Large Deposit but turned down twice for a mortgage of 50% less than our current one!

ThingsChange

Hello - I'm really frustrated and wonder if anyone can advise me of any lenders to approach. We are selling our house and will be reducing the amount of money we wish to borrow by 50% to buy our new house. We have a deposit of 64% of the value of the new house we want to buy (equity from our current home). We both have a good credit history and credit rating. We have some current credit card debt (just above 20k) - which was mainly the result of getting married recently - we intend to pay this off when we sell our house as we will have around £70k spare once we sell. We are both employed. We have now been turned down by two major lenders (one being our current lender which whom we have an 8 year healthy relationship). Can anyone advise me of any lenders they think may be sympathetic to us - apparently it is the credit card debt which is the sticking point. Thank you.

Dave_Ham

Forget the lenders, pull off your Experian and Equifax credit reports and put them in front of a half decent broker. Certainly do not apply to any more lenders blind, find a broker.

I will take a punt on the 2 declined, 1 will be Abbey/Santander I am convinced...

If pushed, maybe an application to HSBC maybe?

This should be largely straightforward to an appropriate lender, although would suggest a look through all credit files first...

Have you had an offer accepted on a new property already?

Thrugelmir

ThingsChange wrote: »

apparently it is the credit card debt

Underwriters may well expect to see you make some effort to repay this debt yourselves for a period of time. The concern would be that you happily spend money then worry about paying it back afterwards. This puts you in the higher risk category of potential borrowers as far as their concerned.

ThingsChange

We have a broker - he's presented everything to both lenders (proof of salary, credit reports, bank statements, company accounts, supporting letters - partners company which showed profit for 2009 and 2010, even stuff from our accountant when asked, etc etc). They seem to be completely stuck on our current credit card balance - we've never had credit card debt at all before. We have another app in for another lender, who have not asked for such detailed information so fingers crossed. It was the Halifax and Nationwide by the way.

ThingsChange

PS. Yes we've had our offer accepted on the new property and the people buying ours are all firmed up too.

Dave_Ham

Ok - then I would suggest there is something more sinister in the credit files and your broker is either not up to the task, or not telling you the truth.

Halifax are amongst the most flexible highstreet lenders, so you may require a more non-conventional solution - this does not mean silly high rates by the way..

Specifically, why did your broker tell you Halifax declined?

ThingsChange

We've both checked our files and they are okay. Both lenders were sniffy about the credit card debt - despite us clearly never having had any before. They also seemed not to have a clue how to understand company accounts and couldn't read a p&l. We had to get our accountant to write letters explaining the company finances (very straightforward and transparent) and business projections for the coming year.

Dave_Ham

Every lender looks at company accounts differently, some look at the income the director has taken (PAYE & Dividends) others will look at net profit, although depends upon the lender and the structure of the company.

As a broker, you look at the entire picture and with experience place accordingly.

Was the credit score declined with Halifax, the mortgage not affordable based upon interpretation of income potentially, or was the credit card debt cited as reason declined (the latter being incredibly unlikely)

Is your broker courtesy of the Estate Agent?

ThingsChange

Both our credit scores are excellent. They had a problem with a company loss last year (first loss ever and not significant) - so I guess they are talking affordability. Salaries more than cover new mortgage. So stupid though as our current lender has turned us down when we want a new mortgage for 50% less than we currently pay and have a significant deposit (c. £300k) - you wonder at their logic. The whole point of downsizing is to keep our finances in good shape through the recession and ensure we have a more affordable mortgage and money in the bank to grow the business plus pay off credit cards.

ThingsChange

PS. Thank you for your responses - much appreciated.

Dave_Ham

No worries..

Are you both self employed/owners of this business? or either employed..

Latest year loss will be the biggest issue, I have overturned a Nationwide case recently with a loss year within the last 3. The banks are nervous though.

Your deposit will lead you to solutions...

Where is the rest of the deposit coming from?