Halifax Mortgage Rejected - Any point in reapplying or appealing?

satishtn

Hi all,

I am a new poster in MSE even though I've passively read many threads and they've always answered my questions. Now I am a bit of a situation which seems peculiar.

I had an AIP from Halifax for a First Time Buyer Mortgage. I am self-employed and producer 2 years of complete returns and a letter from my accountant for expected revenue for the current year of operation along with Management Accounts till date. The MA (from her system) told me I am eligible for £ 110,000 mortgage even though I choose to apply for £85000 only. The property is Shared Ownership.

Halifax then took money from me and completed the valuation.

Now, they got back to me and offered a ridiculously low sum of money as mortgage. It's as good as saying a no. I was told that it was because they couldn't trace me back to my address through the electoral register and that my After Tax take home as dividends and salary is not enough.

I've checked with my council and my name is indeed in the electoral roll. When I told my MA this, she was wishy-washy and said she had tried everything she could and can't do much more in my case. I am really distraught for what I think is very poor support and service.

How should I proceed? I received an AIP from a broker before walking into the branch and got in touch with the broker again. He spoke to the Area Manager and told me it's worth trying again as the amount they offered seems to be unrealistically low.

Any advice or experience to share? Is there anyone who's been rejected the first time and have succeeded the second without a drastic change in circumstances? My income this year is increasing by almost 100% given that I am becoming more known in the market and given there're jobs around. Affordability is not an issue.

Thanks in advance.

Dave_Ham

You can guarantee the mortgage advisor is at fault here in the bank, somewhere along the line.

Either they keyed in incorrectly, or they have given you inaccurate information. The Halifax typically wont take a valuation fee until the mortgage is likely to proceed on those terms and hence the wishy washy.

What have you declared on self employed, what deposit and is there anything else in the background credit commitment wise?

Either that, or they did not key the rental side of the shared ownership and therefore this may have reduced the amount and a mistake a novice would potentially make?

satishtn

Thanks Dave.

I was willing to put down 20% as deposit and the only credit commitment was the HA rent which the MA did enter into the system while submitting the application.

Interestingly I also spoke to Credit Expert (Halifax works with them to do the credit scoring); apart from updating my address to match the electoral roll, they have assured me that no credit check were done on my name; there is no foot-print whatsoever. The agent from CE advised me to get back to Halifax and challenge them on this.

The MA gave me two reasons for the decline:
1. The couldn't trace me to the address through the electoral register
2. My net profits + salary is low, which is a ridiculous argument because I have in my hand a AIP from Halifax saying I am eligible for £20K more than what I am asking for with the same details.

It's all very confusing. The MA is very non-commital and she says she's been at it for 15 years so I doubt she is a novice; may be just incompetent.

S

satishtn

Also to add, the MA is blatantly saying I can go ahead with a broker if I want and that brokers key in the details in a "different" way which may work out (credit to her, she does sound earnest).

But what bank 'advises' someone to go away from them and seek a broker's help? Very weird!

Dave_Ham

Its not just confusing, it actually does not make sense.

If the same information was keyed at AIP, then what appears to be a decline they must have found some adverse credit history in the background or something different keyed.

Your broker can probably have a look over it all and come up with something sensible, but we use the same lending platform as brokers that they do in the branch so that does not add up either..

Didnt key the rent as an annual commitment instead of monthly or something silly like that.

What did you earn and what was the rent and maybe put some sense to it... (later though as running out of office now as I type)

opinions4u

At the time of AIP it's possible that the shared ownership nature of the puchase hasn't been identified. So the system thinks it's 40% LTV and increases the amount available (and the likelihood of passing credit scoring systems).

Once we've moved in to real world mortgage application the same error has been replicated and the valuer instructed. When the valuation report has come back the shared ownership element of the application has been corrected and the system now knows it's an 80% LTV on a higher risk shared ownership property.

Net result, lower credit score and lower amount available to lend.

All theory on my part and I could be wrong. But I don't think I am. I'd also guess that a 25% deposit would change the amount of loan available favourably.

I can't explain the CRA information though.

Ask them to check that the income figures used accurately reflect what they should be using.

Conrad

satishtn wrote: »

2. My net profits + salary is low, which is a ridiculous argument because I have in my hand a AIP from Halifax saying I am eligible for £20K more than what I am asking for with the same details.


