What are the likely reasons for a mortgage to be refused?

smiddy_2

Guys, bit of an open question but just wondered what would cause a mortgage application to be refused? I am due to apply for one on Friday, i had one agreed in principle but recently found one £3k cheaper over the 5 year fixed period. They ask for 2 years accounts plus one year prediction for income (which i have) and a quick check of their mortgage calculator says i can borrow £176k, when i am only applying for £150k. Never been bankrupt, never missed a loan payment (infact i paid both the loans i had off early) but is there anything else that could prevent me getting it? The mortgage is with Accord.

CloudCuckooLand

Nationality.
Typo when using their mortgage calculator.
Defaults on credit history, of a minor nature like mobile phone company etc.
Insufficient credit history.
They might decide they need 3 years accounts.
Financial association with someone with poor credit history.
Valuation of target property.

Probably lots more.

smiddy_2

CloudCuckooLand wrote: »

Nationality.
Typo when using their mortgage calculator.
Defaults on credit history, of a minor nature like mobile phone company etc.
Insufficient credit history.
They might decide they need 3 years accounts.
Financial association with someone with poor credit history.
Valuation of target property.

Probably lots more.

Ok, born and lived in England all my life.
Double checked all details were correct when using the calculator.
No defaults at all on credit history.
Two loans and a mobile phone contract for the last 10 years (is this enough?)
No connection with any person with bad credit history.
I double checked and they require 2 years accounts and a years projection (which i have).
Offer accepted at £210k, Zoopla estimates it at £245k and most houses round there go for around £240k.
No dependents, no loan/card payments to make.

The only thing that worries me is that my accounts are £29k Y1, £42K Y2 and projected £55k Y3. Single applicant borrowing £150k with £60k deposit.

Basically i am a FTB and worrying something will go wrong, i have got an absolute bargain of a house and dont want to loose it. Does it look like the criteria will be ok?

VIGILANT22

smiddy

I find it hard to believe Accord would offer you the amount you require...recently they've been lending 2.5/3 x salary..

smiddy_2

Really? Thats not good news. Do i go with the MIP with Chelsea? Or do i try it? If it is rejected can i kiss goodbye to this house or is it not the end?

On a side note i have just checked my credit score and it was 999 on a scale of 999 so thats certainly a weight of my shoulders.

Thrugelmir

Simply put, you fail to meet the lenders criteria for the mortgage product you are applying for. Ask questions before proceeding to far.

smiddy_2

Thrugelmir wrote: »

Simply put, you fail to meet the lenders criteria for the mortgage product you are applying for. Ask questions before proceeding to far.

Ok why do i not meet the criteria? Sorry for sounding clueless but this is my first venture into the world of mortgages! Also what sort of questions?

HelpWhereIcan

smiddy wrote: »

Ok why do i not meet the criteria? Sorry for sounding clueless but this is my first venture into the world of mortgages! Also what sort of questions?

No quick answer to that. There isn't one really if you have no adverse credit history and is often best thought of as you don't fit the overall profile of the type of client they are currently looking for. No need to take it personally and move on to the next lender who will.

The fact that you are looking at Accord would normally suggest that you are using a broker as that is the Yorkshire Building Society's intermediary lender. If so, the easiest way to check is to ask your broker what the position with Accord is.

Accord should allow for the projection for year 3

http://www.accordmortgages.com/information/criteria.html

The minimum trading period is 2 years.
Accountants letter from a recognised accountant confirming turnover & net profits and applicant’s share of net profits for the last 3 years or 2 years plus a projection if the business has been established for less than 3 years.

but they are much less flexible than they used to be so best to ensure your broker has an agreement in principle from them.

Even if they won't do it I am sure that others will and I would set your broker to work securing your offer.

smiddy_2

So......let me get this straight, having a perfect credit score is not good for a mortgage?!!

I would not be applying for it if Accord did not ask for more than the wage proof i had. I am not sure i understand what is being said here.

To clarify - Accord require two years accounts plus one year projection. I meet this criteria. I will get my broker to get an AIP today. Would getting a second AIP harm my credit score?

Guys all this is really starting to worry me now. I do have this Chelsea AIP but it is £3k more over 5 years. TBH this is nothing as the house was already a bargain and it really is the stuff of dreams. I do not want to loose it. Do i just scrap the Accord idea and go with the more expensive (but AIP) to better the chances?

Can i apply for both and see what happens or is this a bad idea?

MisterEz

smiddy wrote: »

So......let me get this straight, having a perfect credit score is not good for a mortgage?!!

I would not be applying for it if Accord did not ask for more than the wage proof i had. I am not sure i understand what is being said here.

To clarify - Accord require two years accounts plus one year projection. I meet this criteria. I will get my broker to get an AIP today. Would getting a second AIP harm my credit score?

Guys all this is really starting to worry me now. I do have this Chelsea AIP but it is £3k more over 5 years. TBH this is nothing as the house was already a bargain and it really is the stuff of dreams. I do not want to loose it. Do i just scrap the Accord idea and go with the more expensive (but AIP) to better the chances?

Can i apply for both and see what happens or is this a bad idea?

I'm sorry I can't help you out with most of your questions, but I would suggest that applying for two mortgages on the same property is a very very bad idea...

The best thing you can do is speak to your broker, or find one if you're not currently using one - let them find then best mortgage that suits your situation & then apply for that mortgage only.

HelpWhereIcan

smiddy wrote: »

So......let me get this straight, having a perfect credit score is not good for a mortgage?!!

Not in the sense that you mean it. Lenders are under no obligation to lend any amount or even accept you as a customer.

You may have a 'perfect' credit history - no missed payments etc - but you do not have a single credit score that applies to all lenders.

Each lender has their own 'scoresheet'. You score points for literally every answer you give on the application form.

Length of time in employment and address (longer the better the score) are obvious ones, but lenders will also look at more obscure things to allow them to target the customer profile they want e.g. some will score certain postcodes higher than others, target a particular income bracket, occupation class, prefer existing customers etc etc.

They do not vary massively but they do vary which is why someone with a perfect credit history will fail with one lender and pass with another.

At the end the lender uses the information from your credit file, national hunter etc to either add to or take away from your score. If the combined final score is above the 'pass mark' you will get through.

Obviously it is not that simple but you get the idea.

smiddy wrote: »

Guys all this is really starting to worry me now. I do have this Chelsea AIP but it is £3k more over 5 years. TBH this is nothing as the house was already a bargain and it really is the stuff of dreams. I do not want to loose it. Do i just scrap the Accord idea and go with the more expensive (but AIP) to better the chances?

Can i apply for both and see what happens or is this a bad idea? .

We do not know enough about your situation to say definitively but just 2 AIPs should not adversely affect you.

The one in the know really will be the broker you are using. If they have reccommended Accord they will have taken into account their own opinion of your overall chances. A case of let them do what they do best and see how it goes really.