Nationwide - Declined at AIP stage

andymd

We have just asked for an agreement in principle from Nationwide. We went through all our income and outgoing and were advised we could borrow £490k (including porting our existing £195k mortgage), however we were declined based on the credit check.

They advised us to check our credit files for anything that shouldn't be there and to check we had disclosed all of our current credit agreements.

On the application we said my wife has £4k credit cards and £65/ month hire purchase agreements, when the credit file shows £3500 and £63 respectively.

For me, we said I had £20k credit cards (with £5k to be paid before completing mortgage) and £335 of hire purchase agreements, the credit file shows £15k (about 40% of available credit) and £335 respectively.

There was nothing else on our files. No missed payments, no CCJs, etc. Whilst I appreciate some lenders will view my unsecured credit card debt as problematic, this was factored into Nationwide affordability assessment prior to the credit check so I wonder if this is the cause for rejection?

The only other things that could cause a problem are that in recent months there have been a couple of searches on my file, one for a credit card which is included in the figures above.

We also applied for a decision in principle a few weeks ago from Nationwide. We only applied for £13500, we wanted to settle a second charge (similar to help to buy) on our current house.

We were accepted, but chose not to proceed due to legal fees and sourced the funds elsewhere(partly explaining the credit card debt - all at 0%)

The only change since then, is that I opened a new current account (no overdraft or credit arrangement), although am still using my long term current account.

Is it likely these searches could be a cause for rejection? How easy is it to get Nationwide to review their decision? The consultant mentioned they would refer the application to their underwriters once we had checked our credit files. Do they often overturn the automated decisions?

Will we have to wait a period of time before applying again?

Thrugelmir

Without getting into the specifics of your personal circumstances. The perspective from the lenders viewpoint is that you wish to borrow £490k. Given your high level of unsecured debt the assumption will be is that you have no savings. So will be funding the move on borrowed money. By advancing you yet more money the lender may consider themselves not to be acting as responsibily. With an inherent danger that you will continue to overspend and at some point iof the time in the future hit the rocks financially. Not worth the risk to do so. Nor is funding your lifestyle the right course of action.

Batchy

40% of available credit is pretty high, I think most lenders what to see single digit numbers

andymd

Thrugelmir wrote: »

Without getting into the specifics of your personal circumstances. The perspective from the lenders viewpoint is that you wish to borrow £490k. Given your high level of unsecured debt the assumption will be is that you have no savings. So will be funding the move on borrowed money. By advancing you yet more money the lender may consider themselves not to be acting as responsibily. With an inherent danger that you will continue to overspend and at some point iof the time in the future hit the rocks financially. Not worth the risk to do so. Nor is funding your lifestyle the right course of action.

Of course we will be funding our move on borrowed money, I thought that was the point of a mortgage. That doesn't mean we don't have any savings, we'd have a deposit of £120k+

But they had all the details of unsecured borrowing and took that into account in calculating the amount they were willing to lend, so why should a credit check telling them what they already know alter their decision?

AdrenalineJunkie22

I think by borrowed money he means using your credit cards to fund expenses for the move. Why not offset some of your deposit and clear down your debts. Your mortgage interest rate may be higher but you're more likely to be accepted