S

An AIP is only a rough guide based on loose non verified information.

A lot of self employed people tell me they earn ex amount, but once the full info comes in from the Accountant etc, a lot lower figure is revealed.

I think you stand a good chance of getting a mortgage. A decent broker is quite different from an employed Bank worker with the title mortgage adviser.

satishtn

Thanks Dave, Conrad and o4u.

I think o4u is right in that it may the SO that might cause the issue. I can't be sure about it. I don't think anyone can be except the underwriters who score the application. Do they really score SO as higher risk? It sounds strange.

I agree that AIP is only an indicative document. But look at my scenario. The AIP says I am eligible for £105,000 and I was offered a mortgage of - hold your breath - £ 18K. I mean £18 K. What do I do with it?

Also, I didn't act dodgy with my figures as well... straight as a ramrod throughout. In fact I submitted all the returns undersigned by my accountant and a management account and a projection even during the application stage. So all the figures keyed in were from my final returns.

@ Dave Ham - I have PMed you with my financial details.

The strangest is the credit scoring. Halifax didn't even do it. So everything must've been in the underwriter's calculator (i.e. a spreadsheet) and the case was closed there without even taking it to the next step.

Oh and guess what.. I just got an email from my broker. He has managed to submit the application again to Halifax and the AM had told him that there was an IT glitch and because of that it wasn't recognising my income correctly. The Halifax IT team are looking into this!

The question staring at me is: was my AM / underwriter so incompetent that they couldn't see the obvious discrepancy? Didn't they have the basic curiosity to ask themselves that something must be wrong and that they don't have to parrot whatever the computer throws at them? I should no... I used to work in a bank!

So my guess for the turn of events it this:
- MA collects all the documents from me; enters into the system
- Application goes to the underwriter
- System processes my document and due to the error says I can be lent £18K
- MA challenges the underwriter that it can't be correct. They come up with possible reasons for the low amount. Address issue and take home revenue pops out as possible reasons.
- The MA calls me, empathizes with me and repeats the script to me
- I get depressed and lose my sleep!

TBH, I feel a bit confident now.

Thanks all. I will keep you posted on what happens.

opinions4u

satishtn wrote: »

I think o4u is right in that it may the SO that might cause the issue. I can't be sure about it. I don't think anyone can be except the underwriters who score the application. Do they really score SO as higher risk? It sounds strange.

Yes. It is higher risk.

I agree that AIP is only an indicative document. But look at my scenario. The AIP says I am eligible for £105,000 and I was offered a mortgage of - hold your breath - £ 18K. I mean £18 K. What do I do with it?

That would suggest that the income allowed for the mortgage has been significantly changed on the system. Clarity on what numbers are being used is the starting point. Not what you've submitted, but what's been treated as income when they've typed it in.

The strangest is the credit scoring. Halifax didn't even do it. So everything must've been in the underwriter's calculator (i.e. a spreadsheet) and the case was closed there without even taking it to the next step.

Halifax credit scoring is automated. Shared ownerships will also be referred to an underwriter 100% of the time.

I susepct they've disallowed certain elements of your income. Rightly or wrongly.

brit1234

satishtn wrote: »

Do they really score SO as higher risk? It sounds strange.

Not really, I think you will find shared ownership properties mostly overvalued and difficult to sell especially at the price you bought it for. Lots of banks don't like shared ownership and the government has even withdrawn funding for it.

satishtn

brit1234 wrote: »

Not really, I think you will find shared ownership properties mostly overvalued and difficult to sell especially at the price you bought it for. Lots of banks don't like shared ownership and the government has even withdrawn funding for it.

I do agree that SO properties are a bit overvalued. But if the bank feels it is the case, shouldn't their valuation team look at it objectively? I say this because when I paid for the valuation I made a specific request to the MA to instruct Halifax's Valuation team about my reservations on valuation. I thought the propert was overvalued by about £25K. Despite this the bank came back with a valuation to match what the HA offered. So if the banks feel So is overvalued, why do their own expert stick to that valuation?

But please... I don't this thread to become a let's bash SO one. I think it's very subjective and depends on personal situation. That's a whole different story altogether.