Am I likely to be rejected again?

AFF8879

So - like many on here who's threads I have seen- I have been rejected for a mortgage application which has come as a shock given a) I went through a broker and b) was told I should be a "shoe-in" (I bet they say that to all the applicants eh...)


I won't post my full application obviously but basic details:
Property price = £315,000 with 10% deposit (first time buyer)
Annual salary = £63,000 with bonuses averaging £13,000 past three years
1 outstanding personal loan of £2,300ish with payments about £100 per month
No defaults, late payments or otherwise bad credit history (Experian report is spotless)
Sole mortgage, no dependents


The mortgage application was turned down by Coventry BS for "affordability". I find this really surprising given that after the mortgage payment and all my outgoings I would have over £1.3k of spare income per month - this isn't even factoring in my bonus!!

The only thing I can think of is my bank statements submitted were Nov, Dec and Jan- and of course the first two were full of Xmas spending! but even then, everything was paid off in full each month and I was still earning more each month than my outgoings (although one of the months my net saving was only about £200, the other two it was about £1k).


I guess £315,000 is fairly hefty for a first purchase but as I am buying in London, I can assure you this does not get me a palace :-) it is just a 1 bed flat.


I've heard a few people say that the mortgage affordability calculators on lender's websites do not reflect reality - does anyone agree? I'd be interested in your thoughts as I don't want to fire off multiple applications for them all to fail and my credit be left in tatters!

MortgageMamma

Sounds like the underwriters gone through your bank statement with a fine tooth comb. What has your broker said about this? its 4.5 times your salary without additional borrowing you may already have. Including your bonus 3.74 x salary. Perhaps they are not taking bonus into account, is it discretionary or performance related?

AFF8879

Thanks for the reply, the broker has said he is going to appeal the decision as in his words "it is very harsh" but advises me to seek a new application in the meantime as the current place I am trying to buy is a time-sensitive sale for the seller.


The bonus is indeed discretionary and performance related- but they specifically asked me to provide evidence of it (P60's) - hence I figured they must have accounted for it somewhere in their decision...


Another thing I am thinking of - my broker told me before I submitted the application that I had to be quick in getting all my documents together because they were putting their rates up in a couple of days- the cynic in me thinks maybe they didn't want me on that cheap rate...

MortgageMamma

I can't really comment on the rate changes situation but if you are really in a rush you need to consider what is more important, a fast turnaround or the best rates. Often they don't go hand in hand. From my point of view (I've not worked in mortgages for a while)small lenders are not always the fastest but there may be more factors at play. If you can't get more information regarding the actual reason it was declined from your broker other than "affordability" (this is not uncommon, often the lenders can be cagey about it so it may not necessarily reflect badly on your broker) then perhaps give your broker the benefit of the doubt an look for a (fee free) second opinion at the same time. Don't permit any credit searches at this stage just look for another potential lender. You need someone who works quickly, perhaps telephone based rather than sitting down for a lengthy appointment. Is your broker estate agency based?

amnblog

Is there something else in the background you have not considered?

Student loan, car finance, credit cards on zero rate?

Thrugelmir

MortgageMamma wrote: »

its 4.5 times your salary

Lenders are capped at 15% of their mortgage books for lending at this level. With only a 10% deposit. May simply be no appetite to lend this month on this particular application.

cns06

We had a similar (joint) income and our max was 275k. No kids etc etc. And we had 25% deposit..

minimike2

I would say from what you have said as others have, your income multiple is way out for what you are looking to borrow.

When you say £63k with £13k bonus, is that £50k Basic +£13k or £63k + £13k? It could be read both ways and makes a big difference.

Also your broker "appealing" the decision in this scenario is a waste of time and quite frankly just sounds like a fob off. A commercial business has the right to issue whatever decision they see fit and to "appeal" something on the basis of "I don't think that's fair" is nonsensical given the reason for the decline.

AFF8879

Thanks all. 63k is my basic salary and bonus is on top of that. I agree that there is little to no chance of the lender changing their mind but I think the point of the appeal is to understand their reasoning for saying I cannot afford the mortgage so that I can be aware of anything I need to change in future applications.

minimike2

OK well with that being the basic I would say there should be other options available to you where affordability and multiples would be met. It's just about getting the right lender.

You may not even need to use the bonus assuming everything has been disclosed here, but if you do would it show in your P60s at that level for the last two years?

minimike2

OK.

Well I would certainly say that there should be alternative lenders, but your broker needs to do some proper looking about for you first and look at using some AIP systems which only soft search, having first checked affordability calculators / policies before submitted another full application for you.

If you don't think the broker is up to scratch then find another who is.