Mortgage declined, help!

sp5291

I have been in the process of applying for a mortgage with ING for 6 weeks now, only to be told today that my mortgage has been declined on affordability grounds.

The mortgage amount is £129,500 on a property priced at £185,000 (70%). I earn £34,115 gross per year.

The reason that they declined is that currently I am close to the limit on my credit card (£600) and I use my small overdraft most months (£250). I also had an unarranged overdraft fee 3 months ago as I exceeded my limit by £1.50. I find this confusing as I currently pay £600 per month in rent which is close to the monthly payments proposed on the mortgage.

I am wondering if it is worth persuing a mortgage with another company? If so, would paying off more of the balance on my credit card (currently at 0% as a balance transfer) and removing my overdraft facility help?

I am reluctant to give up as I have already sunk money into the property (solicitors fees and surveying costs). Ideally I am looking for a 5 year fixed deal.

marathonic

Why are you using a £250 overdraft most months if you've got a 30% deposit available for the property - likewise, why the credit card balance?

Crashandburn

Does seem very strange. Might be worth getting a copy of your credit file just to see what's been put there as long as there are no other issues or commitments (loans or family), then Nationwide have good 5 year deals.

ACG

Look at this from the lenders view....your currently using all your available credit on a monthyl basis and have exceeded it fairly recently. OK its £1.50 but its the fact that you are running your finances that tight and not managing them - your seen as a riskier person in the lenders eyes than someone who has £1000 less in savings but manages their accounts better.

To be honest, my mate works for ING mortgage. Theyre quite strict. I get the impression they have no real appetite to lend at the minute. You would probably get a mortgage elsewhere just not with the likes of HSBC, First Direct, ING....basically any of the best rates on the market. You would get one with a run of the mill company i imagine.

HappyMJ

You have over £50,000 in the bank and have a measly £600 credit card which is maxed out and are at your overdraft limit each month. errrr...Why?

sp5291

The deposit is in the form of a loan from my Dad, to be paid back on an interest only basis after I recieve a guaranteed pay rise in September.

The overdraft is there as a hangover from my student days and has been reduced significantly in the past year. Unfortunately I haven't been worried enough (up until now) to pay it back. Similarly the interest free deal on the card which expires in 6 months.

ACG

Has the deposit been declared as a loan from your dad or have you put it down as a gift?

sp5291

They didn't ask about it during the application process. If asked, I would say that it was a gift as the repayment is on an informal basis.

I have checked my credit file with both Experian and Equifax but there is nothing of concern on either report.

ACG

The application would have asked where the deposit came from. It has to to cover money laundering regulations.

The fact that its informal wouldnt matter its still a loan as it is expected to be paid back - but thats a different issue.

As i said earlier though, your not managing your accounts in a great way. It looks bad. As the deposit is a gift it also means you havnt actually saved anything so i think you will struggle unless you go to a lender more willing to lend and with less strict criteria.

brit1234

sp5291 wrote: »

The deposit is in the form of a loan from my Dad, to be paid back on an interest only basis after I recieve a guaranteed pay rise in September.

:eek::eek::eek::eek::eek::eek::eek::eek:

sp5291 wrote: »

I have been in the process of applying for a mortgage with ING for 6 weeks now, only to be told today that my mortgage has been declined on affordability grounds.

Sorry but you have showed no ability to save a deposit, you are living beyond your means and you are technically wanting a 100% mortgage. I can see why they turned you down.

Pay off your debts, learn to live within your means and raise a deposit. I don't mean to be harsh but I can see why you were turned down.

Good luck.

Thrugelmir

sp5291 wrote: »

I find this confusing as I currently pay £600 per month in rent which is close to the monthly payments proposed on the mortgage.

How will you afford to maintain the property? There's more to ownership than paying a mortgage.

Ideally your mortgage payment needs to be far lower than your current rent.