Declined for interest only - any idea why?

sterlingstash

Thrugelmir wrote: »

Maybe that's because stocks fall as well as rise.

Agreed Thrugelmir, but taking current fund value (minus a chunk) for someone who has 20 years+ term to run seems a bit tight. I'm on IO, and it's not affected me yet, but if I want to port my loan in future then despite a track record of large overpayments (10% of total loan amount per year) and a consistent £1k per month going into S&S ISA (on a sub £200k loan), I still wouldn't be eligible to port my loan unless I already had 120% pot at time of porting.

POPPYOSCAR

ValHaller wrote: »

I doubt that the revaluation has acted against you. You income is fine, but while your credit is low, you have to wonder why on your income you need it at all - as underwriter, just to be provocative, I would be more dubious of your grasp of finance with 2 months income borrowed than I would of someone on £40k.

But the real killer will emerge when you go to some amortization calculator and work out how long you will need to pay £250 into an ISA to clear £294k. This will be what is bugging the underwriter

That was my first thought as well.

Thrugelmir

sterlingstash wrote: »

Agreed Thrugelmir, but taking current fund value (minus a chunk) for someone who has 20 years+ term to run seems a bit tight. I'm on IO, and it's not affected me yet, but if I want to port my loan in future then despite a track record of large overpayments (10% of total loan amount per year) and a consistent £1k per month going into S&S ISA (on a sub £200k loan), I still wouldn't be eligible to port my loan unless I already had 120% pot at time of porting.

There's been a good run recently in equities. QE is estimated to have boosted the FTSE by 10 to 15%. Corporate reporting season is upon us. So far the results have been mixed. Vodafones results are an indication that the short term may be disappointing.

sterlingstash

Thrugelmir wrote: »

There's been a good run recently in equities. QE is estimated to have boosted the FTSE by 10 to 15%. Corporate reporting season is upon us. So far the results have been mixed. Vodafones results are an indication that the short term may be disappointing.

You're missing the important point I think. Is it appropriate to judge a long term repayment vehicle by what it has in it today? Endowment policies were considered suitable based on ongoing contributions (albeit with overly optimistic growth rates). My understanding is that Lloyds now only looks at fund value at time of application, ignoring future contributions (which could be 20 years worth), let along future growth of investment. So your savings need to outweigh your mortgage at time of application.

Thrugelmir

sterlingstash wrote: »

You're missing the important point I think. Is it appropriate to judge a long term repayment vehicle by what it has in it today?

Markets move up and down.

FTSE 100 stood at 6931 on 31st December 1999.

What was it today?

I hold shares myself via my SIPP. I place no reliance on current value. As tomorrow I might lose the gain I've made. Seen it before.

sterlingstash

Yes, but with 20 years of future contributions, even at Bexters £250 per month should surely be valued more than today's pot minus 20%.

Imagine if at 35, your pension forecast was based on today's value minus 20%. Yet they pick and choose their terms. Damn financial institutions. What is good for the goose....

bexterswell

With regards to the repayment vehical - it's not just the ISA of £250 per month.They worked out the replayment vehical as:
1) downsize
2) pension payout (I put £1.5k into it a month)
2) £250 into the ISA would be worth around £75k in 20 years before compound interest. And I've been putting it in there for over a year.

I asked the mortgage advisor 'what does it need to be?' and that's what he suggested!

I'd been given a offer, signed the paperwork and thought it was a done deal, but the underwriter declined.

bexterswell

kingstreet wrote: »

Is the bank willing to lend you the money, on capital and interest?

Is it declining the amount, a mortgage of any size, or the repayment method?

Yes. When they called and said no to the interest only, they said we are eligble for a better rate on a new capital repayment mortgage.

They seem to be declining the repayment method - has nothing to do with the amount of money borrowed.

Thrugelmir

bexterswell wrote: »

I'd been given a offer, signed the paperwork and thought it was a done deal, but the underwriter declined.

You may have received a DIP. Until the formal application is made and processed will you won't receive an offer.

Thrugelmir

bexterswell wrote: »

We got the house revalued from £334k to £420k (substantial renovations!)....maybe that has something to do with it?

Have you asked the bank to revalue?

For that sum of money presumably the property has been extended. Not just kitted out with top end fixtures and fittings.