having a mortgage nightmare - advice needed

akc

At the end of October 2010 my wife and I got an agreement in principal from Abbey/Santander for a mortgage of £390,000 on a property worth £490,000 with us putting in £100, 000.

The house we want to buy is a new build and was due to be completed at the end of February but the bad weather in December delayed the build and we are now being told mid April.

We sold our old house in mid Jan and went to full application with Abbey/Santander a couple of weeks later. We were declined. No reason given and the broker told us to look at our credit reports. Now, when we got the agreement in principal we both had maxxed credit cards and a couple of loans each. After we sold the house we payed off our cards and my wife's loan, my loan is at a low interest rate so we decided not pay it if in a lump so that we would have more deposit money.

The trouble is that none of these payments appear on our credit reports yet and to make matters worse, we are staying with family and have applied to go on the electoral roll at that address but this may not appear on our credit reports until early April.

The broker we have been using told us yesterday that he had drawn a blank and couldn't get us a mortgage.

So in a nutshell, we have a £120k deposit, massively reduced our personal debt, have well paid long-term jobs and can't get a mortgage. Could this be true? It sounds crazy? Advice needed to stop me going insane!

Tony

GMS

Having a large deposit does not necesarily mean you can get a mortgage.

Have you got any missed payments on your credit file? Any CCJ's or defaults?

What kind of income do you have?

akc

Hello GMS thanks for your reply

Our joint income is £92k
No ccj's or defaults, but wife has missed payments while she was on mat leave - she's showing 7 but 2 are 11 months old so should drop off at next update.

We are hoping her score will increase a long way once report is fully up to date with reduced credit, though she will still owe £10k then and me £15k

Problem seems to be that we need more than 4x salary to fund this mortgage, and Santander seem to be the main lender who will do this now? Wife wants to complain/appeal to them, as broker just cannot understand why they approved us with her having late payments but changed their mind a few months later when everything was still the same?

GMS

It is not as simple as income multiples. Santander use affordability calculators which will take into account credit commitments, number of dependants, childcare costs etc.

Missed payments will hurt credit score. Although the last 12 months will show on the report their is a 'worst status last 36 months' section on the report which will show for last 3 years.

Credit score will be lowered due to this and affordability looks tight especially with loans and child(ren)

May be that you need to look for a cheaper property if you can.

akc

Fair enough, but we have come quite far with this property on the conveyancing side and both love it.

Just don't understand why Santander agreed in principle to lend us £400k when we had a lot more debt! Surely if they were up for it, another lender would do it now that we have reduced outgoings. No childcare costs happily, family help

GMS

The missed payments will not be helping credit scoring. How many consecutive missed as a maximum?

Try the affordability calculator on Abbey website and see what the results are.

Who was your previous mortgage with? Have you tried them?

Dangerous game to sell a property and sign for a purchase of another with only a Decision in Principle as you are unfortunately finding out.

Has your broker suggested any alternatives?

akc

i think it's 2 missed on a halifax cc, which she has now settled

hmm yes abbey says 362 on the website. If they had offered that, we could have bridged the gap somehow, i'm sure

had no idea it was a dangerous game to move without a firm offer - thought if anything we would be in a better position with the deposit money in our hands and proof that we had reduced other debt

wish our IFA had advised on that, though hard to see what we could have done - doubt our buyers would have waited and waited - we accepted their offer last october and new place won't be ready till end April earliest!

prev mortgage was with Northern Rock, hadn't though of trying them but will have a look!

thanks

akc

NR have a detailed calculator on their site which gets us there and requires a medium credit report....that could be a solution, the rate is not too bad

IFA's alternative was a niche company which would leave no footprint on our files, but we failed on their affordability criteria. The rate was high though, and really high redemption penalties, so don't think we would have done that anyway

GMS

Do you have copies of credit reports from Experian and Equifax?

NR are very strict on lending criteria. Who were the niche company?

Try the affordability calculators with the credit paid off and a smaller deposit. May work out better for affordability.

akc

Have tried the affordability calculator with some and all of the debt paid off and the amount we could get improves. Obviously lower deposit with no or low debt is more important that bigger with debts, thanks for the tip.

What are NR's lending criteria, do you know? We do have copies copies of our experian reports we're both on credit expert (now!). Do you ask because that's for our benefit or theirs?

Niche company was Aldermore.