Gutted. Declined a Mortgage

Lexiedhb

So my partner and I have probably had some dubious advice. We began to look for a property to buy last year and went to see a mortgage advisor who told us that in principle we could borrow up to 190k (we have 10% deposit, and earn 32.5k and 25k), but that it was not worth putting in an application until we had found somewhere to buy as mortgage offers have a time limit.

We found a place recently (need to borrow 170k ish), went through a broker (free), sent all the paper work off, and within 3 days were declined with no right to appeal. Our deposit is in my partners parents name- it came from his last property sale 18 months ago- he gave it to them for safe keeping- has a penchant for fast cars!! Our broker advised us to tell the lender that the deposit was a "gift" and as such drafted a letter.

Reasons given for mortgage refusal
1) Deposit is a "gift" no evidence of saving (this utterly baffles me)
2) My current account is overdrawn (1k)- despite me providing statements from my savings account which contains approx £6k - so if I had just dumped all that money into my current account at christmas they would be none the wiser !!
3) My partner has several bank accounts (2 were actually thought to have been closed by his EX- was not until he asked for statements that it came to light this was not the case!! we are unaware if they have any adverse things on them)

My experian credit score is 999, perfect history. My partners is currently unknown, he is waiting for a pin number.

So question is what to do now- desperately do not want to loose the place we have found but as we have no recourse with Nationwide cant show them we can easily rectify the issues!!

HELP :(:(:(:(

ETS we are 35 and 40 years old, he has had a mortgage before i have not. We also have between us plenty of cash to pay stamp duty, deposit, fees, do a place up - in the region of 32k..... dont know if that makes a difference!

Dragonista

Wow that sucks. I have no advice but just want to show some support. Have you tried other lenders?

Lexiedhb

The broker is trying others for us- but as we know applying to shed loads of people can have a negative affect on your credit rating etc....... :(:(

ACG

Forget your 999 score its useless, lenders use their own scoring system. At 90% it can be quite strict.

Look at this from a lenders view - you havnt saved your deposit (so it appears in their eyes)...but even if you went down the honest route - your partner has to give his money to his parents so he doesnt spend it, i did that with my pocket money when i was 10.

You cant manage your money properly - using an overdraft when you have £5k savings - although the savings cancel the o/d out it doesnt look great that your using borrowed money when you have no need to.

What you are wanting is probably possible, i would go and see another broker. Free is great but you get what you pay for, i never charged a fee when i was starting out as i gained experience my fee increased, does your broker have experience or is he/she new?

Lexiedhb

I am looking at it from a lenders point of view- had the deposit been in his name they would not question it (cant switch it now as apparently lenders would think he had taken out a loan!!!) But how many people get GIFTED deposits from their parents? The figure must be high- so why question it?
Point taken about my account- but like I said had I known i could have dumped the savings into the current account at xmas- and they'd be none the wiser- surely THEY can see that?

Broker is an established company, through the estate agent, not a newbie (when i say free- he will be paid by the lender). Spoke to 2 other brokers before hand and they all seemed to come up with the same companies etc so not sure how changing broker will help.But if you can find me someone who will lend me 170k i'd be willing to pay for it!!

The Credit score WAS also taken into account so it is relevant- even if only in the initial stages is it not?

ACG

No, the credit score means nothing. The lender will credit score you - but they wont use the ones with the credit agencies. They will look at your credit report (the green, orange and red markers) and use their own scoring system.

Gifted deposits are common yes, but combined with the other bits thats where the issue has arisen.
It may well be that the brokers would have gone to the same place and you just have not met the criteria or the other brokers may have helped you get your circumstances looking better... they may not have, it depends on how much of a rush you were in when you met them - ie purchasing straight away or purchasing 3 months down the line.

Had you cleared your o/d and kept your account in credit then yes the lender would know how your account has been over the last 6 years as its in your credit report - but they would have seen 3-4 months of it being in credit and may have looked at it more favorably.

Its difficult to say without knowing the whole case, you may just not have met their criteria - at 90% it can be difficult, but there may have been ways to improve the application.

Lexiedhb

So its the report that is looked at not the score- right. I didnt think current accounts were on the likes of Experian?

They did say 1 of these things would not have been an issue, but the three combined were. Our broker thinking the multiple bank accounts being the worst part...... but they have been closed now.

Lets hope someone else is slightly more lenient.

ACG

Have you looked at your credit reports?

Experian and Equifax are the 2 main ones.
Your bank accounts will be on there especially if you have an overdraft as it is credit you have available to you.

meer53

I'd wait until your OH gets his credit report, if he's still financially linked to his ex, there could be something on there which they didn't like.

kingstreet

Credit files should have been obtained at the outset and a more forensic examination of the case should have been carried out, particularly when the overdraft and deposit issues came to light.

90% needs to be clean, preferably with a decent length of time with employer and at current address, if you are using a scoring lender.

On the information given, I'd be keeping away from credit scoring lenders and looking at smaller building societies in the locale. They are likely to look more sympathetically on such cases and a human being makes the decision.

Thrugelmir

Lexiedhb wrote: »

1) Deposit is a "gift" no evidence of saving (this utterly baffles me)

Simple to answer.

You are borrowing a large sum of money repayable most likely over 25 years (300 months). So the lender is looking for evidence that you have the financial discipline to meet this commitment over the mortgage term.

A period of regular saving demonstrates that you have the personal responsibility to manage your finances. Not a 100% maybe guarantee, but better odds than someone who has had to do nothing.

No savings suggests to a lender that you live on edge. Waiting for every payday. Not the way to inspire any confidence.