Mortgage in Principle, but rejected consolidation loan so worried

Rapished

Myself with an excellent credit rating/score and my partner with a fair
rating have recently been into Lloyds tsb to see what are options where with a second mortgage, we moved our first one to buy to let,

The bank accepted us and ran some figures and came back with a principle mortgage, this got us excited so off house hunting 30 viewings later we had an offer accepted,

We then went back into the bank on there advice to consolidate our debts, loans and cc's etc, we ran through there process all along the guy was spouting how sure he was it'd say yes etc, it declined, he then informed us it would no doubt have a bad bearing on our mortgage which we're applying for fully this sat.

To say an awful lot hinges on that decision is an understatement, we have looked at the partners credit report, its states a figure of 792 and is in the fair bracket,

What can we do now or in the future to make them say yes?

Just some good general direction is needed please,

Regards

Thrugelmir

What's the extent of your debts? As will have a major bearing on any outcome.

ACG

As if they have put you through for a loan when your applying for a mortgage a week later! Sounds like they have some targets to hit.

How much is your income?
How much is your deposit?
How much are you looking to borrow?
How much are your debts?

Do you know if you were declined on affordability or bad credit or....?

A mortgage is secured against a property so will get looked at a little different to a loan, but its important to understand why it was declined, maybe get a copy of your credit report?

Rapished

income is
25k for me
27k for her

we have a personal debts to the sun of 14.7k

we also have a un secured loan when we brought our first house at the height of the market, that's another 30k between us

sadly we just jumped and never looked in 2007 when it was all about getting on the ladder

are deposit is 10% as per Lloyds tsb's request and the offer on the house was 171k so 17.1k deposit all sat in the bank account ready

if rejected we are thinking of the following

using deposit money and some savings to pay off her personal debts which account for 5k of it, but there all at silly apr, then saving that back up and re applying in 6 months? would this make a difference

Also putting my debts into one loan and one smaller payment to clear over 36 months this would then free up most of our income and have reduced the out goings on loan/card payments

Also she has an old boy-friend who has multiple actions against him back from 2006 on her credit report should be do that disassociation would that help in the short term

Also the guy we're seeing on sat to do the full application for mortgage was the one who said in principle we could have this much etc, should I tear him a new !!!! hole? as its ruined us and will effect the chain now, why offer what they wont give?

ACG

Sort out the credit report issue, its a simple phone call to the credit agencies but might take a couple of weeks to rectify - easy enough job gets rid of 1 issue.

The rest, im not entirely sure you would have got the mortgage anyway, but they certainly havnt helped. If you cleared off £18k worth off debt, how much would that free you up each month? How long would it take you to save up another 10%?

I just think at 10% any lender is going to see you have more debt than deposit, there isnt enough equity in the property and i think in all honest they will see you as a high risk - it might all be manageable to you but there are people without that debt after a mortgage also.

Take away the fact that you know yourselves and look over the figures given - would you be comfortable lending someone that much money very little equity to cover the risk?

Rapished

Agreed, I said the same thing to the miss's would she lend herself money etc,

I ment pay off her debts, which come to 5 of the 15 then, have my 10 in one loan so one smaller repayment.

The other house takes care of itself, with rent= mortgage

so we'd only have the unsecured loan associated with our buy to let mortgage, which is all paid via mortgage payments for that property,

so we'd have one loan payment, then the rest of the income bar fuels etc would be free funds?

What seems like a good idea to you guys, we're living with the in laws so rent free, and able to save, but would like a goal,

Hence getting shot of her debts with higher apr rates and freeing up her report maybe, which does state a few faults, and leave us with most of our income free

jamesd

Do continue with the visit on Saturday. Secured mortgage lending and unsecured are different and you still might be accepted.

Dissociation from the old boyfriend will matter and she should take care of that. If a computer says yes, no or refer to underwriter you should ensure that Lloyds know that there is no longer any association. But it's not the biggest issue. You have a high level of unsecured debt between you for the incomes you have and the amount of mortgage you are applying for.

It is normally a bad idea to do more unsecured borrowing between getting an agreement in principle and completing a property purchase. If Lloyds suggested that timing while knowing about the mortgage situation they failed to act properly. If this turns out to be a negative factor with the mortgage application you should complain about it.

Rapished

Yeah we'll still pop down and even if nothing comes of it, we'll take the direction of paying off all our debts and sorting our the credit score, save for another year then re look at things,

The fact we asked a few times about the fact it may hinder our mortgage they kept saying no it will help, as if you consolidate, you'll have a better looking account etc etc, so i'm fuming as originally I asked to wait till it was all sorted then consolidate.

Thrugelmir

Why not reoccupy the Buy to Let property?

Rapished

Sadly its only a 1 bed house and we now have two sons

Thrugelmir

Rapished wrote: »

Sadly its only a 1 bed house and we now have two sons

Sell it and clear your debts. This will speed up the the rebuilding of your credit profile.