Still need 10% deposit with a 5% mortgage guarantee mortgage!

spencer82

So I have applied for 2 mortgages recently. I only have a 5% deposit so my choice was limited. My advisor explained to me about the mortgage guarantee scheme and that this was a good option because the government would guarantee x amount of the total value of the property along with my 5%. To cut a long story short, both high street lenders would not borrow me the amount I needed with a 5% deposit, instead asking for 10%. What is the point in this scheme if they still ask for 10% on application? To me it seems absolutely pointless. Has anyone else experienced this?

ACG

It must be from a risk point of view.

Ive not done many 95% mortgages but every one I have done has gone through at 95%.

spencer82

To add to that I have an excellent credit score but only 2 credit accounts, a credit card and mobile phone. I have 0 missed payments on either and no outstanding debt. Can you elaborate on what could be going wrong? is there anything I could do to help this process in future?

ACG

It could be any number of things.

Did you save your deposit or was it gifted?
How many times your income are you looking to borrow?

You would need to ask the lender for a reason - they dont have to supply one but they will usually give you a pointer.

spencer82

My deposit was gifted and I as looking for just over twice my salary. Can I approach the lender even though I went through a broker? If I can, do you know how I go about this? Thanks for the help.

ACG

Ask your broker to do it.

This could be the reason though...
Not many lines of credit, so a limited credit history.
Your deposit is gifted.

So limited credit history and no history of savings - this means you have no financial vested interest in the property as you have not contributed.

combined, the lender may be a little concerned and wants to limit their risk.

Im not saying that is the case but it could be a reason.

cevans65

Yorkshire bank do 95% mortgages and at the min its no application fee and £500 cash back. They don't do the gov help to buy scheme which they say makes it easier to qualify for a 95% and also it is quicker because they are busy but not busy with those applications.

Mortgage_Mark_2

spencer82 wrote: »

To add to that I have an excellent credit score but only 2 credit accounts, a credit card and mobile phone. I have 0 missed payments on either and no outstanding debt. Can you elaborate on what could be going wrong? is there anything I could do to help this process in future?

Not having much credit will count against you at credit score stage and you can't demonstrate as good a history of repaying credit commitments.

That'll be it, in conjunction with the gifted deposit.

kingstreet

spencer82 wrote: »

To add to that I have an excellent credit score

The CRA "scores" are worthless, as you are discovering.

Lenders compile their own score from your application data and raw credit history.

If you are paying for the score, stop now.