Mortgage Decline

feistyred

Hi All

I'm new to MSE but hoping to get some advice. I recently applied for a Co-Ownership mortgage. Due to my fianc! having a previous repossesion and my 'then debt' this was our only option. I had a credit union loan of £11,0000 and £1000 overdraft. On the advice of my mortgage advisor (I am going onto the mortgage alone) I cleared the credit union loan In order to be eligible for Co-Ownership and also brought my overdraft down to £500. My partner cleared this loan for me. We had considered using his money for a deposit but because I was going in on the mortgage myself, the maximum I could borrow was £70K.

Long story short, we sailed through Co-Ownership and got an approval in writing within 10 days. We also got pre-approved for mortgage with Ulster Bank. The application was sent to underwriters last week and we were very hopeful. We have paid the holding fee for the house we want. Today I received a phonecall from my mortgage advisor to tell me that the mortgage has now been declined, and the reason? Because I paid off my loan! we are so frustrated. My mortgage advisor has been great and is also shocked. He said he thought we would fly through the mortgage process. He has told me he is appealing this decision and will fight tooth and nail until we get a mortgage. If the appeal is also declined, he has told me there is another bank we could try. Our problem is we have to stick with banks that offer a Co-Ownership mortgage without a deposit.

My question is, has anyone ever been declined for a mortgage, appealed and had a successful outcome? Or been declined with one bank and approved with another?

Any advice would be greatly appreciated!

Let_Us_See

Yes, to both your questions.

However, I would like to know the "thinking" behind decline for repaying loan?

feistyred

Thanks for your reply!

Yes some information regarding the decision to decline would be great. We are very confused. My Experian score is 999 and I have never missed a payment for bills or any credit agreements that I previously had.

My mortgage advisor has told me that the bank wanted to know if I have paid off my loan why I couldn't get another loan and use this as a deposit? It makes no sense to me. If I was to get another loan, not only would I be putting myself into debt but I would'n't be eligible for Co-Ownership (to qualify I can't have any debt over £5,000). Also, I wouldn't be able to get a mortgage for the house we want on my own.

I'm just keeping my fingers crossed that the appeal is successful. I never realised how stressful applying for a mortgage would be!

Thrugelmir

The ongoing overdraft position won't of helped you. Nor would have paying off the loan be the reason behind the decline. More likely it's your previous credit history ( past 72 months) that's the issue.

feistyred

My past credit history isn't an issue. As mentioned, my Experian report have been at 999 for at least the last 1-2 years. There have been no outstanding payments - I have never been in arrears.

The bank's reason for declining is because I paid off a loan -

Morgage_Confused

Isnt this the actual reason for decline. You now have no deposit?

feistyred wrote: »

Our problem is we have to stick with banks that offer a Co-Ownership mortgage without a deposit.

feistyred

No, this isn't the reason for the decline. We went to ulster bank who offer a co-ownership mortgage with no deposit. We never had a deposit due to clearing a loan. So, because I cleared the loan, the bank have declined the mortgage.

feistyred

**update** The official reason for being declined was " a loan was paid off to suit the criteria of coownership". Our mortgage advisor appealed this with the underwriter who rejected the appeal. He then went higher and brought it to the head of mortgages. Just found out the appeal was successful and we have been offered a mortgage ( subject to valuation) we are thrilled!

AWeeCuppaTea

feistyred wrote: »

**update** The official reason for being declined was " a loan was paid off to suit the criteria of coownership". Our mortgage advisor appealed this with the underwriter who rejected the appeal. He then went higher and brought it to the head of mortgages. Just found out the appeal was successful and we have been offered a mortgage ( subject to valuation) we are thrilled!

I was going to say, I recently completed on a house using Co Ownership and paid off part of my loan to bring it within the £5000 limit as well, and Ulster Bank had no issue with me paying it off to 'suit criteria'. It must have been a clueless underwriter. Delighted for you, best of luck.

Jon_B_2

BTW. Your 999 credit score means nothing. Don't waste your money in future...

feistyred

Thanks AWEECUPPATEA!

We were very disappointed and confused when we were declined. Absolutely delighted now though. How long did the whole process take for you?