Declined mortgage in principle

AnnieBox

I'm hoping someone can help me out as this is all very new to me and I'm not 100% sure what could be wrong as Nationwide didn't provide a reason for declining us.

We have cleared all of our outstanding debts as of last year and have now this year begun saving for a mortgage deposit. We currently have £4k actual cash saved, with another £5k offered help from my father in law, available immediately once we find a house.

The only debt left is a £900 balance on a Nationwide 0% interest credit card, which is being paid by direct debit and will be cleared before it starts charging interest next year and my partners student loan which is currently being paid at £40 a month. There is not other credit cards, finance or loans in either of our names.

We are both permanent employees, I'm full time earning just over 16k and my partner is part time earning 9k. We weren't expecting to apply for any mortgages until my partner has a full time job also and we have a lot more money saved, however a house came on the market for 90k and after doing lots of number crunching and online mortgage affordability calculators, we worked out that because of the much lower than usual price of the property, we could actually afford the mortgage repayments, bills, food and taxes and still have about £500 left over of a month.

So, we applied for a mortgage in principle with Nationwide online. I was 100% honest about all details, but it ended up saying that we had been declined, however it didn't give a reason on what the issue may have been.

We have never been bankrupt, had any defaults or ccj's. Our debt at it highest was £14700, so not like we were hugely in debt compared to some people have been and our employment history has been permanent and consistent for years with the same employers.

I was wondering if anyone with more experience in these things would be able to advise what the problem may have been and what, if anything, we can do to improve our chances in the future? I don't want to try again through a different provided because I don't want to put loads of negative searches on our credit file, but at the same time, it would be nice to know if there's anything we can do to increase chances in the future.

Thank you for taking the time to read my wall of text. Any advice, very much appreciated.

ACG

Get your credit reports - equifax, experian, noddle.
Check whether there is anything on there.

Speak to a broker. They may know lenders more lenient.

It could just be that you have not met the score needed for the application (this is not the score on your credit reports) or it could be something more sinister but by getting your reports it will hopefully help to determine which.

Alias_Omega

Go see someone, a person can input the numbers and tell you where you are going wrong. It might be that the 90k might be too much, but 89k is acceptable...

Thrugelmir

AnnieBox wrote: »

and still have about £500 left over of a month.

Don't base your budget on current interest rates. Also allow a contingency for one off expenses. Running a house over the years does come at a cost.

AnnieBox

I did have credit reports from back in May last year and there was nothing on there that shouldn't have been back then, I will check again though, just in case. I did have some missed payments, but they were all in the 13-24 month category back then, so obviously they are even further in the past now, I haven’t missed any payments on anything at all for at least 18 months, but I don’t know if that makes any difference.

In the meantime, we will keep saving and my partner will keep looking for a better paid job and if this situation arises again, I will see about visiting a broke, instead of going it alone.

Thrugelmir wrote: »

Don't base your budget on current interest rates. Also allow a contingency for one off expenses. Running a house over the years does come at a cost.

We calculated our left over amount as what was left after all expected outgoings, which includes our 'rainy day/emergency savings" fund. We aren't extravagant spenders, we are used to being thrifty as a result of our debt busting journey so I know we would be financially able to live on this amount. I wouldn't have even considered it otherwise.

ACG

It could just be you have not met the score for that lender.

Speak to a broker, there could be other options.

AdrenalineJunkie22

How long have you both been in your current jobs? Lenders like to see security so if under 1 year then that could go against you

Any children? Dependencies weigh heavily on mortgage applications

It could just be that you didn't meet Nationwide lending criteria. A whole market mortgage broker will be able to advisor you on the different lending criterias and therefore you have a better chance than going from bank to bank which won't do your credit score much good

AnnieBox

AdrenalineJunkie22 wrote: »

How long have you both been in your current jobs? Lenders like to see security so if under 1 year then that could go against you

Any children? Dependencies weigh heavily on mortgage applications

It could just be that you didn't meet Nationwide lending criteria. A whole market mortgage broker will be able to advisor you on the different lending criterias and therefore you have a better chance than going from bank to bank which won't do your credit score much good

I have been in my current role 4 years, my partner has been in his 3 and a half so employment stability shouldn’t be a concern. We also do not have any children or dependents so no worries there either.

We will keep saving and searching and next time we need to try applying for anything, I will go through a broker. Looks like the way to go.

Time to ask friends and family for recommendations

[Deleted User]

I would think with looking at a 90% mortgage you will need to earn a fair bit more than you both do at the moment to meet the affordability criteria.

I think the banks test interest rates going up by 5% and if that was the case, the £500 you have "spare" every month would evaporate very quickly.

AnnieBox

We have actually had a call from Nationwide this morning advising that there was an error with the system and our application wasn’t actually declined, the information was rejected and didn’t actually apply for anything at all.

The house is now removed from the vendors website so we won’t be trying again anyway as there’s nothing else similar on the market anyway, we will keep saving, keep trying to get my partner into a full time job and then when there is another house, we will be much better informed and equipped to apply again.

Part of me is just grateful there won't be a declined mortgage application showing on my credit file!

Thank you everyone for the advice provided, we really appreciate the help.

Alias_Omega

Agreement in Principle is valid for 6 months.

Apply, get the outcome then see what happens.