Affordability Unease

powernap

Hi everyone. Have been reading with great interest, but affordability paranoia got the best of me today so I thought I'd ask a question that has been addressed but only partially from what I have read here.


Partner and I are FTB, trying to get on the government guarantee scheme. We are in our early 30s and collectively earn ~116k annually from full time employment. No dependents, no credit issues in the last 3 years, and not a single £ of outstanding credit anywhere.


We got a DIP in place a couple of weeks ago, for what was the absolutely the maximum amount the lender can lend on the HTB guarantee scheme. This was based on a hard credit check, and now has been signed off to proceed to full underwriting.


I am extremely nervous because our day-to-day spending is (I think) quite significant. We don't eat out, go to pubs/bars but we do enjoy good quality food and spend a fair chunk on groceries. We do also travel quite a bit and I have bought a couple of expensive gifts.


This will all be apparent in our bank statements - 3 months to date supplied to the bank. Even though we passed the credit checks and seemingly earn enough I am really worried that an underwriter may just consider us unworthy to lend to and will reduce the amount they lend, especially as we are applying for the absolute maximum they do for FTB.


Has anyone had a similar experience they can share? Thanks so much!

csgohan4

Lenders generally base spending on ONS figures. Unless your 'large' habits are quite frequent or train season tickets are large. Gambling is an issue with some lenders

powernap

Thanks very much! We don't have any season travel commitments - I take the bus to work and partner cycles or takes the bus. We don't gamble either. To be fair I can't even quantify how much we spend on groceries but it's probably above average. Not talking caviar and champagne but we do shop at specialist/organic grocers quite a bit and have an expensive gym membership. I am really petrified that lender may consider these as extravagant and would turn us down.


We otherwise meet their lending criteria and are going through an MA.

powernap

Can anyone else shed some light on the matter? Is this a reasonable concern, and does it present a realistic challenge to having a mortgage agreed?

kingstreet

Be a lot easier if you told us the lender's name!

powernap

Bank of Ireland

kingstreet

Hopefully, someone will now be able to tell you about BOI underwriting practice.

powernap

I did see some BOI threads that time forgot, none mentioning affordability in specific terms. I am pretty much on the cusp of building a spreadsheet to estimate affordability

Thrugelmir

powernap wrote: »

Can anyone else shed some light on the matter? Is this a reasonable concern, and does it present a realistic challenge to having a mortgage agreed?

The fact that you fund your lifestyle out of monthly earnings should pose no issues for the underwriters. Why should it? There's no rules as to how you spend your money. There would be concerns if you resorted to borrowing to fund your lifestyle. As this would suggest that you fall into the spend now pay later category. I assume you have no expensive hobbies such as owning a race horse or playing polo etc.

powernap

Thrugelmir wrote: »

I assume you have no expensive hobbies such as owning a race horse or playing polo etc.

Haha. None of the above, and thanks for sober reassurance.


Having looked at the ONS figures, it looks like our expenditure is, in fact quite restrained! We definitely don't spend £531 per week, which is what (I think) the data below is stating.




"The average weekly household expenditure in the UK combined over the years 2012 to 2014 was £512.60. There were 4 regions with higher expenditure than the UK average, the top 4 regions were:

1. London (£616.30)
2. the South East (£594.80)
3. the East (£540.60)
4. the South West (£533.00)"
   
   If they really baseline their estimate on these figure, they would come up with 40% of our income going into mortgage and living costs, despite the fact that we have a £6,700 after tax joint monthly income!

amnblog

I don't do too much travelling and don't buy expensive gifts. My daughters, however, always have their hands in my wallet.

I am not sure it that makes me a better risk than you.

Lenders don't judge lifestyles. We have placed clients with gambling habits, drinking habits, and shopping habits, that many people would consider ridiculous.