Friend+Gf applying for m.gage- what %?

betmunch

The living in the area for 5 years could be a problem, if HSBC feel they will have problems selling the property if they have to repossess due to the only buyers having to have lived in the area for the last 5 years. My first thoughts are that this will be a problem for HSBC due to the fact they are particularly picky on their mortgage applications, however you will only know for sure when it goes to the underwriter.

Whether you go for a 2 year or 5 year fix is down to individual preference, I dont believe its right to say most people prefer a 2 year fix over a 5 year one, although thats my experience ratehr than looking at any official statistics.

bob_dob

Hi again all.
Thank you for your help so far.
Well, as predicted, HSBC turned down my friend for the 5 year issue.
Now, my friend was going to immediately rush to another provider to try them but i have advised him to just hold fire and go to a good broker (as opposed the IFA/Broker he used before he went to HSBC, that fella did not tell them that there were providers who didn't use brokers and doubled his advertised fee of 0.5% to 1%).
However, i also warned him against rushing to another provider incase HSBC had performed a credit search on him. I would assume that the last thing he needs is to be in a situation where he has had two refusals and two credit searches in a short space of time and no mortgage.

So my question is do you think HSBC would have performed a check on him at this stage (where the decision on the 5 year issue was passed onto the underwriters)?
And what should his next step be?

betmunch

Its likely they did the credit check at AIP stage, this wouldnt have revealed the issue with the property.

If you friend wants that house then he needs to apply for a mortgage, I agree, go to a good broker. Tell them the issue with the house and they will find a lender that will accept it.

I wouldnt worry about the recent credit check, it may or may not make a difference, but the one thing that is certain, if he doesnt get another one done he doesnt get a mortgage, and therefore doesnt get the house the house! Just make sure that the next provider is one that will accept the property rather than the next one down the road from HSBC (obviously this issue is covered by the decent broker)

bob_dob

Update: HSBC said they had done a 'minor' search so that that wouldn't show on their record. They didn't actually specify why they refused my friend so potentially it was the 5 year issue. But also, im guessing, it was potentially the
fact that his gf only has a one year contract with her employer. Or even less
possible that their credit records are too 'clean' as neither has had a loan or credit card.

I think he is finally going to go to a broker and tell them everything.

Am i right to suspect that the one year contract thing may also be a large factor?

betmunch

a contract with an expiry date could be an issue.
the restriction on the property could be an issue.

Unless they tell you then theres no way to be sure. Could be both, could be neither!

bob_dob

Thank you all for your great help.

Thrugelmir

bob_dob wrote: »

They didn't actually specify why they refused my friend so potentially it was the 5 year issue.

If there's a requirement to be a local resident to purchase the property. And they don't meet that qualification. Then the mortgage companies view is irrelevant.

Your friend should establish the full facts first, rather than misleading people.

StormyNight_2

betmunch wrote: »

No history of credit and a small deposit, I think they may struggle, but its going to be the Lender that makes the decision, not us guys on here.

Repayments will be dependent on the interest rate, find a mortgage calculator, pop the interest rate in with the loan and term and bobs your mothers brother.

I would recommend they have a sit down meeting with a good local mortgage Broker rather than you give them figures.

Good Luck

But it's over 10% is that considered small?

bob_dob

Hi,
I should point out that my friend and his gf meet the 5 year issue criteria.

They are now, thankfully, going to a broker today.
Just a question, even though they are choosing to go down the fee route (as opposed to the commission route that all of his family are urging him to choose 'because it's free'), am i right in thinking that even if they choose the 'fee' option there may STILL be lenders who the broker cant 'see'/use?

betmunch

StormyNight wrote: »

But it's over 10% is that considered small?

These days, yes.

The larger the deposit the higher credit score the lender will give you as it lessens their risk.