Turned down for re-mortgage

Frugal_Fox

I'd like some advice please!!!

We currently have a mortgage of £95,000 with Halifax, and are looking to clear off a second charge we have on our property with Black Horse - round about £8,000. We've also decided to clear off 2 other credit commitments with the re-mortgage totaling £4000. We are also looking to do some home-improvements - which we estimate will cost £8000 (building in a small contingency fund also). So are looking to borrow £115,000

According to several 'affordability calculators' our income means we 'could' obtain a mortgage of up to £140,000. Our house is worth £142,000 so we are going for about 81% loan to value.

We have just been turned down by Nationwide as 'definate no' on the basis of our credit score - not even a referral!

We want to remortgage to enable us to do some improvements to the house - not hugely big plans, and to take the mortgage ideally over 20 years. Doing this would reduce our monthly outgoings by £750/month - of which we'd use a big proportion on overpaying the mortgage to hopefully clear it down sooner - and to finish paying off the other small debt - mainly overdraft (see signature!) We are aware that consolidating the existing debt on to the mortgage could mean we pay back more than at present - but hope that the overpaying negates this.

I've applied for my credit file from Experian & Equifax (using Martins freebie method) and nothing seems to obviously jump out. There are no defaults, can't see anything bad from Lloyds TSB - who have agreed to settle my claim for unfair bank charges (thanks to another thread here). There have been 14 late payments over 11 accounts over the last 12 months (6 of which are in the last 6 months) - actually reading that possible tells me all I need to know!

Actually I think I have answered my own question!!

However -
Was Nationwide the right one to approach? We particularly would like to be with a building society rather than a bank.

Should we wait a few months before applying again?

What should I be looking for on the credit report?

I am paying more on time now - and have less creditors - have though spotted a couple of accounts not showing as 'settled' on my file - will ensure this is rectified.

Can you think of anything else?

Any help gratefully received.

FF
x

regularsaver1

can i just ask if black horse have given you the £8000 as a settlement figure or whether there are penalties on top?

any reason why you haven't gone back to present lender for a further advance?

Frugal_Fox

There are no penalties on top of Black Horse - the settlement figure is around £7980.

Halifax will not allow us to re-mortgage with them as they do not accept my source of income! With them we could get a mortgage of £77000 !

regularsaver1

what is the source of income if you don't mind saying - as OP's might be able to point you in the direction of who do

Frugal_Fox

My source of income is an adoption allowance - paid fortnightly by the adoption agency.

AndrewSmith

Frugal_Fox wrote:

According to several 'affordability calculators' our income means we 'could' obtain a mortgage of up to £140,000. Our house is worth £142,000 so we are going for about 81% loan to value.

These calculators whilst useful take no consideration of personal circumstances or credit score/status. As such, are sometimes wildly optomistic and can create false hope.

I've applied for my credit file from Experian & Equifax (using Martins freebie method) and nothing seems to obviously jump out. There are no defaults, can't see anything bad from Lloyds TSB - who have agreed to settle my claim for unfair bank charges (thanks to another thread here). There have been 14 late payments over 11 accounts over the last 12 months (6 of which are in the last 6 months) - actually reading that possible tells me all I need to know!

With this level of missed payments I think you may have difficulty with many lenders.

However -
Was Nationwide the right one to approach? We particularly would like to be with a building society rather than a bank.

Should we wait a few months before applying again?

Knowing what you know now about your credit file then no, Nationwide were not the most appropriate lender to approach. I don't think that you will be afforded the luxury of having a vast choice of which lender you are going to 'choose'.

As for what you do next really depends on you. How much do you need to re-mortgage? Could you possibly do without the home improvements and simply look at reducing your outgoings by consolidating first? This could possibly allow you to clear off the accounts that you have had trouble paying and give you, say, a year of clean payment history before borrowing for home improvements.

This way, if you do have to take the re-mortgage initially at a higher rate due to your credit score you are not paying ove the odds for the home improvement element. After the first year of clean payments you could then possibly look at switching to a lower rate.

Before I am jumped all over by the 'usual' crowd who are always trying to discredit the brokers on this site I must point out that this is simply a suggestion that you should look into. Without knowing specifics or amounts etc then it is difficult to be precise.

As my signature suggests, please do not treat this as 'financial advice'.

Hope this helps

Andy

regularsaver1

mmmmmm i think ive seen this before in halifax (adoption allowance)- but may have changed

i remember seeing a customer that fostered once and that income was used, as well as tax credits

AndrewSmith

Adoption allowance is sometimes acceptable but under certain terms and conditions. I placed a case last year for a couple who in receipt of adoption allowance and tax credits.

That one went with the Northern Rock, however with this many missed payments in 12 months I doubt that they would look at the case.

Frugal_Fox

Halifax - and many other lenders view adoption payments and fostering payments very differently. Most will recognise fostering payments but not adoption.

AndrewSmith

Even if you do have to initially go with a lender who is outside of the 'usual' high street names, whatever you do make sure that you do not go to a 'specialist' broker. You know the ones, they advertise on daytime TV offering magical solutions to any mortgage problem.

These companies will charge you broker fees sometimes in excess of 3.5% of the loan and have access normally to a very restricted panel of lenders, and can offer nothing that can come close to the service offered by a fees free regular broker.

Hope this helps

Andy

Frugal_Fox

Andy,

Thanks for your comments. I have to say I initially looked over my credit file and couldn't 'see' the problem. However after counting up the late payments I'm seeing it very differently! I continued to post - because sometimes a fresh eye can give another perspective!

The home-improvements are not essential, and I am happy to wait for these. The re-mortgage itself is not essential either - however, when we took out our mortgage we took it over a short term and so we pay nearly £900. Due to the change in circumstances I would like to bring this down, and I thought re-mortgaging would be an idea (not now!). Halifax are not prepared to negotiate the term of the mortgage as according to their criteria we couldn't get a mortgage to the same value as in there eyes I have no income!

I'm wary about consolidating the loans 'as is' as I'm not sure how easy it would be to secure a 'consolidation loan' which would probably be secured to the house when we already have the mortgage and the Black Horse charge on the property - even though we intend to repay the Black Horse charge.

Not really sure where I go from here - except to make sure all payments over the next 6 months hit the relevant creditors on time to try to repair some of the damage.