Has the mortgage market changed enough?

whiteroom184

Morning all :j

i recently separated with my husband and bought out his share of the property via a separation agreement in writing, also have all the child maintenance sorted etc. The mortgage is still in joint names, i tried to get a mortgage in just my name but no lender would lend, despite the fact i have mainly paid the mortgage myself for the last few years;- the details are;-
earnings 37k net plus 5k annual bonus
house value 220k
mortgage o/s 175k
credit repayments £120 pcm
currently paying £1020 pcm on lenders variable rate but could pay £850 on a more competitive rate.
i have an excellent credit rating, no defaults or missed/late payments for 20 years.
i have tried both L&C brokers and both my current account banks but still no joy.
Disposable income after mortgage, utilities, ctax, childcare, credit payments etc leaves over £600 pcm for food (approx £100 pcm) and car running costs (approx £50 pcm as work locally), i even manage to save £200 pcm into my rainy day account which has 2k in it, with my main current account provider.
I have also just taken in a lodger paying £350 pcm plus ctax.

So why can i not get a mortgage?!?

If i were to reapply now could i use the lodger money as additional income?

any advice gratefully received

kingstreet

It sounds like you haven't approached a lender with a high enough income multiple.

You need to try lenders' online affordability calculators to establish what you can borrow. These will take into account your income, but will also make an allowance for existing credit, dependents and childcare costs, so make sure you put everything in.

The term of the mortgage will also have an impact.

Lenders use gross annual income for the employed and the equivalent, net profit for the self-employed, so ensure accuracy there too.

I input the following in one of the more generous lender's calculator;-

£37k gross basic
£5k bonus
£1,560 child benefit (assumed two kids)

£120 per month loan
£0 credit card balance
1 applicant
2 dependents
25 year term

and got an output of £195,940, so there's something you are missing out.

Please clarify.

whiteroom184

kingstreet wrote: »

It sounds like you haven't approached a lender with a high enough income multiple.

You need to try lenders' online affordability calculators to establish what you can borrow. These will take into account your income, but will also make an allowance for existing credit, dependents and childcare costs, so make sure you put everything in.

The term of the mortgage will also have an impact.

Lenders use gross annual income for the employed and the equivalent, net profit for the self-employed, so ensure accuracy there too.

I input the following in one of the more generous lender's calculator;-

£37k gross basic
£5k bonus
£1,560 child benefit (assumed two kids)

£120 per month loan
£0 credit card balance
1 applicant
2 dependents
25 year term

and got an output of £195,940, so there's something you are missing out.

Please clarify.

I am 37, one child (7), my credit repayments is over 2 credit cards 0% balance for another year total 6k.

When ever i use the online calculators they work out right too! but when i actually apply they say no no, the L&C broker said it was because they take into account the cost of a child, but i receive £182 pcm maintenance plus £80 pcm child benefit i even get his childcare vouchers tax free.

I cant make sense of it?:(

kingstreet

Right.

You are understating the cost of your credit. Some lenders use as much as 5% of the balance, so £300 per month for a £6k debt.

Amending the calculator to reflect what you've said takes the output down to £175k. Right on the borderline.

Is your maintenance court-enforced, CSA? If it is, or you can provide evidence of receiving it via three months' bank statements, it may be allowable, upto 50%. If I add that, it takes the output back up to £188k

The income from letting a room won't be allowed until you have evidence of a couple or three years' receipt.

whiteroom184

kingstreet wrote: »

Right.

You are understating the cost of your credit. Some lenders use as much as 5% of the balance, so £300 per month for a £6k debt.

Amending the calculator to reflect what you've said takes the output down to £175k. Right on the borderline.

Is your maintenance court-enforced, CSA? If it is, or you can provide evidence of receiving it via three months' bank statements, it may be allowable, upto 50%. If I add that, it takes the output back up to £188k

The income from letting a room won't be allowed until you have evidence of a couple or three years' receipt.

They like to make it tough!!

the maintenance is by a legal agreement and i have been receiving it through my bank account since August

I just find it ridiculous that i have new credit card requests dropping on my door step all the time, never been refused for credit, had a mortgage for nearly 15 years and no problems, just frustrating!

but thanks

kingstreet

I suggest you find a good independent or whole market broker close to where you live and have a chat with them and let them establish your circumstances.

I find it difficult to see where the problem lies, with a bit of thought and effort this seems achievable.

See what the others think over the course of a day or two...

whiteroom184

Thanks for your advice

do you know whether i would need to apply as a remortgage customer or a new mortgage?

thanks in advance

kingstreet

If you are moving your mortgage to a new lender but staying in the same property it's a remortgage.

If you are moving house, staying with the same lender it's a new mortgage for an existing borrower.

If moving, with new mortgage with new lender, you are a new borrower moving home.

ValHaller

kingstreet wrote: »

.... You are understating the cost of your credit. Some lenders use as much as 5% of the balance, so £300 per month for a £6k debt

whiteroom, if the above is the problem, just looking at your signature, you have a projected DFD of October. So if you wait until then and allow another 6 to 8 weeks for your credit record to update it seems it will go in your favour. Although RainyDay savings are important, if your credit is good enough for credit cards, I suggest that you pile up your cash month by month and put it with your RainyDay money to clear the debt early and use the credit card to carry the eventualities you might have used the credit card for. This will bring your DFD forward and allow you to put forward an application not hampered by debt.

So, I suggest that you relax for a few moths until the debt can be cleared. A broker here might advise how you explain that your credit is cleared if you put an application shortly after you have cleared the debt.