Any broker/underwriter prepared to comment please?

moatmeister

I have a good income and i believe a reasonable credit rating with no ccjs etc, but 1 missed payment last feb due to bank error on a loan which was paid the next day by debit card.

I have 3 outstanding personal loans with mainstream lenders totalling about £25k all generally running well apart from the missed payment above.

Want to apply for a mortgage to buy a property for £295k very soon. Looking at a 70% loan. Have £100k, £90k as a cash deposit and £10k for upfront costs. Its just enough, not much spare. Possibly have access to a bit more if necessary but assuming affordability is ok, I need specific advice on whether I should use some of the cash to pay off the personal loans before applying (which would then possibly mean a bigger mortgage with a higher LTV) and maybe boost my credit rating, or save the cash, keep the loans running which are being paid ok and put down a larger deposit with a lower LTV (with the personal loans still running in the background) These would be then settled fully when a building plot gets sold. Obviously a larger deposit and less borrowing would be more favourable to the lender but I feel I would rather keep the loans running and have more ready cash for unforeseen costs in the short term as there will no doubt be some immeadiate building work required by the mortgage company.

What I want to know is in these circumstances how much will keeping the loans affect the chances of being granted the full mortgage package? and how much weighting do the mortgage lenders put on the credit report as part of the overall decision?

Over to you Conrad, Mrs Bumble et al..................

_Andy_

What is your gross annual income?

castle96

and the monthly cost/ o/s term of each loan

moatmeister

Loan 1 10k/3 yrs £316 month £7583 o/s balance 24mths to run
Loan 2 10k/3 years £345 month£9314 o/s balance 24mths to run
Loan 3 8k/5yrs £186/ month £8953 o/s balance 48mths to run

Income £40k
Joint income 50k
Thanks.

moatmeister

This application, whilst genuine, may not look the most attractive to lenders (Self Cerification, run down albeit slightly down valued property in need of renovation, some structural problems, Likelyhood of a retention, Already high 70% LTV) so I want to maximise the chances of getting it without necessarily compromising my short term cash flow. Its not really about apr's etc in the short term.
I have access to a private "off the books" loan of a further 30k from a friend if I need it but would rather not go down this road at this stage unless absolutely necessary so if the loans will not be loked on unfavourably, I would prefer to keep them for now, however common sense tells me they would be better off gone. Its just that this underwriting thing seems to be all a bit of a black art and not an exact science!

luckyfool

You want Self Certification as well?

This looks pretty marginal, and unless the mortgage lenders valuer confirmed the property as being inhabitable from day 1 then they could hold a full retention.

Are your jobs employed/self employed? What is it you do? You will find lenders are much more sceptical of self cert applications these days and will dig into why you want/need self cert, and really so should your broker as well.

moatmeister

wife is self employed with 3 years accounts but low income. She is also Director of limited company established 1 year which employs me (and others) with much higher income, but only one years non audited trading accounts. all above board but no track record. Personal loans used to set up business for working capital etc cos our bank didnt want to know at the time.

Mrs_Bumble

Your loan repayments will deduct over £10K a year from any affordability calculation. making joint income £30K, the level of lending that you are looking for is not supported by this level of income. Get a bigger deposit saved and your loans cleared.