Advice for a FTB

Silverstar

This is more about hopeful reassurance than anything, as I'm always a little nervous when it comes to money.

I'm in the process of buying a flat as a first time buyer. I've got an agreement in principle from the Coventry BS, and have had an offer accepted on the property I want at £10k less than the AiP was for. I have a deposit of just under 20%.

I'm about to put through the actual application. I've taken a look at my credit report from Equifax, and there's no problems showing up on there - the only thing showing up as not in the 'good' or 'excellent' range is that I've only been renting my current place for two years.

I do have some credit card debts, but no late payments showing and have been on and lowered my credit limit on the card that had a very high one, so that I have much less available credit. All of the credit card debts were obviously put through when the AiP was applied for.

I have been living in my overdraft for a while. However, I've just paid this off fully.

The deposit is coming as a gift from my parents.

Is there anything else that you could suggest I ought to do now to try to maximise my chances of the mortgage being approved? Is there anything that you can see that is likely to stop it being approved? I'm hopeful, but never really believe that I can do these kind of things, and so any advice would be appreciated!

ACG

Check coventry or whoever you go with allow gifted deposits - i think they do but it is worth checking.

Forget the 2 ears at current address, you sound like your in the ideal position. Good luck.

Silverstar

From what I can tell, there isn't a problem with the gifted deposit. My broker says they just want a letter from my parents to state that it is absolutely a gift, which is fine.

I've been asked to provide two months worth of bank statements, which will show me as being in my overdraft, but hopefully the fact that it's now paid off will mitigate that.

Thank you for the reassurance! I know it's not a done deal, but I'm hoping that I'm in decent shape for it all

Silverstar

Another question, because I'm now a bit more concerned.

I spoke to my broker about the fact that I'd been in my overdraft, and she seemed to think that wasn't going to be a problem, though mentioned that going over the overdraft might be.

I went back to check my statements, and discovered that although I'd thought I was doing ok in that sense, I did have a single unplanned overdraft fee from the beginning of the year, for going over my overdraft by £4 for one day. I usually transfer money back and forth between accounts to make sure I cover this, but apparently I failed to do so this time.

I've told my broker, and she says that she thinks it may still be alright as it was such a small amount and for such a small time, but obviously, it's not up to her, it's up to the lender.

Does anyone know what the Coventry are like in these circumstances? Are they likely to automatically decline me, or will the fact that the overdraft is now paid off help to mitigate it?

If it's likely a straight decline, it seems worth knowing that before I put the full application in and waste the fee.

If I do get declined on that, are there likely to be other lenders around who might accept me based on my situation?

Any advice would be great.

Silverstar

So, I've been turned down by the Coventry. They said that it was partially due to going over my overdraft limit, but also they had some concerns about the fact that I've been living in my overdraft and although it is now paid off, some of the money used to pay it off come from the gift that my parents are giving me. The rest was paid off with my own savings.

My broker says she is going to look around and talk to the underwriters prior to putting in any applications so that nothing shows up on my file. I'm fairly convinced that I've messed up, now, though and won't be able to get a mortgage, so will lose the gorgeous flat I was hoping to purchase.

Does anyone know if there are lenders out there who might still offer me a mortgage, based on all the above criteria? Or should I start to resign myself to losing this flat? If I do end up losing it, how long should I wait before looking into buying again, considering the searches on my file?

GMS

You need to trust your broker, or if not find a new one.

What type of flat is it? New build? Recently converted? Ex local authority?

Did Coventry decline prior to valuation?

How does your overdraft show on a credit report? Any arrears on it?

Could your broker not find a lender who require no bank statements or one month only?

Silverstar

The flat is about ten years old - purpose built and not ex-local authority.

They actually declined before we put in the application - I had an approval in principle from them, and then spoke to my broker about the overdraft stuff when I discovered the charge on it. She said she would speak to the underwriters about it and showed them my bank statements before we put the full application in because I was nervous, and came back today saying that it would have been a pass if the overdraft had been fully paid off by myself, but as some of it had been a gift, they wouldn't pass it if we applied.

My Equifax credit report doesn't show any arrears on anything, that I can see. No late payments, no defaults, no CCJs.

I think that's what she's hoping to do, and she's also hoping to put in any new applications after 1st May, as if they only want one or two bank statements, the overdraft charge won't show then, but she said she would "have her work cut out for her" finding me a lender. I'm assuming she knows what she's talking about, but not knowing a whole lot about this, it's hard to know!

The whole thing ended up having to be a bit of a rush, and I wish I'd realised how bad overdraft issues look to a lender before attempting it. I thought that as my credit report was showing no issues, that I would be a decent bet, but clearly not!

kingstreet

Why was Coventry selected?

Is your broker independent/whole market?

If you can't get a scorer to do this, a non-scorer like a local building society will certainly be interested at 80%.

I've just done a 90% shared ownership case, which had been turned down by Leeds BS due to App 2 having a three month AP marker by Vanqis in 2010 and a couple of mail order late payments last year.

The lender? A local Midlands-based non-scoring building society.

Silverstar

Hi kingstreet,

They are whole of market, yes. At least according to the paperwork I have!

Apparently, she started by trying Abbey, and that was rejected as I scored low with them. I'm not sure why, but clearly something bothered them. She then went to Coventry because they were offering the best rate and she said that they were a non-scorer, and that application went through straight away and she was able to obtain the Approval in Principle. She said that she wouldn't be trying any scorers as she doesn't think they will work anyhow.

The deposit works out at just under 20% - do you think that if I were able to get this bumped up to exactly 20% (which might be possible), I would stand a better chance as it would put me into a different bracket? She did say that she thought the issues with the overdraft were seen as worse because I was asking for such a high loan to value, although I thought that around 20% wasn't too bad! But then I'm new at all of this.

So you think small local building societies are the best bet? How many chances do I get before it's going to be too many searches and I should stop trying?

Silverstar

I emailed my broker with some of the above questions this morning, and am waiting to hear back from her.

In the meantime, I was doing a bit of research myself, and came across Newbury Building Society, who appear to be limited in where they will lend, but the property I am looking to buy falls within the areas to which they will lend. Having found what appears to be their lending criteria, it seems that they would ask for, in addition to the application form, my last P60, the last three months payslips, and 'evidence of deposit'. It doesn't appear that they ask for bank statements.

The P60 and payslips are no problem at all - they're ready to go. Does anyone know what would count as 'evidence of deposit'? Would it need to be my bank statement showing that the money is there, or would a letter of gift from my parents count?

Also, does anyone know what Newbury are like to deal with at all?

Thanks for any help.