Just been turned down for the decision in principle

ValHaller

Farside wrote: »

.... So i'm not just looking at what this house is worth now. But the future. I just somehow need to get the mortgage lender on my side.

You have an uphill battle here. The problem with your proposal is that it is speculative. The house is plainly a doer-upper rather than one to live in. And you have no money behind you.

So all the financial risk is being taken by the lender and you, who has no money will end up no worse off if it all goes wrong.

Speaking as I say, from a non financial services perspective, this is how I would be describing your proposals:

Farside is a builder who has been bankrupt. Since bankruptcy he has complied with the terms and conditions of credit he has taken, although he brings very little in the way of savings with him.

I believe that Farside represents a medium to low risk of default on a straightforward mortgage at up to 2.5 times income with a deposit of 10% or more and his handling of consumer credit subsequent to bankruptcy indicates that mortgage repayments will not be missed and will be on time

In respect of Farside's proposed property, values are holding up in the area and to some extent rising, which is a reflection of renovations which have been undertaken. Farside is himself proposing a renovation. I would assume that Farside has the technical capability to execute the renovation either himself or by engaging associates.

However, my doubts centre upon the financial model. Farside has no capital behind him and the proposal is at 95% LTV. Given the extent of works evident on other properties in the area, it is inevitable that his proposed property will drop substantially in value at some stages in the renovations.

The value could drop below £30,000 at worst, making an effective LTV of 150%. Inevitably, when the property is at its lowest value, the finacial stress on Farside will be highest and there is a medium to high risk of Farside having no option other than to default, despite best efforts. At this point, if repossession is required, the lender will be exposed to a risk of £20,000.

While Farside is a reasonable prospect for a straightforward mortgage, I could not recommend lending for his current proposal as currently formulated. The proposal would be viable at LTV of 60% or lower with Farside having no other unsecured credit active and a further £10,000 in savings.

Sorry, it will not be what you want to see. I would be interested to see if others agree with the above - but I think it is a fair summary of what you are up against

Farside

it's more then livable, i was talking more along the lines of refurb if i want to make it more valuable, currently it needs no work to be livable, it just look crap decor wise, everything works, kitchen, elec, bathroom..plumbing wise.

but i'd just like to improve it. i could also get more deposit possibily (£1k-£2k more so that would make it approx 10% deposit). i'm just not sure on costs involved as its a first time mortgage, i know solicitor/convayor fees as i've had quotes already for that for £500-£650. there bank mortgage fees which i estimate at £499. What else am i looking at? I dont need moving costs as the house is just down the road so friends can help carry and move furniture. I currently have a spare £2k left in bank for fees, so that can be added to deposit (of which is currently 10%) after fees are taken care of, Plus next wages which i have a lot of over time added on so thats another spare £1k to add on to the deposit or fees if needed.

Thrugelmir

ValHaller wrote: »

[/INDENT]Sorry, it will not be what you want to see. I would be interested to see if others agree with the above - but I think it is a fair summary of what you are up against

Mortgages are priced for high volume low risk transactions primarily for the purpose of buying a home. Anything else needs to be funded by the borrower either in cash or by a more suitable form of finance.

ValHaller

A lot of this relates to how you present yourself and your proposals. If you go into a Mortgage Advisor with plaster on your arms and leaving dusty footprints on the carpet, you are going to start making an impression. If you then start talking about the value of the property and how it is worth at least £20,000 more once you get your hands on it, I fear that you will have oversold yourself and the lender will be interpreting everything in the context of you being a builder - if you had a television which could see into their heads, you would see pictures of loaded skips and scaffolding and stripped lath and plaster, the whole property renovation daytime TV imagery.

I suggest you rethink your approach. Look at it as a family home. So go to the Mortgage Advisor with your partner, dressed to look the least like a builder (but when asked, do say that you are a builder). When it comes to discussing the house, it is worth exactly £45,000. You have no ambitions to do it up and you should not claim potential a value which needs skips outside. A lick of paint and a garden makeover is the limit of your ambition. Dust and lath and stripped lath and plaster and skips outside is for your customers, you want a home where you can stay away from all that.

Get yourself 10% deposit and free of loans and I think you will probably get a bit further than you have so far.

