Interest Only Mortgage question

Thrugelmir

JimmyTheWig wrote: »

They _won't_ need to see evidence that you are paying into it every month. That is your responsibility.

What makes you so sure that every so often documentary evidence will not have to be produced?

Only a couple of days ago the Halifax announced far tighter regulation of interest only mortgages.

GillianY1

opinions4u wrote: »

You need to take paying your bills on time more seriously. It is a big issue.

Thanks for your opinion. I would say not paying your bills is a 'huge' issue rather than paying them a week or so late a couple of times a year! A mortgage always has a DD set up to pay it therefore there would never be an issue with a late payment on it.

opinions4u

GillianY1 wrote: »

Thanks for your opinion. I would say not paying your bills is a 'huge' issue rather than paying them a week or so late a couple of times a year! A mortgage always has a DD set up to pay it therefore there would never be an issue with a late payment on it.

You've just been declined a mortgage, probably because of your late payment last month. So it clearly is significant.

People with direct debits in place are not immune from late payments, missed payments or repossession.

You have created a situation where a lender thinks the risk of advancing you a large sum is too great.

GillianY1

kingstreet wrote: »

HSBC has the best deals and is cherry-picking the best applicants.

I have also been looking at ING Direct as they seem to have a few good deals but am worried that the same thing will happen as they may also cherry pick the best applicants....do you have any advice with regards to whether I should apply to them?

roonaldo

GillianY1 wrote: »

I have one late payment in April (paid my Next bill a week or so late!) but nothing else on there. My husband has a couple of late payments on his credit file

This is the reason!
missed payments = greater risk.

SandC

To be honest, I can't see why with a combined income of £51k you can't deal with the £610 mortgage payments and paying off the debt at the same time.

I know you've been declined anyway but whilst it seems the hard way out to just slog it out and get rid of that debt, it IS the way that teaches better money management. If you can build up a debt and have late bill payments on that sort of income with your mortgage at £610 then it doesn't highlight a couple who are particularly financially savvy - save I guess for having that income might make you a bit blase about money matters in the sense of you know you've enough for a certain lifestyle so you can deal with issues as they come up.

It is the above that is part of the credit check that has caused them to decline, in my opinion. It isnt just about late payments etc. but about the whole package - your dealing with credit on an income like that will bring up red flags.

kingstreet

GillianY1 wrote: »

I have also been looking at ING Direct as they seem to have a few good deals but am worried that the same thing will happen as they may also cherry pick the best applicants....do you have any advice with regards to whether I should apply to them?

You're chasing the best deals in the market from a position of relative weakness. The late payment certainly won't help your case.

I don't know what your chances are with ING as I have no experience of dealing with them. They are only opening up to dealing with mortgage brokers this week, for the first time.

If you do give it a go and are declined again, I'd find a nice small building society which doesn't credit score and has a "human says yes" instead of "computer says no" approach.

GillianY1

kingstreet wrote: »

You're chasing the best deals in the market from a position of relative weakness. The late payment certainly won't help your case.

I don't know what your chances are with ING as I have no experience of dealing with them. They are only opening up to dealing with mortgage brokers this week, for the first time.

If you do give it a go and are declined again, I'd find a nice small building society which doesn't credit score and has a "human says yes" instead of "computer says no" approach.

Can you perhaps point me in the direction of a small building society which doesn't credit score just in case. I have never been declined in a credit application before and am worried that more credit searches will only make the situation worse. I suppose I didn't realise what a huge effect one late payment on my credit file would make to the application. Also, do you agree that the fact I am applying for interest only rather than repayment would make lenders more wary of accepting the application?
Thanks!

GillianY1

SandC wrote: »

To be honest, I can't see why with a combined income of £51k you can't deal with the £610 mortgage payments and paying off the debt at the same time.

I know you've been declined anyway but whilst it seems the hard way out to just slog it out and get rid of that debt, it IS the way that teaches better money management. If you can build up a debt and have late bill payments on that sort of income with your mortgage at £610 then it doesn't highlight a couple who are particularly financially savvy - save I guess for having that income might make you a bit blase about money matters in the sense of you know you've enough for a certain lifestyle so you can deal with issues as they come up.

It is the above that is part of the credit check that has caused them to decline, in my opinion. It isnt just about late payments etc. but about the whole package - your dealing with credit on an income like that will bring up red flags.

Whilst our £51k income may appear to be high our mortgage is not our only monthly outgoings. Like everyone else, we pay council tax, childcare expenses, travel expenses, utility bills, pension payments and insurance payments.
The idea behind switching to interest only was so that I could make increased payments into my credit card (yes I am managing fine to pay my bills just now but would like to pay it off quicker!) therefore making a huge saving on the interest payments on them. Once this is paid off, I would switch back to repayment and make overpayments, therefore reducing my mortgage quicker and paying it off earlier than originally planned. I would have thought that was more finanacially savvy than sitting on a debt with high interest rates over a longer period of time....
I do appreciate though that the banks cannot verify what your future intentions are and will only judge you on the credit information available to them.

kingstreet

I wouldn't expect the interest-only thing being a factor in determining whether you get a mortgage. It's not normally asked at agreement in principle stage, it tends to come later in the application.

You should be ok with the ING search, but I'd stop after that and use plan B. Smaller building societies tend to specialise in particular lending groups and geographical areas. The Dudley Building Society is particularly good for the WV, B, DY postal areas.

The Cambridge Building Society specialises in the East of England.

There are Teachers and Ecology Building Societies. It'll depend on where you are and what other issues form your make-up. List here;-

http://www.bsa.org.uk/aboutus/buildsocmember.htm

A whole of market or independent broker could also help.