Underwriting.

Jennie2827

Could someone explain what is entailed in the underwriting process?

Just about to submit my application, but concerned it will not pass underwriting..... I have a young family, so there is no money left at the end of the month. . But I am paying £1200 per month in rent, but my mortgage will be £600.....is that considered?

Thank you in advance. .

ACG

They check affordability, credit score, employment status etc.

If your mortgage is half your rent then you should be ok, but you will still have to pass the lenders affordability model. See if they have an affordability calculator - if your unsure speak to a broker.

Jennie2827

Thanks for this!

I have a DIP and my broker seems to think its very affordable. But he has not scrolled through my bank statements either. Friends of mine have been asked loads of in depth Qs like how much they spend a month on take aways?

To me a mortgage is far more affordable than rent....but I am just not sure how much they will scrutinise my spending?

ACG

Depends on the lender

GMS

I have worked as an underwriter for different lenders. As ACG says it depends which lender.

The DIP process is credit scoring and application provided being matched to criteria, ie wages to affordability.

Bank statements if requested can offer an insight into financial management as well as revealing any undisclosed credit and commitments. It would also show any returned direct debits or cheques etc.

Payslips could show deductions not declared such as pension, student loans, childcare etc.

As long as everything declared at DIP matches then there should be no issue.

If bank statements reveal a gambling habit, reliance on overdraft, unexplained credits etc then expect questions.

Jennie2827

Thank you all. . The insight into the underwriting process is really invaluable! Thank you...

I am going with the Woolich. Everything was declared at DIP. In reality, the time between DIP and application has allowed me to completely pay off my last credit card, so the picture may be even better. I don't use my OD regularly nor have any gambling issues. . But kids are expensive and I do use most of my disposable income on a monthly basis.

Thank you to ACG for suggesting the affordability calculator. I typed in all my info, and it came back as affordable by £300. So hopefully that side should be ok. It was on an intermediaries website, and I did not know that existed. On the calculator, they are using their standard interest rate, which comes out as £250 more per month than I was quoted. But it was still affordable. Thanks for this alert.

Thrugelmir

Jennie2827 wrote: »

To me a mortgage is far more affordable than rent....but I am just not sure how much they will scrutinise my spending?

Ownership brings with it additional costs and risks. Namely property maintenance and interest rate rises. So don't be lulled into a false sense of security. Buy something which is affordable.

Jennie2827

Well, I take home £2900 a month and pay £1200 in rent. My mortgage payment would be £600.....regardless of maintenance or interest rate rises (which also effect the rental market).....it surely is more affordable to buy. .

PeacefulWaters

Thrugelmir wrote: »

Ownership brings with it additional costs and risks. Namely property maintenance and interest rate rises. So don't be lulled into a false sense of security. Buy something which is affordable.

Although this post is very generic it is absolutely bang on.

I do wince when I see people stretching themselves to the limit. While it often pays off when the pay rises come through and property prices rise it can make a mess of your life when one income stops, property market stagnates or interest rates move unfavourably.

Jennie2827 wrote: »

Well, I take home £2900 a month and pay £1200 in rent. My mortgage payment would be £600.....regardless of maintenance or interest rate rises (which also effect the rental market).....it surely is more affordable to buy. .

The figures you offer here do suggest to me that buying makes sense.

First thought is what are you going to do with £600 a month saved? A bit goes on insurance, doubtless IKEA and B&Q will get visits. But then what?

Interest rates won't be low forever. Overpaying the mortgage (if it can be done without incurring penalties) will reduce the debt which will mean any increase in payments from a rate rise is affordable too. Building up a contingency fund to give you a six month buffer in the case of illness, job loss etc would also make sense.

Good luck.

amnblog

Woolwich have a dip system that checks a number of factors automatically on application. Get the detail right first time and your changes of getting the case through smoothly are greatly enhanced.

Thrugelmir

Jennie2827 wrote: »

Well, I take home £2900 a month and pay £1200 in rent. My mortgage payment would be £600.....regardless of maintenance or interest rate rises (which also effect the rental market).....it surely is more affordable to buy. .

My generic comment was made in the context of something you said in your opening post " so there is no money left at the end of the month."

A mortgage lasts 25 years. 300 monthly payments need to be made on time. So setting off on the journey on a stable financial platform is what matters. Life is a roller coaster.