advice please, rejected mortgage :-(

Mazza6059

Hello all,

This is the first time that I have posted on here and only about the 10th time that I have visited the forums [even though I get the e-mail from Martin every month]. Anyway, I’m rambling on now so ill get to the point.

Bit of background first:
1. We are first time buyers
2. we both currently have debt - my girlfriends has 1k will be cleared before we 'draw down the mortgage' but mine is 7k and won’t be cleared.
3. Combined we earn 45k per year
4. We both have car finance equalling £600 payments per month [combined, not each], mine lasts for another 2 years and my girlfriends lasts for another 1.5 years.

About 2 months ago we found a house that we fell in love with and decided that we wanted to buy it. I will point out that this house is not yet built so we are buying off plan.
The house is on the market for £149995 and we have just managed to scrape together £7500 as a 5% gifted deposit from my Girlfriends father.

Me and my girlfriend went to my bank [NatWest] for a meeting with their mortgage advisor.
The lady at the bank reviewed my account history along with my girlfriends past 3 bank statements and payslips. From this she advised us that we would be able to get a mortgage for approx. £150k [as we only need 143k this if plenty] and advised us on a scheme they call New Buy.
The new buy scheme is only for first time buyers and allows you to put down 5% deposit with an attractive fixed rate [for 2 years] of 4.79%.
So we went away, thought about it and then went back and went through the full application with their under-writers. Upon completion they gave us an approval in principle and told us that within around 2 weeks we could expect to get the offer letter.
following on from this good news we went and put a £500 reservation fee down on the house and paid our solicitors £250 to begin processing the documents and carrying out the searches.

Around 3 weeks later we still hadn’t heard anything and we’re about to leave for a week’s holiday, so as I was expecting the £499 arrangement fee to come out of my bank account I rang them up to check the status, this was on the 24th June.
It was then that I was told that the mortgage had been rejected on the 17th June and when I asked why we hadn’t been informed all they said was “oh, didn’t anyone tell you”?!?!?! When I asked for the reason they told me it was because I have an overdraft with them that I am in every month. The most annoying thing about this is that they knew that when we applied and got the approval in principle. I have banked with them all my life and they know all my history so why couldn’t they have told us this straight away????

Also, to this day we still haven’t received any correspondence from the bank confirming that the application was unsuccessful which I feel is totally unacceptable!

So now we have applied for another mortgage with Abbey and are waiting for the confirmation from them.

The question I have is if the other mortgage is unsuccessful, meaning we cannot buy the house do I have any grounds to complain to NatWest as we will have lost £750 that we paid out because they lead us on to believe that the mortgage was successful.

All opinions/ comments welcomed, thanks Matt

Dan:_4

Post this on the mortgage board for some good advise on resloving your mortgage problems.

However, I have to say that if you don't get a mortgage in place then it is highly likely you have done your £500 reservation fee as builders are greedy b******s

Senior_Paper_Monitor

Natwest are very touchy about 'living in overdraft' at that moment and have little enthusiasm for lending in general.

Being a 'loyal customer' holds little or no sway.

We have a client on the books at the moment with spot on credit, large income (nowhere near pushing the affordability limits like yours), own 100% of successful brewery business, banked with Natwest (business and personal) for years, rejected for a remortgage at 75% LTV because they were using average 50% of their 5 figure overdraft facility constantly.

At 95%LTV they arer super picky.

No broker with any sense would have taken you to Natwest for this one - for the reasons explained above. They are however the most generous on lending muliples - so (without running you through the various affordability calculators) I suspect you are going to struggle with the alternatives.

You ned to be very careful with any furtehr applications at this stage - multiple applications (DIPs) in a short period do not help your credit score.

.... and, NO, you have no recourse against Natwest. You went to them voluntarily, they did not give you advice and they did not promise you a mortgage (and it is almost certainly the case that the girlie on the desk was in a position to give you guidance in any way).

Yours is a classic demonstration of why most First Time Buyers would benefit from the services of an experienced mortgage broker.

