Mortgage provider has lowered offer

Denman73

Hi everyone

Some weeks ago my wife and I got an agreement in principle for a 90% LTV mortgage with Abbey where they were prepared to lend £148500. The full application went in 2 weeks ago and today we have heard that after affordabiity underwriting they will now only lend £14000. Our broker is on holiday so we can't find out any more.

The figures are:
My salary: 54k
wife: 8k
I have a bank loan for 7k, payments £196 per month. The affordabiity calculations with broker suggested we could borrow up to 230k based on these figures.

My questions are:
Is this reduced offer likely to be based on other factors? My employment is stable (Deputy Head in a secondary school) and a default I had against me has been resolved as it was the error of the mobile phone company
Are the company offering the lower amount in the hope we withdraw the application?
Finally (thanks, sorry for the wittering!) would people advise that we find the extra money (I'm due a large compensation payment after suffering a fractured spine) or would we best to ask our broker to look elsewhere? My priority is a speedy resolution as our tenancy expires soon and I don't want to have to sign another tenancy contract.

Many thanks for your time and apologies once again for the length of this post

kingstreet

Was there a difference in the data used on the AIP and the full app? Were dependants added by any chance?

Denman73

Thanks Kingstreet. May be- we have 3 dependants and we made this clear at the intitial stage but as I recall we only gave their dates of birth for the full application (10 yr old, 7yr old, 4yr old). Would this make a difference if the broker hadn't originally stated that?

kingstreet

Denman73 wrote: »

Thanks Kingstreet. May be- we have 3 dependants and we made this clear at the intitial stage but as I recall we only gave their dates of birth for the full application (10 yr old, 7yr old, 4yr old). Would this make a difference if the broker hadn't originally stated that?

Probably. It's not something people often think about but lenders are becoming more wary of the impact dependents can have on disposable income.

Using the Abbey affordability calculator, the impact of three dependents is a reduction in borrowing of 12%.

I think we've found our problem.

I suggest you start looking for another lender if you can't/wont increase your deposit. By the way, have you tried a different mortgage term? This can often alter the figures.

Denman73

Would that entail reapplying or would they factor a 20 yr term into the current one? Definitely worth considering, thanks for that. I would be happy to pay the extra provided from the compensation if it guaranteed the loan but I was hoping to spend that money on a new ktichen/bathroom etc... however, that stuff could wait.

Thanks kingstreet, that was a very perceptive spot and it has illuminated things for me!

DVardysShadow

Denman73 wrote: »

My priority is a speedy resolution as our tenancy expires soon and I don't want to have to sign another tenancy contract.

You should let your tenancy go periodic rather than sign again.

kingstreet

Denman73 wrote: »

Would that entail reapplying or would they factor a 20 yr term into the current one? Definitely worth considering, thanks for that. I would be happy to pay the extra provided from the compensation if it guaranteed the loan but I was hoping to spend that money on a new ktichen/bathroom etc... however, that stuff could wait.

Thanks kingstreet, that was a very perceptive spot and it has illuminated things for me!

When I've had a down-grade previously, I've called them and asked them to change different bits of data to see what happens. One of them is the term. Affordability normally gives a higher loan amount the longer the term.

Denman73

DVardysShadow wrote: »

You should let your tenancy go periodic rather than sign again.

Good call, spoke to landlord and we'll do a monthly rolling tenancy if necessary. Im going to take kingstreet's advice as well and look at the application.

Thanks everyone for your input, much appreciated

Wh05apk

Denman, based on your figures Abbey should lend between £203k and £270k depending on your credit profile over 20 years.

I suspect they have found undisclosed commitments and assumed these will not be repaid, do you have any other loans/credit cards/csa/maintainance payments, or have you recently finished something which could still be showing?

Your income is easily enough to support this mortgage, so changing to another lender (abbey are among the most generous) will make no difference, if you have not already done so they will also allow tax credits/child benefit which may just top up your income enough to justify the full amount.

Does your broker not have holiday cover or someone else who can speak to the lender?