Application stall as now going through affordability tests

jennyyates2001

So, today I heard from my MA stating that Santander are now putting my application through the affordability tests.

I am buying a 50% share of a Shared Ownership house, with very low rent at only £40.00 a month. My rent and mortgage is less than what I pay now renting a 1 bed flat.

My DIP was approved on 25th March, so I have been patiently waiting for my MA to update me regarding valuation date, having been told my application would not need to go through affordability tests, as the original application was put in a month before the law changed.

So the past couple of weeks, I have put in weekly calls re the valuation date, having been told that it should be sorted for w/c 28.04.14. But as mentioned above, I know have been told that Santander will lend me £6K less than the amount needed due to the affordability tests now being applicable!

My MA is appealing this decision and also checking out alternative lenders. Has anyone else had a similar situation or any advice for me please?

Thanks Jenny

Rmphotography

As soon as I saw "Santander" in your post my heart sank a little bit.
Never know such a long drawn out process in all my life where as soon as anything is questionned you go to the back of the queue.
We gave them 9 weeks of waiting, hearing nothing before we went with Halifax. And in 5 days we already had DIP and valuation booked in and carried out.

jennyyates2001

Thanks for responding. Just to clarify your situation, I presume the Halifax had to go through affordability checks too for you applicaiton, but this was ok with them and not with Santander? Is that right?

Thanks again!

kingstreet

Santander analyses everything with a fine tooth comb, where Halifax uses ONS figures, but does take into account large individual costs, such as employer loans, season tickets, student loans, childcare, school fees and ground rent and service charges.

The Halifax affordability calculator is as reliable as it was before, as long as you include the correct things.

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

Ryan1983

Hi Jenny, I am with Halifax and going through a similar situation. This new affordability test (MMR) is a lot more stringent and can reduce what the lender offered in their AIP. My valuation completed 17/4, but the next step for processing the mortgage was held up for "IT techincal issues". I was then stuck in limbo land to process through MMR or hold out until they sorted this glitch. Today Halifax called me to say they should have this issue resolved next week so no need for MMR. My argument (which I think should be your angle) is that you submitted your mortgage application before MMR, thus ruling out being applicable for this MMR process. They cannot change the goalposts at this late stage and it is your broker who should be fighting your corner.

jennyyates2001

Thanks to both for your responses.

It feels very unfair to have had all my paperwork in and with Santander well over a month ago with the AIP in place for the correct amount and at this late stage they are reducing the amount they are prepared to lend.

I could have perhaps gone to other lenders initially and then avoided MMR with them, which I will have to go through if Santander don't budge. At this stage, my MA has appealed the decision stating that their figures don't add up and he hopes to have some more info on Monday.

If I have to go through MMR with someone else, is it possible that they will pass me through at the amount I need, even though Santander have said no....are there great variances with lenders processing MMR? So if Santander said no to £73000 and I need £79000, then I presume another lender can quite easily say yes....is that correct?

Thanks again to everyone who has responded, any info appreciated, as this is all new to me!

Also Ryan, I take your point about being ready before MMR and this should be my angle and I will speak to my MA about this. Cheers.

Ryan1983

Hi Jenny - without scaring you, we all just want hard facts, right, another one of my MA's clients had their offer drop from AIP to mortgage offer stage via MMR of £53k!! That is huge!
I asked how much the property was for and she couldn't disclose this info for confidentially reasons, but I managed to get our of her that it was for a property less than £200k... wow!

This made me very paranoid about whether I switch to MMR. My AIP was £145k, but my property purchase price was £125k. So, I have a bit of leeway but on the above evidence, will that be enough?!

We are with different lenders admittedly, but I would love to know what criteria we have to match to just gauge what they are looking for!
Anyway, good luck and hold on in there

ReformedShopper

DIP approved in January for £123,500 by Woolwich, (originally £135K, but I'm going through the HTB Route, and government calculators would only allow 4.5 x salary)

Checked Woolwich affordability calculators post MMR, and now seems like DIP might not only have expired, but may have no chance of going through! Scary!

jennyyates2001

Thanks to all for your messages of support. It seems that we are not alone in experiencing stressful times with the new MMR rules.

Ryan, my purchase prices is £92500 (50% share), I have 15% LTV, so I need to borrow £78625 and they have offered £73000, although the AIP for the correct amount was agreed at the end of March.

I hope my MA proves his worth and can fight my corner to get it up to the amount required. Does anyone know if any appeals have been successful as yet?

I think alot of the problems are there is no consistency between lenders and MA's are not sure of the system because of this.

Good luck to anyone else who is going through the same stress.

jennyyates2001

OK, an update on my situation. My MA has not heard back from Santander, so has approached Leeds Building Society (apparently specialise in Shared Ownership mortgages) and I have a new AIP, plus the MMR application has gone in and they have agreed.

So I think I just need to sign the paperwork this week, and then to valuation.

Last few days have been very stressful, but it sounds like we are back on track, no thanks to Santander.

Phew!!!!