Turned down for Remortgage - what now?

Legacy_user

My partner's fixed rate mortgage ran out about 6 months ago (was first-time buyer 2.5 years ago) so she's paying more than she'd like to each month now.

She applied for a Tesco 2 year fixed, went through the whole process including paying the fee, surveyor etc, but was turned down at the last minute because she'd used her overdraft too much over the previous few months (never went over her OD limit though). Didn't get the fee back either :-(

So now what should she do - plan is to wait for 3 months, use the overdraft as little as possible, then apply to another lender.

Any advice?

House cost £212k, with £45k deposit and £167k mortgage (this should read £65k deposit and £147k mortgage).

I'm not on the mortgage for various reasons (incl. previous bankruptcy) although we might look again at this in a year or so. She earns £35k plus a bit of child benefit and c.£3.5k income from lodger.

Thanks in advance.

System

Oh yes, and she's 5 months pregnant! She intends to go back to work in around October or November.

Dave_Ham

Hi, what rate is she currently on?

Tesco was never going to be a likely solution given the income multiples I am afraid.

Depending on the rates, the income multiples required are going to be an obstacle for many lenders but may be a better solution.

kingstreet

It's tight on income.

It needs 4.5x as a minimum and that's out of reach of all but three or four lenders. The OD thing was probably the tipping point.

Very few lenders will take payment from a lodger as income, so that may well be ignored.

System

Not sure what the rate is, it's gone up from 600 and something per month to 700 and something. Tesco had agreed in principle, surprised they would do this and put all the effort in at their end if it was never a goer.

Any ideas on possible lenders? And (other than OD) tips on 'behaviour' in the meantime?

Thanks

kingstreet

Talk to a broker.

More speculative lender credit searches are going to start to cause an issue.

Dave_Ham

Depends upon her rate, if she has a competitive SVR then even though it is going up then there may not be better elsewhere?

That said, the lenders at 5 * income multiples are going to be less likely to care about being within an overdraft limit as to what Tesco were..

EMac_2

Did it value at £212k or wouldn't Tesco tell you? Already close to 80% which takes out the better rates anyway so SVR might be it. Income multiples are fine but lenders now tend use their own affordability calculators which can slaughter your affordability when you have household dependents. Its a shame to have paid for a valuation when so many remortgage deals offer free valuations and legal work. You might have been able to save on some of the time, effort and money you laid out by seeing a broker. Best of luck

ILW

Has she taken on any financial connection with yourself over the last couple of years?

System

ILW wrote: »

Has she taken on any financial connection with yourself over the last couple of years?

No, we've quite deliberately avoided that.

I may have got the LTV numbers wrong (it's off the top of my head), could possibly be 20k out (20k more deposit, 20k less mortgage) giving just under 70% LTV.

The only other changes since the lender (Lloyds TSB) gave her the original 2 year deal is that she earns more than she used to, and has one less dependant as her eldest kid now lives with their father.

System

EMac wrote: »

Did it value at £212k or wouldn't Tesco tell you?

Valuation was same as purchase cost, £212k.