Remortgages and underwriters please explain!!

Chimpfeet

If a mortgage broker sorts out a remortgage for you with a decision in principle - they do all the paperwork, valuation, solicitor etc then it goes to the underwriters what are the chances of it getting turned down? My mortgage broker says as long as the redemption figures on current mortgage/secured loan aren't drastically higher than first estimated it shouldn't be a problem. Its about £5000 more than originally estimated is that classed as drastic? Please help my life is in the hands of the underwriters aaaarrrgh!!!:eek:

luckyfool

Chimpfeet wrote: »

If a mortgage broker sorts out a remortgage for you with a decision in principle - they do all the paperwork, valuation, solicitor etc then it goes to the underwriters what are the chances of it getting turned down? My mortgage broker says as long as the redemption figures on current mortgage/secured loan aren't drastically higher than first estimated it shouldn't be a problem. Its about £5000 more than originally estimated is that classed as drastic? Please help my life is in the hands of the underwriters aaaarrrgh!!!:eek:

The issue here isnt whether you get turned down, its whether the lender will lend enough gven the higher redemption figure. Your broker should be able to work out using multipliers or affordability calculators whether any higher amount required is going to present a problem.

Chimpfeet

We have been told the redemption figure is £70000 for mortgage and £25000 for the secured loan. We have been told we can get remortgage for £125,000 (inc fees) The rest will be to pay off credit cards etc.

luckyfool

Will the balance be enough to pay off all the credit that you told the mortgage lender you would repay?

There is the remote possibility that if there was a shortfall and you couldnt pay off some of it, then this could have an impact on the lenders affordability calculation. This would depend on whether it was close in the first place? For instance if the extra £5,000 meant you couldnt pay off £5k of credit card debt then depending on the lender they could assume that the minimum payment at 3% of the balance would be £150 a month and that this would remain. They may then annualise this (multiply by 12) and deduct it from your salaries before applying any income multiples.

Chimpfeet

Hi Luckyfool, thanks for your advice. The lender is GE money somebody told me they throw remortgages at people (so I'm hoping they will throw one at me) there might be a bit of a shortfall - think I'm just going to have to sweat it out and hope for the best. Do you think if we get turned down the mortgage broker will try and get us a deal with somebody else?

luckyfool

Chimpfeet wrote: »

Hi Luckyfool, thanks for your advice. The lender is GE money somebody told me they throw remortgages at people (so I'm hoping they will throw one at me) there might be a bit of a shortfall - think I'm just going to have to sweat it out and hope for the best. Do you think if we get turned down the mortgage broker will try and get us a deal with somebody else?

If there was any prospect of getting you a deal elsewhere they would obviously try to rather than losing the business.

If your mortgage is for 90% or less then GE Money will tend to offer a "50% debt to income ratio". This basically means they will lend very large amounts relative to salary. Above 90% they have tightened up a bit and are less generous. My feeling is if GE Money won't lend you enough then you are going to struggle elsewhere.

Chimpfeet

Hi Luckyfool sorry to be a pest!! Have just phoned the broker up and he said its all been sent to the underwriter so we should hear something in the next 4-5 working days (so we've got all the Bank Holiday weekend to fret over it!!) I said if they turn us down they will try and sort us a remortgage with someone else he said yes but now I'm worried because you said if GE money aren't prepared to lend to us we might struggle with another lender. (We have never been in arrears with our mortgage/secured loan so even though we are struggling surely if we didn't manage to keep up repayments they'd take the house off us anyway we just need someone to have faith in us because we would be loads better off if we get the remortgage!) Any more advice greatly appreciated.

luckyfool

Chimpfeet wrote: »

Hi Luckyfool sorry to be a pest!! Have just phoned the broker up and he said its all been sent to the underwriter so we should hear something in the next 4-5 working days (so we've got all the Bank Holiday weekend to fret over it!!) I said if they turn us down they will try and sort us a remortgage with someone else he said yes but now I'm worried because you said if GE money aren't prepared to lend to us we might struggle with another lender. (We have never been in arrears with our mortgage/secured loan so even though we are struggling surely if we didn't manage to keep up repayments they'd take the house off us anyway we just need someone to have faith in us because we would be loads better off if we get the remortgage!) Any more advice greatly appreciated.

Your broker should have done the Debt to Income Ratio calculations themselves before sending the case away. Dig out your mortgage quotation and look at the monthly payment at the reversionary rate. Add on the monthly payments for any credit that will remain after the mortgage is repaid. Now compare that to 40% of your monthly joint gross income (if you are borrowing over 90%) or 50% if you are borrowing 90% or less (and you are not going onto a heavier adverse product where the restriction is still 40%). If the mortgage payment + all the o/s credit is less than the 40% or 50% figure then it fits.

Obviously there is more to it than that and the underwriter checks all other aspects of the case but that is the basic affordability calculation that GE Money make (they also ignore credit card balances under £1000, loans with less than 6 months to run etc from the calculation).

Chimpfeet

The mortgage processor who has been dealing with my account has gone on long term sick leave (since last week) so someone else (more superior they tell me) is dealing with it. They've got all these figures so surely they should have checked it all out before they sent it to the underwriters and phoned me and said "you've no chance - forget it!" its all very confusing. If I do get declined do you think its worth going to my current mortgage lender and increasing my mortgage term to reduce the payments now? (They are high st lender who Ive had my mortgage with for 13 years!!) Ive tried doing what you told me with the figures and it may just squeeze through if Ive done it properly! (I'm useless at maths!)

luckyfool

Chimpfeet wrote: »

The mortgage processor who has been dealing with my account has gone on long term sick leave (since last week) so someone else (more superior they tell me) is dealing with it. They've got all these figures so surely they should have checked it all out before they sent it to the underwriters and phoned me and said "you've no chance - forget it!" its all very confusing. If I do get declined do you think its worth going to my current mortgage lender and increasing my mortgage term to reduce the payments now? (They are high st lender who Ive had my mortgage with for 13 years!!) Ive tried doing what you told me with the figures and it may just squeeze through if Ive done it properly! (I'm useless at maths!)

I'd hold off and try not to worry until you hear back. If your broker knows what they are doing these calculations should all have been done already.

Chimpfeet

Thanks Luckyfool, its with The Mortgage Lender so I would have thought they would check these things out before they let things get as far as an underwriter. My mortgage processor always seemed a little "away with the fairies" so I hope her superior has checked my file otherwise its wasting their time and mine. Many thanks for all your input I'll let you know what happens.;)