Help please! – Abbey want a budget planner filled in as part of mortgage application.

stratford_2

Maybe I’m worrying about nothing, but I’d be grateful for anyone’s advice, particularly the mortgage broker people.

I’ve applied for the Abbey’s BR tracker, currently at 4.54% for 2 years, with 4.2 X salary. Because of this high income multiple, the Abbey agent said that I had to fill in their budget planner and return with my signed mortgage application and that I had to include my bank statement. Is this normal, especially as I am putting over 40% deposit down, been employed with the same employer for 6 years and have cleared Abbey’s credit check and it is agreed in principle? Also, they said that the system was flagging up that extra borrowing of a few hundred pounds could also be taken, if I wished and that they would self-certify me meaning I didn’t have to send proof of pay – has anyone come across this before, without asking for it?

They want the budget planner to include the new mortgage at the full SVR rate, which is approx more than £150 above what I will be paying at the current tracker rate. Roughly speaking, including the higher mortgage amount, I should still be approx £150/month below my take home pay (i.e. £300/below assuming rates don’t rise). Should I worry that they might turn me down, or am I being paranoid about what could be just double-checking that I can afford the mortgage?

Joe_Bloggs

My guess is that your rate is good now because they intend to lock you in on SVR in the future. What will the tie in be period on SVR and what is this interest rate at present?
My guess is they are trying to be responsible lenders and covering their backsides during the future SVR time period.
J_B. (Not in anyway a financial advisor)

stratford_2

The product is a 2yr tracker at BR -0.21 giving a current rate of 4.54% - there is an early redemption charge during this period. At the end, the SVR is payable (currently a high 6.75%) but there is no tie-in. I guess they're covering themselves in the event of any BR increases during the 2 years and if I'm too lazing to look for a better deal afterwards!

skanger

I thought this was now standard practice, since the extension of the FSA into this area. As I understand the lender has to undertake an affordability check and have this on file, in order to protect themsleves from any future "Irrisponsible lending" claims.

Of course I might be wrong. Look on http://www.fsa.gov.uk for info

HTH

Skanger

Joe_Bloggs

It seems a great deal that is being financed by those too lethargic to change from SVR or are in financial confusion. !
J_B.

stratford_2

It is a great deal, so great that the deal has now been changed to -0.16 today (as with some other Abbey mortgage rates)
Worth pointing out though that it's only available with a 40% deposit and that the £499 application fee reduces the attractiveness a fair bit.

Joe_Bloggs

@Stratford
Does the rate below BofE get locked in on receipt of mortgage application fee?
Or can they chop and change at will after this.
It appears your property is worth at least 7X earnings. Good job you had the
40%. You know you are going to have to plan for your remortgage as soon as you take on this one so good luck and stick with this site.
J_B.

payless

Away from the actual rate -

Abbey often "fast track" a case if large depoist .
Not common for them to ask for bank statement- but its hardly a big thing is it?
They do offer some guidance as to "example expenditure" for their budget planner, yes use SVR - and then they expect to see at least £100+ surplus on planner

The "agent" (no sure Abbey actually have agents anymore ? ) should of course have all this information , they sent out revised info in FEB05

stratford_2

payless wrote:

Away from the actual rate -

Abbey often "fast track" a case if large depoist .
Not common for them to ask for bank statement- but its hardly a big thing is it?
They do offer some guidance as to "example expenditure" for their budget planner, yes use SVR - and then they expect to see at least £100+ surplus on planner

The "agent" (no sure Abbey actually have agents anymore ? ) should of course have all this information , they sent out revised info in FEB05

Thanks very much for this info – very helpful. I downloaded the lending guide (Feb 2005) that you mentioned and I now understand my position better and why I don’t have to provide income verification. It just wasn’t clear from the person I spoke to. I also have a better understanding of the budget planning process now and (touch wood) am satisfied that I can meet the criteria.

I was only worried as things are different this time as I provided income details etc. but not a budget for the current and previous mortgages I’ve had and I’m careful (and lucky) that my credit rating is good and I want to keep it this way. And, yes, providing a bank statement is no biggie, I was quite prepared to provide a lot more information!

As for the using term “agent” – apologies, I should have been clear that this was through their call centre.

Re. the rate. The discount won’t change for the 2 years, but obviously the overall rate may change. As for keeping my on remortgaging, I always do but I agree that this site highlights ideas that I may never have thought about!