Have paid off some debt but Halifax will now lend me less

AngelaUK

Would be grateful if anyone can explain why paying off debt has lowered the amount I can borrow with Halifax, as they can't explain!

I had a mortgage offer on a property at 90% LTV for £157,500 plus fees added, when I applied a few months ago I had the following debts:

Loan payment £199 (£10,000 left)
Tesco card £100 but paid in full monthly
Post Office £3,500 (0%) to be paid off by completion
Barclaycard £1,800 (6.9%) to be kept
Virgin £4,500 (0%) to be kept

I started paying lump sums off the Post Office card to make sure was paid by completion, then due to a lease issue I have pulled out of the property.

I have spoken with them in the last few days as I have found another property, I gave them my updated debt figures but I can now only borrow £154,135 with the following:

Loan payment £199 (£9,721 left)
Tesco card £100 but paid in full monthly
Post Office £1,530 (0%) to be paid off by completion
Barclaycard £1,600 (6.9%) to be kept
Virgin £4,400 (0%) to be kept

I know they are very generous with what they are lending, I am just worried that making further payments will reduce the amount I can borrow further, they said my credit score hadn't reduced so I am very confused.

Dave_Ham

It may be in the way it was originally keyed and then amended.

With the Halifax system they cross reference your monthly credit commitments with their credit files and if you say £76 a month and £2100 balance and their system says £72 and £2051 balance then they may count twice.

The best advisors there actually print off the Equifax commitments online and then copy these onto the system to optimise your borrowing power.

By and large, you either had an error in your favour first time, or an error against you second time.

Keep paying down the debt, it will only help and when you are spot on you can confirm it all with them.

If able, sometimes increasing your mortgage term will allow you to borrow more, so maybe if you were up to your limit on say a 30 year term, then maybe now a 29 years 8 months has also reduced your borrowing...

Hope this helps.

StuC75

AngelaUK wrote: »

Post Office £1,530 (0%) to be paid off by completion
Barclaycard £1,600 (6.9%) to be kept

Is it MSE to be clearing the 0% and keeping the 6.9%?

AngelaUK

Dave_Ham wrote: »

It may be in the way it was originally keyed and then amended.

With the Halifax system they cross reference your monthly credit commitments with their credit files and if you say £76 a month and £2100 balance and their system says £72 and £2051 balance then they may count twice.

The best advisors there actually print off the Equifax commitments online and then copy these onto the system to optimise your borrowing power.

By and large, you either had an error in your favour first time, or an error against you second time.

Keep paying down the debt, it will only help and when you are spot on you can confirm it all with them.

If able, sometimes increasing your mortgage term will allow you to borrow more, so maybe if you were up to your limit on say a 30 year term, then maybe now a 29 years 8 months has also reduced your borrowing...

Hope this helps.

I gave them the exact new amounts though on both occasions Experian hadn't yet updated with the figures I had given yet, the term is to be exactly the same, infact this time I am looking to put 15% deposit to get the lower rate, I can still borrow enough though only just. One advisor said that because I had already paid off some of a higher card this had gone against me and I would have been better to leave them as they were!

AngelaUK

StuC75 wrote: »

Is it MSE to be clearing the 0% and keeping the 6.9%?

The 6.9% is LOB and was fee free, the Post Office card 0% ends in September so prefer to pay that off. I have a 0% offer on the Virgin but am too scared to move any over as who knows what Halifax will lend me then...

DVardysShadow

What bothers me about your mortgage proposal is that your used credit exceeds your deposit. Effectively you are borrowing your deposit and a bit more and you have no real savings.

Whether or not this is a factor in the change of your offer, I don't know, but be aware that in the current climate, this will make things very much touch and go.

Thrugelmir

DVardysShadow wrote: »

What bothers me about your mortgage proposal is that your used credit exceeds your deposit. Effectively you are borrowing your deposit and a bit more and you have no real savings.

Whether or not this is a factor in the change of your offer, I don't know, but be aware that in the current climate, this will make things very much touch and go.

Agree totally. Underwriters may well take the same view. Which will be different to a DIP.

AngelaUK

I am putting £27,000 deposit, I also have £7,000 in shares if needed but don't want to sell them while I have cards on 0% as would have to pay tax at this time.

I went to full mortgage offer with my previous debt which was all disclosed, if I was only putting 10% this time I would clear all the cards but the rate is now terrible.

DVardysShadow

AngelaUK wrote: »

I am putting £27,000 deposit, I also have £7,000 in shares if needed but don't want to sell them while I have cards on 0% as would have to pay tax at this time.

I went to full mortgage offer with my previous debt which was all disclosed, if I was only putting 10% this time I would clear all the cards but the rate is now terrible.

Well, it is a mystery why they have cut your borrowing potential.

Your figures are not adding up, your deposit with a loan of £157750 at 90% LTV is 17000.

Bear in mind that loans can sometimes reduce your borrowing capability by more than the loan itself - we have seen an instance reported here. I am inclined to think your issue has arisen because of a minor tinker with the lender's criteria in this area.

AngelaUK

Sorry to clarify figures, previous property was £175,000 with 10% deposit = £157,500.

New property is £180,000 with 15% deposit = £153,000.

I didn't say how much the property was or deposit I would put, just said on my new debt figures want to confirm my max borrowing, was assuming that I could still borrow at least £157,500 if needed. As long as the amount doesn't drop below £153,000 now I am okay, but would to know what triggered the change. By the time I do a full application I will have paid a bit more off so fingers crossed!

Thrugelmir

AngelaUK wrote: »

By the time I do a full application I will have paid a bit more off so fingers crossed!

Underwriting is progressively tightening down. As the banking revolution continues. So paying down your debt should be the priority.