Mortgage affordability problem to do with monthly expenditure planner

Arniecat246

I'm looking for a mortgage of £98k with a deposit of £28k available and the financial advisor I went to see said no problem, then he asked me to fill in a monthly expenditure budget planner. I took that to mean I needed to account for all my expenditure because the form included savings, planning for holidays Christmas birthdays etc as well as all the standard utilities, council tax, car costs, you know what I mean! . I was then really surprised because he came back to me and said because I then had very little money left over the lender will only lend £75K! What have I done wrong? (I'd even allowed for overpaying the proposed mortgage a bit, because I know I can afford it! My credit rating is excellent by the way, and I'm in full time employment with an existing mortgage for 3 and a half years. All advice appreciated because I'm locked in with an estate agent and I've just had to cancel a viewing because if I can't afford to move I don't want any offers and will have to stay put in my little flat!

kingstreet

Was this budget planner for a particular lender?

The Abbey/Santander planner is as detailed as this, while other lenders tend to concentrate on things like credit commitments, childcare and other housing costs, such as shared ownership rent and service charges.

Run your details through one or two lenders' online affordability calculators and see what the output is like for lenders other than the one your adviser is using.

Is this an EA advisor? Limited panel, not whole market?

olly300

You are better posting your query on the mortgage board rather than this one.

Regardless of how you complete the affordability planner if the lender doesn't want to lend then they will offer you limited funds.

ValHaller

Arniecat246 wrote: »

I'd even allowed for overpaying the proposed mortgage a bit, because I know I can afford it!

They have probably taken this off your affordability. Find another lender, remember that the name of the game is to minimize your outgoings. So for any I&E exercise, drop everyone off your Presents lists, put petfood as £0 because you intend to get the dog put to sleep etc. Later on, you can change your mind about Christmas presents and if you get the mortgage, you can reprieve the dog because you are so happy - and if you don't get the mortgage, you can reprieve him, because you will need him to cheer you up.

Hopefully, you get the picture. I have ever been asked for a detailed I&E for any mortgage and I believe that asking in excessive detail is unnecessary micromanagement. The unintended consequence is that the lender will probably reject honest compliant people such as yourselves and lend to Jack the Lad instead.

kingstreet

If, as I suspect, this is Abbey/Santander, you can't skip over an item and enter £0. IIRC it can be a "decline" if nothing is entered and the system also picks up unnaturally low expenditure.

GDB2222

kingstreet wrote: »

If, as I suspect, this is Abbey/Santander, you can't skip over an item and enter £0. IIRC it can be a "decline" if nothing is entered and the system also picks up unnaturally low expenditure.

You mean it requires you to put in a figure for Christmas presents even if you are a mean curmudgeon who never gives anything to anyone and mutter "Bah! Humbug!" all the time?

Arniecat246

I'm seeing a different mortgage advisor tomorrow - will see what they come up with! It wasn't Abbey/Santander it was the Newcastle and one item on the form was monthly maintenance payments - I've no kids so I had to put a zero so I think you're right!

HAMISH_MCTAVISH

Arniecat246 wrote: »

I'm seeing a different mortgage advisor tomorrow - will see what they come up with! !

Always remember banks are looking for excuses not to lend to you these days.

They have far more applicants than they have money to lend, thanks to the ongoing credit crunch and ridiculous new capitalisation rules.

They must therefore reject enough applicants, even people that historically would have been considered very creditworthy, so that the pool of borrowers shrinks to meet the pool of available finance.

So the name of the game is to make yourself look as good as possible.

ValHaller hit the nail on the head with how to do that in post 4.

Thrugelmir

ValHaller wrote: »

Find another lender, remember that the name of the game is to minimize your outgoings.

And fool yourself into believing something is affordable when it isn't.

Lenders can spot budgets that make little sense.

kingstreet

My problem with the likes of the Abbey/Santander budget planner is they seem to give equal emphasis to discretionary expenditure as they do to subsistence expenses.

If you are faced with the need to belt-tighten, there are often things which can be reduced, or done away with altogether. This doesn't seem to be acknowledged.

If they will simply assume everyone will hang on to their Sky and smartphone subs regardless of their circumstances, why ask them if they actually have such things? Why not simply assume everyone has them?

Soot2006

We had to fill one in for Northern Rock - having saved for 7 years to buy a house, we had adopted a frugal lifestyle. Mortgage broker refused to put the "real" expenditure as he said they would never believe it (even though it was obvious on our salaries we could never have saved the deposit if we'd been spending more than that), so he upped it by about £400!
Luckily for us, we were buying within our means and looking for smallest possible mortgage so it was all OK but it was an interesting insight for me.