Mortgage Refused

rockvilla4

Hi

I was offered a mortgage in principle subject to a 10% deposit and was told to go and find a property. I did so, and put in an offer which was accepted. Now 3 weeks later the lender has turned round and declined the mortgage unless I provide a 20% deposit. Is this right? My financial circumstances have not changed.

I used a broker who was up front with his fees - do I still have to pay him, and do I have to pay the solicitors who are handling the sale? I'm not getting any clear answers from the broker and dont really know where I stand

RV

ACG

A lender can change their mind if they like. They would usually give the broker a reason so but do not always.

When was his fee chargeable? If its on application then yes. If its on offer/completion then no.
Have the solicitors started any work? They should not have started anything really until you have an offer but sometimes they do start straight away if it is requested.

Tie your broker down and get the answers. There is no reason for him to avoid answering your questions they are valid.

rockvilla4

Thanks for your reply ACG

I was told they dont think I can afford it, despite the mortgage being the best part of £150 cheaper a month than my rent. No defaults on anything and my cc paid off in full before making an offer.

I was initially told that the fee's were on completion of an offer. The solicitors sent me a bunch of documentation to sign a few days after the offer was accepted.

Its now with another BS but Im quite resigned to the fact that they wont accept me (passed the AIP though)

RV

ACG

See how you get on.
In May I had a client declined based on affordability - it passed affordability on the calculator but was tight. Placed it with a different lender and it flew through.

One lenders decision is not every lenders

Thrugelmir

rockvilla4 wrote: »

I was told they dont think I can afford it, despite the mortgage being the best part of £150 cheaper a month than my rent.

Lenders work on assumed interest rates i.e 7% to stress test affordability. Not actual rates. As over time they will rise from the current abnormally low levels. There's huge complacency that current interest rates are the norm.

rockvilla4

Thrugelmir wrote: »

Lenders work on assumed interest rates i.e 7% to stress test affordability. Not actual rates. As over time they will rise from the current abnormally low levels. There's huge complacency that current interest rates are the norm.

Even if rates rose to 7% it'd still be cheaper than my rent!!! Its not a big mortgage, £47k

kingstreet

We can have as many as six to eight lender affordability calculator outputs on file for one case before we find a lender which will lend what we need.

If the agreement in principle was for more than you were later offered at full application, the income or outgoing data differed from one to the other.

Some lenders only take 50% of some parts of pay while others take 100%. Childcare costs are ignored by one lender, deducted by others.

It's also amazing how people forget their student loan and season ticket for the train are all outgoings lenders would normally deduct from mortgage affordability.

System

Lenders work on assumed interest rates i.e 7% to stress test affordability

If lenders use their own rate e.g. Nationwide which is 3.99% for a 0.5% base rate, is that 7% the bank base rate or their rate?

silvercar

moneyunwise wrote: »

If lenders use their own rate e.g. Nationwide which is 3.99% for a 0.5% base rate, is that 7% the bank base rate or their rate?

They are testing if you could afford the mortgage if the mortgage rate was 7%.