AFK_Matrix

Yeah Natwest are useless. I was in a slightly better position than yourselves with a 10% deposit and a good credit history and a good salary. So was told that yes I could get the amount I needed so went on to make an application. So went through all the details for the application and at the end was told it had to be referred to the underwriters (even the Natwest lady who was going through the application with me was surprised). So 3 days later they phone me up and say I am not eligible for the mortgage because my salary is too low!!! Well tell me that at the application stage then and save me from having a bloody search on my file!!! Was more than annoyed I can tell you!!

Senior_Paper_Monitor

This is going to get me on my 'hobby horse' ....

The 'Natwest Lady' was talking through an orrifice other than her mouth if she said she was surprised it had to go to an underwriter. EVERY MORTGAGE GOES TO AN UNDERWRITER - there is certainly no-one in branch (and certainly not the girlie you sat with at her little desk in a glass box) who has the mandate to approve mortgages.

90% LTV mortgages, let alone 95%, are high risk lending and will go through a series of underwriting processes and cross checks.

To have it rejected (I am assuming this was the real reason) on affordability just demonstrates the lack of knowledge and authority of that 'Natwest Lady' - as this is one of the decisions that falls in a simple published formula for which she would have had calculators readily available.

Bank clerks have nothing to lose in simply banging the application in as it either works or doesn't (it works they get a commission) - they don't have an alternative market to consider.

This is why a broker paws over every detail of your financial records and history to match you with the lender most likely to accept your case

betmunch

Another stitch up case by "My Bank" when will we learn?.....

Cant see you having any better luck with Abbey, they will find any reason to decline a case.

Go to a broker, see if this is salvagable, and get it done right

Mazza6059

Sorry to sound like a complete novice [although that is what I am].

But how do i go about seeing a broker?
I've been dealing with an independent financial advisor since the NatWest one got rejected...is this the same as a broker?

Thanks Matt

betmunch

If your seeing an IFA then thats a good start. A mortgage specialist would have been better.

If hes put in an application to the Abbey it means one of 3 things.

1. Hes very brave.
or
2. Hes very confident.
or
3.there were no other options. (most likely)

Good luck, let us know how it turns out

Senior_Paper_Monitor

Sort of - if he is an IFA then he is authorised for pensions and investments in addition to mortgages/non-invetsment insurance.

Some IFAs still do mainly mortgages with a few pensions thrown on top, but many do primarily pension/investment and occasional mortgages (many sub-out such work to mortgage specialists) and the problem with them is they don't tend to be up to date on detail criteria level (I.e if you haven't done a mortgage with Natwest for a year how do you know their 'attitude' has changed - Natwest were taking nearly 40% of our business at one time).

Mortgage Brokers (or advisers as most prefer to be called -I find broker works better on the search engines !!) 'live and breath' mortgages and work on their relationships/level of access with lenders.

At least you are taking advice at this point - which must be better for you than trawling the banks.

Mazza6059

Well we have been given the impression [by him] that he mainly does deal with mortgages. it was the builders that actually put us in touch with him in the first place, but us being inexperienced we decided that we could do it ourselves...how wrong we were!!

When I first spoke to him and told him the problems with NatWest he went away and then e-mailed me [as we were on holiday at this point] 2 options:
1. The Abbey mortgage
2. A share equity scheme with the builders of 10%, which when coupled with our 5% deposit this would mean a LTV of 85%.

We decided against the shared equity scheme as we are not fond of them as we wanted to own our own home from the start, not just 90% of it!

If this Abbey one falls through [which is what I am expecting if I'm honest] then we were thinking of trying the shared equity as a 'last-resort'...but would seeing a broker be a better option? ]

Thanks Matt

thegirlintheattic

I would speak to friends/family and get a recommendation for a mortgage broker. Failing that look in the yellow pages.

You are going to be a iffy proposition for most high street lenders as you have a low deposit, debts and are pushing the affordability criteria.

I personally think shared equity is the least attractive proposition. You may find future problems when selling.