Buying New Build - Mortgage

dilemma10

Hi everyone,

For about a month now I have been going through the process of buying a flat through the government scheme - HomeBuy Direct.
I have a £250 reservation down on the flat through Miller Homes after my mortgage adviser called up Halifax (the best lender at the time) and I passed their credit scoring and was accepted in principle for any amount up to £98k.

Fast forward a month and the East Midlands Housing has approved my government grant of up to £30k - which means I have left to fund £67k through a mortgage and the rest as a deposit (which I have).

Since then I have been intrigued by my credit report which was sent through the post the other day - it is 483, shockingly low and 1*. All I can see on there is alot of addresses through being only 22 and a recent graduate and moving around alot but an Orange default from my silly youth days. Everything else is fine and I have a car loan which I have never missed a payment on.

Now I am worried that Halifax only accepted me in principle, but that when I do my full reservation tomorrow with the builder and they send my forms off to Halifax, they will come back and reject me? How likely is this?

I earn excellent money £28k for a 22 yr old, have a good pension, never missed a payment on my car but the Orange default from university days when I thought I had upgraded my phone to another contract but in fact had TWO Orange contracts.

My mortgage adviser says the original credit scoring with Halifax went through ages ago and I will be fine????

kingstreet

IIRC if you do a full application to Halifax within what you originally requested, it doesn't re-score you. However, there is one difference here. The Halifax Mortgage Promise doesn't take into account the shared equity issue. You can pass as an "A" but will automatically be downgraded to "B" because it's a shared equity case.

If you were my client, I'd put the full application in and get all the status enquiries out of the way before I let you reserve. Is the reservation fee refundable? If so, I'd be a bit more relaxed.

Has there been any mention of fast-tracking and no evidence of income required because you got an A pass? If there was, get ready for that to change. You'll need payslips and bank statements as a bare minimum.

kingstreet

Any idea how many in the block are sold and how many mortgaged through Halifax? Last lot I did in Sandwell we got real problems due to the lease and we ended up with no lender once Halifax had taken 50% of the block.

dilemma10

kingstreet wrote: »

IIRC if you do a full application to Halifax within what you originally requested, it doesn't re-score you. However, there is one difference here. The Halifax Mortgage Promise doesn't take into account the shared equity issue. You can pass as an "A" but will automatically be downgraded to "B" because it's a shared equity case.

If you were my client, I'd put the full application in and get all the status enquiries out of the way before I let you reserve. Is the reservation fee refundable? If so, I'd be a bit more relaxed.

Has there been any mention of fast-tracking and no evidence of income required because you got an A pass? If there was, get ready for that to change. You'll need payslips and bank statements as a bare minimum.

What it is is that my mortgage adviser works for a firm that specialises in new build properties and the original agreement in principle was accepted through Halifax as one of only 3/4 lenders lending on the HomeBuy scheme - therefore surely I would not get downgraded if I had passed from the get go under shared equity?

Next thing - the mortgage adviser visited me weeks ago and took copies of my bank statements detailing deposit amount plus some payslips and was sending them into Halifax. However, the builder says Halifax will not act on this until they hear from the builder after a full reservation.

I can get my reservation of £250 back - do you ask because you think it is likely that this will fall through?

Regards and thanks so much for your time.

dilemma10

kingstreet wrote: »

Any idea how many in the block are sold and how many mortgaged through Halifax? Last lot I did in Sandwell we got real problems due to the lease and we ended up with no lender once Halifax had taken 50% of the block.

Hi there yes - 4/6 are sold, only the bottom ones have not been and all were sold through New Homes Services acting as the go between. Not sure if all through Halifax lending but I know there's only really Halifax and Leeds and maybe one more bank lending like this.

I have also posted another post above too.

Many thanks for your advice.

kingstreet

The development I was working on last year had a policy of refunding the fee if the applicant proved unable to get a mortgage. I'm not suggesting you won't but I am covering all the bases I'd want covered if it was me, or you were my client.

As I mentioned earlier, the thing you've been through is called a mortgage promise. It analyses your credit history and income and expenditure and bases a lending recommendation on the loan to value and the term of the mortgage. It does not know you are going to buy a shared equity property until you submit a full application.

Last case I did like this, I got an A pass promise and was given a lending limit of £79,000. We completed a full application, which included the shared equity data and the maximum loan fell to £74,000 because the pass level fell. You're nowhere near the limit like this client was, so I'm not suggesting you'll have problems. You just need to be a ware that the extra information on a full application can change the lending decision.

dilemma10

kingstreet wrote: »

The development I was working on last year had a policy of refunding the fee if the applicant proved unable to get a mortgage. I'm not suggesting you won't but I am covering all the bases I'd want covered if it was me, or you were my client.

As I mentioned earlier, the thing you've been through is called a mortgage promise. It analyses your credit history and income and expenditure and bases a lending recommendation on the loan to value and the term of the mortgage. It does not know you are going to buy a shared equity property until you submit a full application.

Last case I did like this, I got an A pass promise and was given a lending limit of £79,000. We completed a full application, which included the shared equity data and the maximum loan fell to £74,000 because the pass level fell. You're nowhere near the limit like this client was, so I'm not suggesting you'll have problems. You just need to be a ware that the extra information on a full application can change the lending decision.

Ah right thank you very much for this insight - Halifax were specifying borrowing up to 98k but I only need 67k anyway? What do you think to this?

As regards my credit scoring which is giving me the most worries - what do you think to this? I would not fail on credit scoring if I submitted a full application even though it's not good but I passed in principle?

Finally how long after tomorrow's reservation should it take for the Halifax to offer?

Regards

kingstreet

dilemma10 wrote: »

Ah right thank you very much for this insight - Halifax were specifying borrowing up to 98k but I only need 67k anyway? What do you think to this?

That's why I said you should be okay in my last post. You're well within and not likely to be affected.

As regards my credit scoring which is giving me the most worries - what do you think to this? I would not fail on credit scoring if I submitted a full application even though it's not good but I passed in principle?

A full application should go through no problem, but you may be asked for documents you have already given to your adviser anyway. He can pass these on if they need them.

Finally how long after tomorrow's reservation should it take for the Halifax to offer?

Regards

Couple of weeks if everything goes ok.

dilemma10

kingstreet wrote: »

That's why I said you should be okay in my last post. You're well within and not likely to be affected.


A full application should go through no problem, but you may be asked for documents you have already given to your adviser anyway. He can pass these on if they need them.


Couple of weeks if everything goes ok.

You have been a great help - thank you very much!
Gemma

dilemma10

Hi, as soon as my mortgage adviser put in a full application it failed - and it must be due to the Orange default. I would like to know whether it will make any difference clearing the default money owed £150 (long story I did actually pay bits of this off but Scotcall never sent me any paperwork to confirm they were clearing my cheques). Would a default at £0 look better than a default with monies owed?

kingstreet

As I mentioned, if you already had a mortgage promise, the Halifax system had taken that into account and you still scored enough to pass. If the only variant between the agreement in principle and the full app was the addition of the shared equity, it is that which has caused the decline.

Let your adviser exhaust the appeal process before you do anything else and as I advised by PM, make sure the solicitor does not do any searches before this matter is resolved.

If it was me, I'd even have Halifax do a bit of trial and error around different deposit levels without the shared equity to see what they would give you if you had a deposit of your own.

Hopefully, at this moment, your "at risk" money is zero as anything you've paid out can be called back if you can't proceed.