New mortgage lending criteria

partialycloudy

Hi,

Hoping someone can help and point me the right direction!

We have just been refused a mortgage in principle by the post office. They say because our loan to debt ratio is at 47%...can anyone explain how this is calculated?

My OH and I earn a combined income fo £75,000 we have £40k for a deposit. We have HP for our car, balance at about £12k and a loan we took out in 2011 for £19,000. Th monthly payments on these dont even come to £500 amonth.

Mortgage was 90%, house value of £270,000 mortgage for £243,000.

We can easily afford the monthly payments. We had a mortgage approved last September and another in March but both houses fell though....the mortage from March is still valid but they under the valued the property we wanted to buy.

We are at our wits end! We had a mortgage previously and never missed a payment.
Both myself and my OH have been trying to buy a house since last August and I have just spent the past half hour crying in the loos at work as I am not sure how much more of this house cr&p i can take!

Will all mortgage companies now reject us because of these new rules?
With another credit check on our profile will that make things event worse?!!
Can someone please give me some good news for a change

ACG

£27k deposit yet you have £40k debt.

You have borrowed more than you have saved.

£40k worth of debt is quite a lot - do you not think? To some underwriters that is going to look as you are living beyond your means.

Speak to a broker, there may be a way to get this through but this should be seen as a bit of a reality check. You appear to be under the impression there is nothing wrong with having £40k worth of debt on top of a mortgage.

You are going to need a lenient lender to have a chance of getting this through - The post office are not renowned for being lenient.

Dave_Ham

This is likely to be more about lender selection, although I appreciate why as Post Office have attractive rates at 90%.

I would expect a solution, but not on the terms from Post Office.

Outstanding debt as a % of annual income is typically how I believe PO work this out. Other lenders would not be as affected by this.

Good luck

partialycloudy

We have a 40K in savings, 10% despoit and fees. The loan for £19,000 was a loan to have a lease extension on our previous property, which we had to do to sell it....we bought in 2007 in highs and sold at a loss.
At the time of getting the loan, the loan wouldnt affect our mortgage applications, and it was the best wayout of the situation we were in.

Now the goal posts have been moved, and due to bad luck with the properties we've tried to buy we are still trying to buy 18 months after putting our flat on the market....we sold it in March and yet here we are still trying to buy!

amnblog

Why are you going through all this stress caused by trying to do it yourself.

Engage a mortgage broker.

GMS

Definitely one for a broker.


Don't go applying at random or chasing rates.

partialycloudy

We did have a mortgage broker, the other 2 mortgages were through the Broker. We applied the Post office one ourselfs as he did not hae access to it and it had the best rate.
We have spoken to him, and he said there are others we can try so all may not be lost but getting so fed up with the stress of it!

amnblog

New broker time.

This should just be a question of checking everything thoroughly and doing all the calculations before applying anywhere else.

ACG

This should be discussed with a BDM or underwriter before submitting. I would very surprised if this did not go through first time if you had a decent broker on it.

Its not like there is anything that is up for interpretation, its fairly black and white. Im with amn, probably a new broker as you have now had 3 credit searches - that alone is going to start making it more difficult.

partialycloudy

The other two mortgage apps were fine :

1st Application summer 2013, House fell through as our buyer pulled out
2nd application March 2014- house No2 was down valued, House No3 was also downvalued.

As it was the same mortgage company who downvalued both properties (by the exact same amount) we thought we would try another lender, hence Application No3 to the Post Office, which we found and applied fo by ourselves

Our Broker has been nothing but helpful, even though we have been a stone round his neck for the past year as we keep having to go back to him with each new instalment of our bad luck story! And so far he has not charged us anymore then we paid him when we arranged the first mortgage.

We (well our Broker) will be giving Santander a try today. So fingers crossed that all goes well with that one!

GMS

Good luck with Santander. Not sure they would be my choice for this.


Which lender did the broker put you with previously?