Have new MMR 'affordability' checks destroyed by chances?

seriouslyworried

Hello,

I'm a first-time buyer getting seriously worried and in need of your advise.

I currently have a full mortgage offer from Nationwide, for £175,000. Together with a deposit of £75,000 I'm waiting to exchange (by myself, no partner) on a £250,000 house and all was looking good.

Owing to some issues, it looks like I won't be able to exchange on the property before the mortgage offer expires. Without going into details, I know the seller will still sell to me for £250,000, so the worst I've been looking at is losing a little on fees/legals and simply re-applying for another mortgage offer.

However, I've been looking into these new MMR affordability rules, and looking at the 'Affordability calculator' on the Nationwide website, and it looks to me like they've dropped the maximum they will offer to me substantially. Like £85,000 substantially.

Previously, they would lend me 'up to' £225,000, of which I only needed £175,000. Now it looks like they'll lend me a maximum of approx £140,000. If that's true, I can kiss the house goodbye along with any chance of getting any other property. With the area I'm looking in, I'll be frankly lucky to find a one bed for that.

Their online calculator reveals the 'Other outgoings' element is what's killing me. There are two criteria; "travel costs" and the real killer "any other costs you think we should know about".

I've enter £205 for travel, which is 100% accurate, and estimated £350 for the 'other' stuff, which from what I've read is anything from your internet bill to a haircut. This gives the £140,000 maximum.

Altering the 'other stuff' down to £175 (halving it) and all of a sudden they'll lend me £168,000!!

Has anyone got any decent advise on how realistic these figures are and what the lenders are really interested in? I seem to have gone from a hard working single guy on a good salary, stable job, with a good deposit to a 'terrible bet' if these figures are anything to go by.

Curious to know how Help To Buy, which I've not needed to touch works with these new affordability rules. Isn't Help To Buy just a loan, in which case surely it's factored into these new checks? They seem diametrically opposed concepts, "here have a government loan, oh look you have a huge loan so we'll lend you practically nothing". Am I missing something?

I'll be honest, I've deliberately avoided getting emotional about this whole process, but this latest blow has me close to tears as it seems like I've just been reduced to renting for life.

Thank you to anyone kind enough to reply,

J

ACG

Help to buy is for people with low deposits and is typically underwritten with stricter affordability rules then non help to buy mortgages - im assuming you dont need that however as the issue is to do with how much you can borrow, not how much deposit you have.

Have you tried other lenders?
Have you spoken to a broker?

MMR passes affordability over to the lender, so they are going to be stricter than ever before.

Eviesmummy

Is the reason that the exchange wont take place down to you or the seller?
If its the seller, maybe letting them know that they could potentially loose the sale because of this might help to speed them up a bit?

seriouslyworried

ACG, thanks for the reply. Help To Buy doesn't seem to be for me as I have a decent deposit, although it's looking like I'll need the newer as yet unannounced product 'Miracle To Buy' if I read the changes correctly.

I've only looked at online calculators and so far only Nationwide and Yorkshire seem to have introduced updated affordability rules. Halifax is still showing they'll lend me £209,000 which will be blown to pieces once the new rules are applied I assume so I guess they've yet to update.

I'm using a mortgage advisor (recommended by a friend) who handled the first/current application, not sure if that's different to a broker?

Eviesmummy, sadly there's nothing either party can do to speed things along. It's a crappy situation, no-ones fault but ultimately I'll be the worse off if it falls through as they'll be an army of other buyers waiting in the wings.

Current plans are to reduce my outgoings to absolute minimum possible, and pray Nationwide don't go back over my accounts further than 3 months (it'll be about 4 months before I have to re-apply for a new mortgage offer).

These rules seem to be disproportionately targeted at single first time buyers. I tested with a 'fake' partner, gave us both low paid jobs, and wham! loads more cash on offer. I just don't see the logic, neither individual salary would have been able to cope with the mortgage so there was no reduced risk to the lender. The whole concept is full of holes and pays little attention to reality, I stress tested myself to extremes before going ahead with my current offer, but it looks like deposits and LTV will mean nothing from now on.

If anyone knows of any lenders with updated affordability calculators, or which lenders are traditionally more generous than others, please let me know. Hopefully they're not all as crazy as Nationwide seem to have become.

J

Jennie2827

My first mortgage was with nationwide......as a single person of 24, they happily lent me £146k with no questions asked. I have never defaulted in my payments and have a good credit record. I am trying to move home and approached them recently. I am now 34, have two children, and earn 50k......and they will only be prepared to lend me £103k. The bonkers thing is, my mortgage left with them is for 106k!!

The market is penalising everyone......meanwhile, I she'll out £1200 a month in rent when my mortgage payment would be £570! I have to let out my owned property and live in rented myself as I cannot get a mortgage in a family home. What is wrong with this picture?? Nuts!

Jennie2827

'Shell'. Got to love autocorrect. .

seriouslyworried

Jeannie - sorry to hear about your situation, that seems ridiculous.

Just had a look at Coventry Building Society, who have an updated affordability calculator, results are insulting.

Single guy on a good salary gets.... £66,000.
Couple both on low salaries get... £188,000.

Mind blowing - in what reality is that based on reasonable predictions, maths, statistics or plain logic? Nationwide seems almost kind in comparison. Oh, and it asked if I was on maternity leave. Single male.... on maternity leave.

Literally no idea what I'm going to do.

ACG

https://www.gov.uk/paternity-pay-leave/overview

Men can have 6 months paternity leave now a days.

Southend1

seriouslyworried wrote: »

Jeannie - sorry to hear about your situation, that seems ridiculous.

Just had a look at Coventry Building Society, who have an updated affordability calculator, results are insulting.

Single guy on a good salary gets.... £66,000.
Couple both on low salaries get... £188,000.

Mind blowing - in what reality is that based on reasonable predictions, maths, statistics or plain logic? Nationwide seems almost kind in comparison. Oh, and it asked if I was on maternity leave. Single male.... on maternity leave.

Literally no idea what I'm going to do.

A couple has two personal allowances so two people on £10k each take home a lot more than one on £20k

Funny_old_game

The most accurate and show stopping post of the week above. Well done *thumb up*.

tigsly

I think 2 dependents lowers the amount - they will lend you - by the assumed cost of childcare.. tehy said something to us about - nursery fees - even tho we only have 3 days worth - they calculated we'd need more..?

I also think they lend you alot less..

So when we applied for a mortgage 9 years ago - we were offered something like 7x our joint salaries..and now its abotu 3.5x.. so alot less even tho we earn more!