Tesco Mortgages

andyca

I would understand this if was a rejection based on criteria, but the advisor was asking if I had any other income that I hadn't thought of, and clearly stated the rejection is based on affordability.

I need less than 1/4 of my disposable income after all expenses to pay this mortgage, I have no debt, no overdrafts, and I pay my credit cards off in full each month.

It just doesn't make sense at all, I can't believe anyone has got this 1.99% rate. Please let me know if you have.

paso11

andyca wrote: »

I would understand this if was a rejection based on criteria, but the advisor was asking if I had any other income that I hadn't thought of, and clearly stated the rejection is based on affordability.

I need less than 1/4 of my disposable income after all expenses to pay this mortgage, I have no debt, no overdrafts, and I pay my credit cards off in full each month.

It just doesn't make sense at all, I can't believe anyone has got this 1.99% rate. Please let me know if you have.

I have with a 60% Ltv, similar monthly income to yours borrowing about £200k

andyca

paso11 wrote: »

I have with a 60% Ltv, similar monthly income to yours borrowing about £200k

Thanks for the response, but now this makes even less sense Higher LTV and repayments with similar income! I have requested clarification from Tesco on their affordability criteria, I will post back if I find out anything useful.

paso11

andyca wrote: »

Thanks for the response, but now this makes even less sense Higher LTV and repayments with similar income! I have requested clarification from Tesco on their affordability criteria, I will post back if I find out anything useful.

Quite. It does seem bonkers...

Thrugelmir

andyca wrote: »

I have requested clarification from Tesco on their affordability criteria,

Underwriting criteria is a moving target. Which will be determined by risk management within the bank along with the availability of funds to lend at any given point of point.

No lender is under any obligation to offer you a mortgage. That's the harsh reality of the matter.

Dave_Ham

Also do be mindful that Tesco started "offering" mortgages very recently, so there understanding, systems, processes, funding and case management is probably far from perfect.

Great rates are only great if you can get them, given the feedback so far it seems many low risk clients are being declined by Tesco at the moment.

andyca

I promised I would feedback and here it is, the issue I had was down to two factors:

1. I went through my credit file and noticed I had over £40,000 of available credit in the form of credit cards and overdrafts that I never used, and a unlimited charge card. I went through reducing this available credit to £6,000 and cancelled the charge card.
2. My existing mortgage was a flexible mortgage which allowed me to increase my monthly repayments when I liked, I recently had a windfall and as I had already paid the maximum lump sum before charges, I increased my monthly repayments to 10 times their usual amount, this meant that when performing the credit search with Experian the Tesco system assumed the large outgoing mortgage payments were another mortgage I had not told them about. Tesco changed the monthly cost of my existing mortgage to the amount I have actually been paying for the last couple of months and it all went through. (I’m sure this is what I did with the first application and when it was declined I changed it but I think it was probably a combination of the two)

Even after the fees, re-mortgaging has saved me £2845 over the next 2 years!

Thanks MSE

Dave_Ham

Thanks for updating and good work.

This is why tesco are still naive on mortgages, lucky you chased for answers...

They should listen to you and cross reference to Credit Files, not the other way round..

All the best

paso11

andyca wrote: »

I promised I would feedback and here it is, the issue I had was down to two factors:

1. I went through my credit file and noticed I had over £40,000 of available credit in the form of credit cards and overdrafts that I never used, and a unlimited charge card. I went through reducing this available credit to £6,000 and cancelled the charge card.
2. My existing mortgage was a flexible mortgage which allowed me to increase my monthly repayments when I liked, I recently had a windfall and as I had already paid the maximum lump sum before charges, I increased my monthly repayments to 10 times their usual amount, this meant that when performing the credit search with Experian the Tesco system assumed the large outgoing mortgage payments were another mortgage I had not told them about. Tesco changed the monthly cost of my existing mortgage to the amount I have actually been paying for the last couple of months and it all went through. (I’m sure this is what I did with the first application and when it was declined I changed it but I think it was probably a combination of the two)

Even after the fees, re-mortgaging has saved me £2845 over the next 2 years!



Thanks MSE

Good to hear, glad it worked out ok in the end. They have withdrawn the 1.99 deal due to high demand. I guess we were both lucky to get in whilst it was available

andyca

paso11 wrote: »

Good to hear, glad it worked out ok in the end. They have withdrawn the 1.99 deal due to high demand. I guess we were both lucky to get in whilst it was available

Very happy to have got this one… one of the things I had to work out for myself was how much the overall percentage rate that I would be paying over the term of the mortgage including the upfront fee… Mortgage companies have massive fees so they can hide behind there headline low rates. This is what I came up with:

Mortgage Amount to be borrowed / Total term in years = Amount that will be paid back each year (X)
Mortgage Amount to be borrowed - ((Amount to be paid back each year * Deal term) / 2) = Average amount owed for the deal term (Y)
(Mortgage fees * 100) / Average amount owed for the deal term = Percentage over the total term the fee adds to the mortgage (Z)
(Percentage over the total term the fee adds to the mortgage / Deal term) + Advertised percentage = Real percentage you pay each year

So for example a £110,000 over 20 years with an advertised rate of 1.99% for 2 years and a fee of 995:
X = 110000/20
Y =110000-((X*2)/2)
Z =(995*100)/Y
Actual % PA = (Z/2) +1.99 = 2.466%

I have a spread sheet that works this out but a web form doesn’t seem to exist. I may make one if I have time. One thing is for sure, I can’t find a true percentage close to 2.466% form any lender now. Next best I tried was Virgin at 3.14% (£99 fee on 3.09%)

This will only work if you plan to switch as soon as your deal is up. But I like it because it cuts through all the rubbish and just gives you one figure that is calculable for all mortgages.