Santander using 'average' outgoings for affordability?

Teamjarjar

My husband owns our house, value around £250k and outstanding mortgage is around £50k with Santander. The mortgage is in his name only.

We were thinking of moving to a bigger house and were offered a new (joint) mortgage in branch for between £120k and £160k, the upper amount available if I increase my hours at work.

We've decided to stay put and extend instead of moving, so we're trying to borrow an additional £30k instead. Apparently Santander won't do this in branch, so my husband had a telephone appointment today.

They've told us that not only can we not borrow any more, but we can't even afford the mortgage we've got!

The thing I'm finding difficult to accept is that they said they don't use our actual outgoings to decide whether it is affordable. Instead, they use the average figures provided by the government. Our actual outgoings are around £1k a month, but he said the average for 2 adults and 2 children is £1400 so he has to use that in the quote. Does that sound right? Because it seems to be making an absolutely massive difference in the outcome. I'm pretty furious that despite all our best efforts to keep our bills as low as possible we're being penalised anyway!

I'm also pretty annoyed that we were offered quite a large remortgage in branch when we were planning to move, and I can't see why that is different.

amnblog

Them's the rules.

Teamjarjar

Why do they bother asking for actual outgoings then? Seriously, the rules are that they use averages?

amnblog

In case your outgoings are higher than the ONS figures, guess what they do then?

Teamjarjar

I'm gobsmacked. Our outgoings are significantly lower than the average, by a lot of hard work, by changing energy supplier and looking for the best deal on everything (everything this site advocates!) so it has come as a massive shock that it doesn't matter. And it isn't publicised, I've been looking everywhere for some guidance!

Have you got any idea why we were given an offer in branch when we were looking to move, are the rules different for that? Or would they have just withdrawn the offer once we'd put an offer on a house?

Thanks for your help, it's been much appreciated.

getmore4less

Remortgage joint for more money if you already have an indication that will be lent.

amnblog

One of the two staff you spoke to at Santander (or possibly both) must have made a mistake.

Use a broker if you want the job done properly.

Teamjarjar

He used a broker last time, when he bought the house, and there was none of this hassle! Probably worth the fee to make sure it is done properly.

The guy on the phone said it wouldn't make any difference if the mortgage was joint the outcome is the same, which doesn't make any sense because although I work part time it still takes our income up to £44k, which means we would be borrowing less than two times our income.

Thrugelmir

Teamjarjar wrote: »

Have you got any idea why we were given an offer in branch when we were looking to move, are the rules different for that? Or would they have just withdrawn the offer once we'd put an offer on a house?

An actual mortgage offer or just a Decision in Principle. There's a significant difference between the 2. Do you have have any other debt? Credit cards, car loans etc.

Teamjarjar

It doesn't say - it just says 'mortgage certificate' and says to contact them again once we've found a home.

We do have a car PCP, and a very small credit card debt that we could clear anyway, we're just using interest free for now.

The childcare costs is a secondary factor - the guy on the phone had to be talked into the fact that our costs will go down once our daughter turns 3, because she'll get free hours then. I can understand they have to take them into account, it definitely makes sense, but it's only a short term cost, compared to the 30 year mortgage! But I can understand that. And that is counted separately to our 'averaged' outgoings.

michelle2008

So you have a joint income of £44k and they say you can't afford your current mortgage? While there is only £50k left on it - was it a large mortgage originally with only a short term left (therefore high monthly payments)?

Is age an issue - are they costing a shorter term mortgage than the 30 years you have assumed?

Given what you have said about your outgoings I assume you aren't is much debt