Very confused with mortgage refusals - Help!

Faz

I'm very confused as to why we've been refused by two seperate lenders for a mortgage - quick snapshot of details:

Myself:

£30k salary
£6k of credit card debt (long term low rate)
Existing joint mortgage with family member - £100k value, £72k remaining, £340 monthly payment.

My Partner:

£14k salary
No debts

Property:

£100k purchase price
£15k deposit
Loan required - £85k - 85% LTV

Halifax and HSBC have both turned us down for a joint mortgage and neither is giving a real reason why.

The house I have a joint mortgage on with a family member is lived in by that person, I don't pay the mortgage for it but helped them to get the mortgage (although they could probably have got it without my name on it).

Any clues as to what is wrong with our circumstances? We're applying for a residential mortgage for us to live in. Our joint income is £44k and we're not even asking to borrow 2x joint salary?? Our credit histories are all green btw.

kingstreet

Your liability for the other mortgage may make lenders nervous. If the joint borrower stops paying, you're in the frame for paying the whole of that mortgage and the new one. If your partner had enough income to justify the new mortgage alone, you might have been accepted.

A good independent or whole market broker should be able to find you a lender which will look at the case, treating the cost of the current mortgage like a credit agreement and deducting the cost from your income before applying any multipliers.

samtoby

HSBC are apprently about one of the pickest lenders. x

kingstreet

IIRC the last case I did similar to this was under 80% LTV too.

Faz

kingstreet wrote: »

Your liability for the other mortgage may make lenders nervous. If the joint borrower stops paying, you're in the frame for paying the whole of that mortgage and the new one. If your partner had enough income to justify the new mortgage alone, you might have been accepted.

A good independent or whole market broker should be able to find you a lender which will look at the case, treating the cost of the current mortgage like a credit agreement and deducting the cost from your income before applying any multipliers.

Thanks for the response. Does my scenario lend itself better to use a broker, than to go directly? I went direct with HSBC and Halifax. I did speak to a broker earlier today who was suggesting a Nationwide or Accord mortgage.

It sounds odd that my partner alone may have been accepted, even though my potential mortgage liability is a small fraction of my income.

Are you aware of any other lenders who would be willing to lend in this situation?

zzzLazyDaisy

It is the existing joint mortgage.

You are jointly and severally liable for the repayments. The fact that you don't actually contribute towards the mortgage repayments is irrelevant. If the other family member defaulted, the lender could chase you for the full amount. This means that your income must be sufficient to support the other mortgage as well as your own mortgage - and that doesn't seem likely.

You say that your family member could afford the mortgage on their own, in which case the best thing to do is for that person to ask his/her lender for a transfer of equity into his/her sole name, and take you off the mortgage (and the title deeds to the property).

EDIT just seen your recent post - yes you may have more joy going through a broker as they have access to mortgage products that are not available to the ordinary consumer.

kingstreet

You could traipse up and down the high street for months and never get this application accepted. Every time you apply, you stick another footprint on your credit file too.

I would say you've a better chance of a broker getting this away for you first time.

I'm not saying your partner would have been accepted alone. I'm suggesting if the mortgage had been within around four times the partner's income, the lender would have been more likely to accept the risk of you having the other mortgage on simple affordability grounds.

I'm not going to suggest who might do this. At 85% it needs more thought than I can give it on here and with only the basic info I have.

kingstreet

Faz, in response to your PM, I would suggest you ask friends and relatives for a broker recommendation. Failing that, search on https://www.unbiased.co.uk, switching off the "website/email only" option as this will give you a fuller list for your area and won't only show the paid-for adverts.

I only deal face to face with potential clients in a small area around Stafford and district.

ACG

As has been said, going with a broker they can discount all of the picky lenders straight away throgh knowledge of the market. They can then speak to any potential lenders BEFORE making an application. Saves you time and your credit file from being hit by loads of searches.

You should also get a copy of your credit file just to be sure but its probably the fact your on the other mortgage thats causing problems.

Faz

Thanks for all the replies.

I'll look into the broker route, as it sounds like my chances of success are best there instead of going direct to others and risking refusal again (timing is critical, as we don't want to lose the house we've put the offer on)

P.s. whatever happened to the days of people having multiple residential mortgages with ease?

kingstreet

Faz wrote: »

P.s. whatever happened to the days of people having multiple residential mortgages with ease?

The credit crunch didn't help. TBH a bigger income and bigger deposit would probably have relegated this to a minor issue. As it is, lenders now take affordability much more seriously. None of them want the FSA looking at them mouthing the words "irresponsible lending."