Loan just before mortgage application...

johnhill

Hi All,

Looking for a bit of advice - I currently have a loan and i am paying £614 per month £11,500 remaing over 20 months.

I am looking at applying for a £252k 90%ltv mortgage with nationwide and although they say they will lend up to £260k with the loan taken into account, I am worried that when I apply they might reject me on affordability due to the high loan and almost borrowing my max amount.

I could redo the loan over a longer period and bring the payments down to £250 per month - online calculators then say nationwide would lend me up to £310k so affordability will be a lot better.

My concern is that my credit history will then show a recent loan application and i'm not sure if the mortgage underwriters would like that - does anyone know if this will matter - my debt will stay the same?

kingstreet

Affordability is underwritten according to monthly payments, not the capital amount, so reducing the monthly payments should improve affordability.

However, a recent credit search may count against you, particularly if you already have others on file in the last year.

It's impossible to say how this will go.

johnhill

Thanks for the reply kingstreet,

The only searches on my file are one 18/01/2012 by Hastings Car Insurance and one by my Bank Natwest 08/12/2011.

Eeekk - don't know what to do - i do not want to jeopardize an apllication because a search but don't want to be rejected on affordability????

kingstreet

Will you be declined on affordability?

Or will you be offered a lower amount?

That would give you the opportunity to consider changing the loan to improve the affordability?

Just speculating here...

johnhill

That's a good point. I spoke to the nationwide mortgage advisor and she says i won't be declined on affordability as I am within my max loan value.
Can't help but worry though.

Anyone else got any experience of this?