Mortgage application delay!

the_bosshog

Hi folks,

My wife and I are buying our council house under the RTB scheme, with the house valued by the council at £130,000 and the discounted price is £71500. We have applied for a mortgage of £90,000.

After 9 days I called the building society today and they said the credit checks were fine, but it's now been referred to the underwriters due to the affordability part being borderline.

We don't have a lot of debt, but we do have 3 credit cards totalling £4500 and 2 store cards totalling £900. Unofficially these debts will disappear when and if the mortgage goes through.

I forgot to say my salary is £23500 and my wife's is £2600

Should I begin to worry now that it's went to the underwriters?
I have had to fill in an additional form with all our expenditure on it.

Any help/advice is greatly appreciated

UK007BullDog

Which lender is this?

You may want to talk to the underwriters and explain to them why you want the extra money.

the_bosshog

UK007BullDog wrote:

Which lender is this?

You may want to talk to the underwriters and explain to them why you want the extra money.

Hi.

It's the Scottish Building Society, and yes you are right. They have asked for quotes for all the work we plan to do in the house.
We are genuinly going to spend lots the extra money on the usual stuff - windows, doors, kitchen, bathroom, conservatory.
Hopefully when we supply these written quotes it should be ok.
I am actually thinking the outcome will be they are going to offer us maybe £82,000 or £85,000 instead of the full £90,000 we originally applied for.What do you think?

UK007BullDog

That could happen. But I would wait to hear from them. How much has the lenders surveyor valued the propeprty at?

the_bosshog

The lender has valued the property the same as the council - £130,000

It's already been a LONG 9 days, and now another weekend of not knowing. This is stressful !!

toonfish

The maximum discount you can get round here is £30,000 on a right to buy now - yours sounds like a great deal.

the_bosshog

Yes it's a great discount. We've been tenants since '91 so our council is giving us 45% off.

It's 32% after 2 years and 1% for every year after that.

What's sickening is our next door neighbours bought their house in 2002, and it was valued then at £59,500.

As our mortgage broker says, it would be rude not to accept the discount !

I kinda knew it was a bit cheeky asking for £90,000, but as long as I get at least £85,000 then we can postpone some of the improvements until we remortgage in 3 years.

beverleyhills

Are you paying your debts off with the money from the mortage?

the_bosshog

Unofficially and off the record we will be clearing off all the debt, but officially the entire £18,500 will be used for home improvements.

beverleyhills

The debts you have are unsecured debts. You will be paying for them for the life of the mortgage. Consider borrowing the amount you actually need for the house. This will give you more disposable income.

Visit the DFW board for advice on managing your budget and paying off your CC debts.

Look at Martin's Budget planner and associated articles on the main site.

Good luck

the_bosshog

You highlight a good point, and one I've thought about a lot.
I'm not too good at explaining things but I'll give it a go, and please correct me if I'm wrong.

I have already made up a payment plan which will clear all the cards by next March, but at the same time if we delay buying the house for another 12 months the increase in value (going by the last 5 years) is around £10,000 per year.

So when it comes to buying the house in 12 months, the value will be around £140,000, with a discount of 46% = £75600

The plan now is to take out £90,000 and pay £71,500 for the house and £5400 to the cards. This leaves £13,100 for improvements

Next year if I take out £90,000 and pay £75600 for the house and zero to the cards, this would leave £14,400 for improvements.

So my thinking is I am only losing out by paying £1300 worth of unsecured debt for the life of the mortgage.

Does that make any sense or am I talking rubbish?