Mortgage declined on affordability

dogaholic

We applied for a mortgage with the Abbey last Monday and was agreed on principle - they did credit checks over the phone, affordability etc.

We submitted our application on Monday and were told yesterday we have been declined on "affordability"! No-one can tell me any more information and they have returned all our documents this morning!

I have tried several times speaking to people and all they say is it has been declined on affordability but no-one can give me an exact reason.

Our credit checks have come back completely fine, the mortgage is 45% loan to value approximately. We have lived in our current house for 4 years, husband been in steady job for nearly 4 years. We have been with the Abbey for over 10 years and have both always had mortgages with them, with no defaults. The only thing I can think of is that we have been overdrawn on our account for the last few months because of my buying christmas presents,paying for things for a funeral, paying for a holiday etc.

Does anyone know what I can do?
Abbey tell me this decline will not show on our credit files but I dont believe that can be the case - does anyone know if this is true?

We really dont want to go down the route of adverse credit mortgages as we feel we shouldnt have to with our situation.

Any advice would be gratefully received.
Thank you

jamief

1) A credit refusal never shows on your credit files.

2) Affordability means

The lender looks at your salary, your monthly outgoings, and works out if you can afford the repayments.

Can you tell us

a) How much you earn combined
b) How much you were looking to borrow (over how long)
c) Monthly repayments for other things?

herbiesjp

It will not show on your credit file that you have been declined.

It sounds like your monthly incomes are not sufficient to pay the mortgage and other debts you may have in the background

As has been posted above, what the actual figures you are looking at?

Greentea

I have had this happen before to me. Now I use an Independant Financial Advisor, who has better knowledge of each lenders criteria, and which are easier to attain. Thus you dont waste time applying for something you might not get.

dogaholic

Thank you for your replies.

I am relieved to hear our decline will not show on our credit file!

I will post later this evening our incomings/outgoings.

I'm going to ask Abbey (if they ever call me back!) what the most they will lend us and we will have to start house-hunting all over again.

herbiesjp

Another lender may well be happy with your scenario.

It may be worth while having a word with a whole of market mortgage adviser if you would want to try and keep going for the property you have seen.

HTH

dogaholic

Thanks everyone for your replies.

I called Abbey this morning and spoke to my original mortgage advisor who said we couldnt borrow 82K but we can borrow 97K! This has been okayed by the underwriter and, after our mortgage survey, the offer will be received whilst we are on holiday! :j

They basically were unhappy with a 3K loan (£99pm) and a few credit cards and want these paid off.

Over the last two days, several advisors have just told me they cannot help me and that was the end of the matter. It was only for my tenaciousness that I found out the real reasons and can still buy our dream house!

For anyone who has their mortgage declined I would advise them to pursue the matter further to see the exact reason and ask if it is, indeed, the end of it.

Basil_Hume

Can I just check that they didn't persuade you to add the £3k loan and few credit cards to the mortgage? If so, you would be paying massively more interest as you would be borrowing these additional sums for the whole mortgage term - and it would be very unethical of the mortgage co. to force you into this.

dogaholic

well,

the property we are buying is 162k. we sold ours for 125k. we currently have mortgage of 35k, so 90K deposit. we wanted to borrow 82K to buy the house plus pay off 10k on a credit card. they refused on affordability because:

we have 3k (£99pm) remaining of a 5k loan
£800 credit card
£2k credit card

which makes approx 6K


the only mortgage they will offer us is 97k and I just wonder where they got the other 9K we need from!

We aim to put this into the highest interest account we can find and pay this back at the end of the 2 year fixed interest only period (4.99%). Then find the best repayment deal available at that time.

Are we doing the wrong thing do you think?

chivers1977

You will only need to agree to a mortgage for the sum to you need to purchase as well as clearing the debts as far as I am aware. I don't believe that they can force you to take extra borrowing. that is not "treating the customer fairly" IMHO

raq

This amazes me.

We put down 80k on a £200 house and our debts are 13k and our f.a. knew about these. Okay we didn't go with a high street lender but we also got the house of our dreams.

Oh and we still got our debt but working really really hard to clear them.