Refused a mortgage

suzie380

ACG, when you say a smaller lender, who do you mean and have you a few in mind? I only really know the main ones, having got my own mortgage in 1994 (I only have one year left) and have not moved either house or lender since.

The broker we are currently using is one at the estate agents. Perhaps you are right and we do need to go to a different broker. My daughter only wants a small mortgage, she has a decent deposit, two positive credit reports, has no debt other than a car loan, which she pays religiously and has nothing financially negative in her name.

Sigh...I can't believe this is happening.

Warm regards

suzie380

She earns just over £15,000 a year from her full time job, which is what the mortgage application is based on. Although she additionally earns from her working freelance, which is not taken into account for the mortgage, given that this is not guaranteed.

Although she won't be rolling in money, with a 40K mortgage, she will be able to afford to run a flat and be fine. Perhaps it might be better if I guarantor her....??

Warm regards

PS - Macman, she has never had a credit card so there wont be any trail. The only debt she has had is the car loan that she got last year.

Pont

Herein lies the problem:-
1) Low income
2) Outstanding financial commitment
3) Deposit is a gift rather than a history of saving
4) No credit history

Can your daughter not use part of the £10,000 to pay off the car loan?

suzie380

Hi Pont, yes she can use some of the £10,000 to pay off her car loan. She would still have almost £6,000 deposit. Maybe this is the way forward, by getting her debt free?? I'll see if that will work.

Thanks to you all for advising us what to try x

Warm regards

kingstreet

We need to start from the beginning and build up a picture. Let's do affordability first.

What is her gross basic salary?

Any variable earnings on top? If so, gross each year £ and how long earned?

Car loan monthly payment? £

Any dependents, childcare costs?

Purchase price £50,000?

Deposit £10,000 parental gift?

Mortgage required £40,000?

Mortgage term years?

opinions4u

Has she declared the 2011 address?

Is a £12,500 / 25% deposit possible?

ValHaller

suzie380 wrote: »

Hi Pont, yes she can use some of the £10,000 to pay off her car loan. She would still have almost £6,000 deposit. Maybe this is the way forward, by getting her debt free?? I'll see if that will work.

Thanks to you all for advising us what to try x

Warm regards

Don't just try stuff. Otherwise she will end up with a credit file full of footprints. Now is the time to think and understand. Only act once you are clear on what is very likely to work

It looks to me like the car loan was around £8000, which may reduce her mortgage affordability by £250/month - probably as much as her mortgage.

The whole proposition looks much better to me with £6000 deposit, still keeping her below 90% LTV and no loan commitment. If you clear the loan now and she can put off purchasing for 6 months and save the loan payments, she will bring some of her own money to the deal and if you pay some of her bills instead of making a house purchase gift she can save even more.

macman

No one can sensibly give further advice without knowing the income.

suzie380

Yes the 2011 property has been declared, which is just as well as it has shown on both the credit reports.

You're right, the car was around £8,000, she got a newish Fiesta last year.

She earns £15,000 a year,
wants the mortgage over 30 years,
pays £200 a month for the car,
the offer of 50K has been conditionally accepted,
the deposit of £10,000 is a gift
she has no children
she works freelance and pays quarterly for an accountant to keep her tax returns sorted. This wage is not taken into account for the mortgage as it is not a guaranteed income.
Besides her car loan, she pays £30 per month for her phone contract.

She has no other debt, as she would have faced the wrath of her dad and I.

The whole proposition looks much better to me with £6000 deposit, still keeping her below 90% LTV and no loan commitment. If you clear the loan now and she can put off purchasing for 6 months and save the loan payments, she will bring some of her own money to the deal and if you pay some of her bills instead of making a house purchase gift she can save even more.


ValHaller, I think you are right. She does need to establish herself as a saver, clear her debts, and show the bank she is capable in her own rights. Perhaps the bank have looked at her finances and see her being bank rolled by her parents.

She will be upset to lose this flat as it is a bargain, however, without a mortgage there is little she can do. I will take this latest credit report in tomorrow and have a chat with the broker, but I dont think it will make a difference. I think besides my deposit, we need her to get a saving plan on the go.

I feel much better to be honest, and thanks for your advice.

Sue

ACG

Dont use the deposit to pay off the loan just yet.
Having a bigger deposit and the commitment may be the better option here (it may not be, but until you know its silly to make decision like that).

Avoid estate agent brokers - anything that isnt straight forward theyre useless at. They may as well just be price comparison sites.

I cant give out lenders names as it could be seen as leading/advising. But some are only available to brokers. I would suggest you see a whole of market broker - not attached to an estate agents. Theyre used to dealing with less mainstream lenders and doing the research.