Farside

ValHaller wrote: »

A lot of this relates to how you present yourself and your proposals. If you go into a Mortgage Advisor with plaster on your arms and leaving dusty footprints on the carpet, you are going to start making an impression. If you then start talking about the value of the property and how it is worth at least £20,000 more once you get your hands on it, I fear that you will have oversold yourself and the lender will be interpreting everything in the context of you being a builder - if you had a television which could see into their heads, you would see pictures of loaded skips and scaffolding and stripped lath and plaster, the whole property renovation daytime TV imagery.

I suggest you rethink your approach. Look at it as a family home. So go to the Mortgage Advisor with your partner, dressed to look the least like a builder (but when asked, do say that you are a builder). When it comes to discussing the house, it is worth exactly £45,000. You have no ambitions to do it up and you should not claim potential a value which needs skips outside. A lick of paint and a garden makeover is the limit of your ambition. Dust and lath and stripped lath and plaster and skips outside is for your customers, you want a home where you can stay away from all that.

Get yourself 10% deposit and free of loans and I think you will probably get a bit further than you have so far.

I haven't actially said to the lender that the house needs a bit work doing :laugh: , It's only on this website that i explained a bit more, Thanks for the info i'll give it ago in a few years time when i have 20% deposit, I reckon i'll try with 20% not 10% just to make sure. The loan is paid off in exactly 1 year from now so that'll be out the way.

I've just had a call from nationwide and they said they are starting a appeal to see if it get further as it usually does with me when an actual person looks through my accounts...lol. I've got nothing to lose now, If it doesn't work it'll drop my score more but that'll go back up by the time i reapply again. Nothing ventured nothing gained.

droiderm

Let us know how you get on .
Did you definitely fail the automated scoring part the first time round ?

Farside

droiderm wrote: »

Let us know how you get on .
Did you definitely fail the automated scoring part the first time round ?

Yes 100% failed it

ValHaller

Farside wrote: »

I haven't actially said to the lender that the house needs a bit work doing :laugh: , It's only on this website that i explained a bit more, Thanks for the info i'll give it ago in a few years time when i have 20% deposit, I reckon i'll try with 20% not 10% just to make sure. The loan is paid off in exactly 1 year from now so that'll be out the way.

I've just had a call from nationwide and they said they are starting a appeal to see if it get further as it usually does with me when an actual person looks through my accounts...lol. I've got nothing to lose now, If it doesn't work it'll drop my score more but that'll go back up by the time i reapply again. Nothing ventured nothing gained.

Very best of luck. I think you have enough distance from your bankruptcy that it is not going to hinder you too much and you know how to keep on the right side of consumer credit. Do try and get some understanding of why you are getting automatic rejects followed by manual acceptances.

In the meantime, if you appreciate that financial activity which ups your Experian so-called 'credit score' may harm your mortgage prospects, I am sure you will do better.

And I suggest that rather then wait till you get a 20% deposit, you could try pushing the door at 11% and 16% (not 10% and 15%). Also consider opening a savings account with a Building Society which would be likely to lend to you at some stage. Putting £50 in without fail every month and more when you have it and the staff knowing you may not improve your credit score but is the kind of thing which could help tip the balance if you need to be underwritten manually

Farside

ValHaller wrote: »

Do try and get some understanding of why you are getting automatic rejects followed by manual acceptances.

Also consider opening a savings account with a Building Society which would be likely to lend to you at some stage. Putting £50 in without fail every month and more when you have it and the staff knowing you may not improve your credit score but is the kind of thing which could help tip the balance if you need to be underwritten manually

I have never been able to find out why i keep getting rejected by nationwide, They never tell me when i ask them.

I'm trying to find a bank that is good for discharged bankrupt mortgages so i can open a savings account with them. Any suggestions? The only one that stands out after months of looking online is Skipton buildings society, But that is by word of mouth (or fingers lol) online. I'd have to open it online though as i don't live near one.

ValHaller

Farside wrote: »

I have never been able to find out why i keep getting rejected by nationwide, They never tell me when i ask them.

No point in banging your head against that wall. If you say who you had debt with cancelled by your bankruptcy, someone might know if they have been absorbed by NW, which may be why you have problems.