Mortgage declined due to “Affordability” even though we had a Mortgage in Principle

silviu_2

Hi,
My fiance & I really need some GOOD PRACTICAL advice.


The facts:
House price £143.000 – price negotiated before it went to auction (typical auction terms of sale applied)
Deposit paid: £14.300 (10%) & Left to pay £14.300 (10%) before completion
LTV 80% Total mortgage needed £114.400
Completion Date: 18 August 2011 (some 3 weeks from now)
My fiance and I are first time buyers, since my fiance is due to start university this September our mortgage advisor advised we get a mortgage on my income alone ignoring her current income of £23.000 per year.
We got a Mortgage in Principle from ING before we paid the 10% deposit.
On Friday afternoon (17:30) we got an email saying the ING had now declined our application due to “Affordability”.
I work offshore (currently away in the North Sea) & coming into port every 14 days or so. My fiance has access to all my paperwork (P60, work contract etc.)
I’m employed by a UK company and my salary comprises of Basic Salary £20.000 + Offshore Allowance around £16.000, so £36000 GROSS per year.
The Issue:
Apparently ING haven’t taken into account anything other then my Basic Salary and aren’t to keen to do so. We’ve since provided them with my last 2 P60, 3 last payslips & my Work Contract. ING said they’ll forward all this to the underwriter and we should be hearing from them in due course. :mad:

How long do they normally take to make a decision?
Should we start looking at other lenders ASAP? So can anyone help?
Are there any lenders that would look more favourable at my circumstances?

Please help us get our first home. As you’ll probably guessed we’re gutted and we’re finding it rather hard to keep positive as there are penalties if we don’t complete within 3 weeks!!!

Any advice would be greatly received!

jimjames

I can't comment on the mortgage but you have a bit more time than you think - 18 Sept is about 7 weeks away by my reckoning. Still tight but gives you a little more room.

maninthestreet

18 September is 7 weeks time.
Was the house actually bought at auction??

Thrugelmir

Normally 4 weeks at auction. So more likely to be 18th August completion.

Thrugelmir

silviu wrote: »

Please help us get our first home. As you’ll probably guessed we’re gutted and we’re finding it rather hard to keep positive as there are penalties if we don’t complete within 3 weeks!!!

This why people as a whole do not buy at auction. Despite the prices being attractive. As the pitfalls can be very expensive.

A mortgage in principle is far from being a mortgage offer. Ideally you need to be more advanced than an MIP when you go to auction.

Has your solicitor started the legal side yet?

silviu_2

Many thanks for all the replies.

The completion date is 18 August not 18 September. Sorry for the mistake.
We negotiated with the vendor the price before the auction so the house didn’t actually go to auction, however we still agreed to the auction terms but for 2 months completion instead of the usual 28 days.

[FONT=&quot]The solicitor is currently dealing with the legal side of things and we think it should be just about done now.[/FONT]

kingstreet

So it's taken from 18 June for this stage to be reached?

Have there been other problems?

silviu_2

As far as we're aware there haven't been any problems. The legal pack is sound with only few issues left to address (i.e.: some building work certificates, fitted windows certificates etc.) Nothing to stop us completing on time, apart from NOT HAVING THE MORTGAGE in place.
According to common knowledge it should take about 3-4 weeks for the mortgage to come trough, hence we're finding ourselves in this situation.

holly_hobby

The issue is that there is an "off shore" allowance payable in addition to your basic salary. The problem is that from the lenders point of view, if your employer relocates you "on shore" - this allowance will/may be lost. And you will revert to receiving only your basic salary - which they will assume as the 20k quoted.

The UW will need to be convinced to include all of the allowance, and that it is unlikley that you will be relocated on shore due to the nature of the work you do i.e your employer would be unlikely to relocate you (for the same basic) from the rig platform or as a roustabout, to a desk job on land.

If the UW comes back and declines to accept the off shore allowance - this should be the tack you take to support why the 16k o/s allowance, forms a permanent part of your renumeration. (renumeration encompassing all income - not just basic salary alone).

Hopefully the uw will have experience of this employment role, good common sense and will be happy to accept the full o/s allowance as a permanent feature of your employment.

Good luck, hope this explains why they initially only want to accept your basic salary, and requires an UW overview.

Holly

silviu_2

Thanks Holly Hobby,

I really hope you're right about this, cos else we're in serious trouble, potentially standing to lose some £15.000 (a lot of money for the common folk like us)
My work is solely confined to the offshore seismic industry working on seismic research vessels around the world and relocation onshore to a similar post is not applicable. I don’t even go to office apart from various training courses or meetings. Since I started with current employer some 3 years ago I only went into office 5 times.

Do you think a letter from my employer casting some light on my work commitments and remuneration package would help at all?

holly_hobby

So your role is highly specialised, and particular to off shore/rig work - meaning that it would be highly unlikely you would be re-located on shore & lose any allowance.

This is the basis of argument to be used, if the UW is unfamiliar with rig workers and their packages - it certainly wouldn't do any harm in adding an appendum to your application.

Indeed the UW may ask for some further info themseves regarding the nature of the allowance.

If you wanted to send a brief synopsis yourself, you could do, with the inclusion that the nature of your role & basis of renumeration can be fully verified by your employer. ( I say this, because you can get your own explanation in to the lender, sooner than your employer will be able to have one drafted and submitted).

You could primarily wait and see what the UWs comments are, and then submit any additional info in support of your app.

Hope this helps

Holly