First time buyer applying for mortgages.

td23

Hi guys...

I have had an offer accepted for a house with the potential to move in as soon as I can sort a mortgage.

5% deposit is ready, all fees are covered too. Good credit rating, with little existing debt. My earnings in the calculators I have used online, have all said I can potentially borrow over 20% more than what I'm needing. So all in all, a fairly ok position.

Basically I have used a recommended broker who covers all the market, excluding direct deals with certain banks etc.

I was wholly honest with my broker and he has done his calcs and recommended a mortgage with santander at a slightly higher interest rate than the average I can find on money supermarket.

I do have slight issues with organisation of my finances.. I have a few bank accounts and I spread my cash about these accounts with little consistency. As a result of this I presumed Santander were chosen as they would not ask the ins and outs of all my finances, which would have made things take longer. I was happy to pay the additional monthly mortgage payment as a result of this.

Applied for the mortgage today, and was rejected on the basis Of affordability. Like I said though, I have few credit commitments and never missed payments etc.

Affordability wise I don't understand as the monthly payment is not too different from the rent I am currently paying. And have been for years.

Now I'm in a position because....

Although they refused a 5% deposit, they have categorically said that they would approve my application if I were to pay a 10% deposit.

Now I possibly could, at a stretch, find the extra 5% however it would leave me with little security and in my eyes actually make the affordability situation a lot worse. Especially given my advisor has stated that the interest rate I was applying for with the 5% wouldn't necessarily change, even if I paid a 10% deposit.

This part I don't understand as I could offset the reduced monthly repayments on a 10% deposit against the initial extra 5% if that makes sense. Ie if I save £2k over the two years with the better rates and lower payments that could theoretically reduce the outlay of the extra 5% I need to find.. Which makes it a little more possible to find.

Now I feel stuck between a rock and a hard place as if I refuse to pay extra deposit and take that as a knock back, I will have to be pretty dam sure who To apply with next for a potential 5% deposit mortgage like I originally want and am prepared for.

Really don't know what to do. What would you do.

Appreciate your advice.

Thanks.

beecher2

A 95% mortgage is always going to be seen as more of a risk for the lender than an 90% one. If you can find the extra 5% then I'd do it. Otherwise I'd pull out and wait until I'd saved more. You probably should've sorted this out before putting in an offer to be honest.

I don't understand the logic of seeing it as extra outlay as you get the benefit in having a lower mortgage, and will pay less interest.

amnblog

Sounds like you didn't make credit score for a 5% deposit.

What has your broker suggested?

Senior_Paper_Monitor

Did your broker receive a full copy of your credit report before the application (an absolute must with Santander) ?

If so what is his/her comment at this stage ?

td23

My broker has suggested making it up to 10% deposit. If not, re apply for a different 5% deposit mortgage. I see this as an extra outlay as it would leave me with no safety net, although I would appreciate the less interest and lower mortgage..

If I have failed the credit score for a five % mortgage once, would this not be near enough the same throughout all lenders? Or do each take a different approach to it? Would my broker be then able to take the info he's has got from Santander and use it to make sure my next selection is as good as a sure thing that it can be.?

I would have thought to sort this before offering to, however it was brokers who told me to have an offer accepted first, then call them. I had already given them my info and they had given me a mortgage in principle.

Thanks for replying

td23

I'm not sure if broker had looked at my credit score during my initial discussions with them. I have only spoken to him for 5 minutes discussing the declined application and my options, as mentioned above. He's away until Monday. I have about 100 questions for him on his return..

Senior_Paper_Monitor

My question (#4) is very specific - did your broker see your detailed credit report(s) before applying ?

td23

My broker did not inform me that he had done a credit search on me, nor did I submit him a copy of my credit check. I had previously checked my credit rating before speaking to them and all was good with it.

Senior_Paper_Monitor

1) In my opinion any broker that submits a 95% LTV FTB application without crawling all over the applicant's full credit report(s) first needs their bumps felt ! I have no problem with you repeating that comment to him/her

2) The great majority of brokers do not have the facility to do a credit check on you - and even those that do should not do so unless they are acting in a 'packager capacity' (which would not be the case for yours) as this is a hard credit search, hence any sensible broker will obtain the report(s) direct from you.

3) You are almost certainly not qualified/experienced enough to analyse your own report - sorry to be blunt - against lender criteria. That is what a broker is paid for.


When you say the broker was recommended - who by ?

This appears to fall under the definition of FUBAR !!

td23

I really don't want to name the broker as it was recommended on here...massively recommended if I do say so. Make what you want of that..as its my first time buying I'm pretty wet behind the ears with it all, so came to here for help.

No need to apologise.. Blunt is good in my eyes. Keeps to the point.

I'm pretty annoyed as I understand I can't keep submitting applications here there and anywhere. I'm gonna have to be extra careful with the next one.

Sorry if this seems like a stupid question but if I failed on affordability, how would they determine that through my credit score? If it's showing all payments on time and no problems on it? Again sorry if that's a dumb question.

And thanks for your opinion...

Senior_Paper_Monitor

I didn't ask for the broker's details - just who recommended (nuff said).

There are many factors to evaluating both a credit report and affordability - score (that you see) means jack !!!! !

The lender's 'credit score' which is obtained via their algorithm to which the basic data is applied can affect the multiple/LTV they will permit.

Santander are also very sensitive to current debt as shown on credit report (even if you have paid it off).