher deposit with regard to getting a mortgage or is it better to pay off as much outstanding debt as possible to make us a more attractive proposition assuming there is nothing we can do about the ‘computer says no’ scenario we are in at the moment.

Thanks

Ohgr

Berkshiregirl

The deals out there for 90% ltv require a squeaky clean record, and the fact you're waiting for the electoral roll to update means you're probably best off waiting for a bit.

Be careful about applying to too many places - each time you get a footprint on your credit record, which reduces it - Bank C won't like that you've been turned down by Band A and Bank B!

ohgr

So, in theory if we get to say 80 LTV it might be easier ?

Can you ask/force them to update the roll any quicker ?

Yeah, I realise getting turned down a few times makes your credit score take a nose dive!

Berkshiregirl

Either bringing down your LTV or paying off your existing debts will make you a more attractive proposition - you'd need more expert advice on which is better to do.

Dan_1976

Every month your on the voters roll and not borrowing or having credit checks done adds to you score. I think just moving home knock 200 points off. So I would sit tight for a few months save some more if you can.

Conrad

I think you have answered your own question - yes more deposit will help and yes less debts will help, but impossible to say which will be most beneficial.

Pee

If the affordability is ok at £700pm, what are you paying in rent now? If less, then the balance should be going towards savings so that you are ready once you do get accepted. Also, you need to calculate what would happen if interest rates went back up, at least to 8%, and then make sure you are saving that additional money, too.

pjcox2005

Assuming the interest rate on the loans is higher than that of any savings account (the normal position) then I would assume financially you are better off paying the debt than trying to save as the loans are probably costing you money each month.

luckyfool

Two things that will help your score,

1. Wait till your voters roll is updated, not being on the voters roll can on its own be enough for a lender to decline you at 90% in the current climate

2. Try to juggle what credit you do have and ensure that none of your cards are at or over 50% of their credit limits. That will improve your score.

3. Getting your ltv down to 80% will not get you a higher credit score, but it will mean that you do not need as high a credit score to pass with those lenders. Not only that but it will bring into play much better rates, and other lenders that are less strict on their scoring as well.

ohgr

Pee wrote: »

If the affordability is ok at £700pm, what are you paying in rent now?

Nothing and yes we are very lucky in that respect

gizmo111

Pay off you unsecured debt - it will help and also it will make your own household budget more robust to cope with the transistion from paying zero to full on council tax mortgage utilities etc