Mortgage Refused - Computer Says No!

amnblog

What you have posted here suggests that your 'broker' does not really have any idea (recommended by the estate agent by any chance?).


Engage an alternate one before you do anything else.

gowen

Ok I see...The broker was recommended by a friend as he got his mortgage through.

I do have another broker who I intially got in touch with that I will speak to again for further sound advice on this.

As you say I don't want to jump into anything and risk damaging my credit rating further by 'randomly applying'...I won't do that. I was just wondering whether paying off my debt now would help the situation and how lenders generally view overdraft usage and payday loans.

Thanks for everyone's advice and comments...much appreciated!

amnblog

gowen wrote: »

I was just wondering whether paying off my debt now would help the situation and how lenders generally view overdraft usage and payday loans.

These questions are pretty much unanswerable other than to say:


More debt is less affordability for the mortgage

Use of OD suggests insufficient cash available, exceeding OD suggest poor financial management


Payday loans do not look good

Thrugelmir

gowen wrote: »

So would you advise that clearing some of my current debts (2 credit cards and an overdraft) would increase my chances?

Another thing he thinks maybe an issue is the fact I (stupidly) took out 2 small payday loans (around £200) earlier last year to see me through the month.

From a lenders perspective the overall picture painted is one of a financial position that has no ability to withstand any financial shocks in the future. Any loss of income, a hike in interest rates, an unexpected bill could trigger such an event. Therefore a lender may well consider allowing you to increase your debts further irresponsible and unaffordable. After all it's the lender that gets fined by the regulator not the borrower. Something that banks wish to avoid after the ongoing PPI payout saga.

gowen

Appreciate all the advice here.

As much as I want to buy this house and upsize, I think I'll clear my debt now and stay where we are for a year and build up a solid financial base i.e. cancelling overdraft and saving some cash aside.

Thanks again all, sound advice.:beer:

samba

Don't cancel your overdraft - just save your pennies for a few months and get out of it and into credit. There's nothing wrong with having an overdraft as a safety net, as long you remember it's not your money and an expensive loan.

gowen

Thanks Samba...I will be able to clear the overdraft in the next couple of days. Agree it is a good safety net I just don't like the temptation (mainly the wife!!) of dipping into it! Having said that we can now comfortably live in credit and also save a few pennies so shouldnt be anywhere near the overdraft! Agree it is a good safety net should anything drastic happen!