Mortgage Affordability Test

mzmoneypenny

Just recently been turned down for a remortgage with Portman on affordability grounds.

Single parent, one 12 yr old son, been paying mortgage for last 3 years on current property with no problems, and no problems with missed payments on any credit agreeements.

What Portman told me they had done, is worked out an estimate of my outgoings (apart from mortgage), which was way over my estimate which included outgoings for myself and son. They did not take into account any WTC/CTC tax credits or Child Benefit towards income/affordability as they said, that would be for looking after my son.

Fair enough... but why are they including the son in my estimated outgoings if the WTC/CTC and Child Benefit is supposed to be looking after him? Seems grossly unfair to get penalised twice!

Anyone come across this affordability test? Is this specific to Portman, or are other lenders doing this too? (ie not letting WTC/CTC & Child Benefit be used in the income/affordability test).

herbiesjp

Different lenders have different ways of assessing affordability, so whilst Portman may decline your application other lenders will still look at it.

sfell

Hi, we applied for a morgage with HSBC and they did the affordability test, they would lend us way more than we could afford so perhaps give them a call.
Hope this is useful.
:T

accordpassat

I currently have a mortgage with Cheltenham & Gloucester and have asked to remortgage due to home move . They have offered me a lower amount than I currently have outstanding with them.

In which case, why dont they repossess my home if they feel I cannot afford their current mortgage???????/

My mind boggles.

Fairdo_2

mzmoneypenny

I know quite a few lenders do not take the benefits you mentioned.

However, a decent lender can use it as an argument towards affordability, if this is borderline.

I agree with Ian Griffiths on the FSA stance lenders have to take. However, I do believe lenders need to excercise some common sense in proving to be a responsible lender.

The reason they do not take certain benefits (as mentioned before) is that those benefits are historically variable. Child Tax Credit can be changed or removed, Working Tax Credit can be ammended. That is why Maintenance receipts are not normally considered unless it was by court order, as the lender takes an assumption that this income could dry up without notice or recourse. Even though a lender will deduct mainenance if they see it being paid out, whether through court order or not.

Unfortunately, Lenders have the right to take whatever they choose in order to be judged a responsible lender.

I have difficulty getting Agency workers a mortgage with some lenders, even if the client has chosen to because they are paid better on Agency and that there is more likelihood of regular work by that route!

Take the poor Rover workers for example, that used to be known as a job for life, but an Agency worker actually can have a better chance of regular work.

Most lenders are afraid to be pulled up by the FSA for something in hindsight, therefore, when a lender is worried about consequences, they can choose not to take the risk.

There are likely to be much more generous Lenders out there than Portman on affordability, so I would suggest you use a local Independent Mortgage Broker and get them to do the work for you.

mzmoneypenny

Thanks everyone for your replies.

I'm with Abbey at the moment, and the main reason I was wanting to move was their terrible customer service. Been let down numerous times in numerous ways by them. Portman had offered the best rate @ 4.99% fixed for 3 years, hence my application to them.

I've only got a small mortgage of around £28.5k but had wanted to borrow £32k to raise capital do some minor home improvements.

My early redemption period charge and also my discounted rate ended on 5/4/05. Thought I was going to get a big increase on the amount I paid each month. Turns out, it's only gone up a fiver! Now I'm not sure it's worth changing lenders, as I would have to shell out cash unless I got a fee saver mortgage.