Mortgage confusion!

Bettyx33

Hello!

Before I begin, I will firstly admit that I am extremely naive and wish I had done a little more research prior to what I am about to write. But I didn't, and now I need advice from somebody who may know a little more!

Today my husband and I viewed a house (well, the plot of land upon which the house will be built) on a Persimmon development. We were put into contact with a mortgage broker at RSC new homes Ltd. They took all of our details - income and expenditures, any debts etc. The first gentleman we spoke to adviced he would put us on hold whilst he checked to see if the Help to buy and high street banks would be willing to lend, and what our affordability would be. He came back to confirm that they both were happy to go ahead and we would be accepted up to the value of 175k. The house in question is 101k so this was brilliant news. Then he told us he would put all information forward for a full credit check this afternoon and get back to us.

They called us back to let us know that 'everything is absolutely fine, it all cleared and we're good to go!' So I was really happy and didn't pay too much attention at first. Then I realised that actually... I KNOW I've got poor credit. So why has this process been so easy??

I asked the lady if this was definite, or whether there is the likelihood that going forward, there would be more credit checks and we would be rejected? She told me that no, there is definitely no chance of that happening. This is why they do the initial checks for affordability, followed by the credit checks and 'all other checks', which cuts out the middle man and shortens the lengthy process.

I've now spent the evening reading stories online of people who were offered a mortgage in principle, then were later declined.

We have a meeting on Thursday where we need to provide all relevant paperwork to continue with the process.

I am really quite worried though that it's not all as it seems and there's still a high chance that we will end up without this mortgage. I can't even get excited!

Does this sound right? Or is it as I suspect?

Just to add - my poor credit is a £400 phonebill that was unpaid and defaulted back when I was 18 (now 23 and more credit savvy).. between us both we have £2600 income and £1100 outgoings, which includes rent, c/tax and utilities. Our expenditure outside of basic bills is £171 per month on car finance.. no store cards, credit cards or catalogues.. no loans.

Please help!!! :(:(

[Deleted User]

See a proper broker.

Anyone recommended by the house builder will not be offering the best deal. You may or may not accepted, but at least give yourself a fighting chance of a decent offer.

ACG

A one off default from 5 years ago should be easy enough to overcome.
Presumably your broker asked about adverse and you told them about this default?

Ignore the internet, you have a broker working for you, let them worry about it, that is what they are being paid for. DIPs are not a Mortgage offer so you can still be declined between now and then, but it is an indication.

middleclassbutpoor

The bottom line is that the application could fail for one of a hundred reasons in reality. Whether it be credit or issues found when valued or when actual paperwork goes in etc.

Bettyx33

Thank you all.. the lady I last spoke to is the one who has thrown all the confusion into the mix. It's with her tellin me that credit checks were all fine and everything is fine to go ahead, and we had been accepted. She made it sound as though a lender had been found, not that we had passed checks that would allow us to go forward to apply for a lender!

All defaults and debts were delclared on the initial phone call, we have been as honest as we could be.

I think I'll be contacting the brokers in the morning to see where we actually stand.

Also, I wondered if anybody had any advice regarding the deposit? The email I received from the brokers suggested that there is a very tight complettion deadline and all paperwork and finances must be sorted asap. I was under the impression that the deposit and funds were finalised and completed on the day that the house legally becomes ours and we move in, therefore giving us until Feb/March to continue to save as much deposit as possible! I'm now starting to think the deposit would have to be paid a lot earlier than that.. :mad::(

[Deleted User]

Deposit needs to be paid on exchange, not completion.

enthusiasticsaver

Deposits are paid on exchange of contracts. With a brand new home this is usually quite soon after agreeing the purchase so you will need to find it quite quickly.

Don't be rushed into mortgage applications before knowing all the terms and conditions. What rate are they giving you and how much deposit are you being asked for? Sometimes with new homes there is a lower deposit accepted so you can check on that.

If your deposit is in a Help to Buy ISA then you need to check with provider when your solicitor has to apply for money.

If the phone bill default was 5 years ago it may not show up on the sort of search the mortgage broker did. Check Noddle to see what that says.

getmore4less

Check the terms of the purchase, especially any service charges.

AnotherJoe

There will probably be three deposits.

First, one to reserve the plot. Needed pretty much immediately.
Second, one when you exchange which they may want to be within 28 days.
Finally, one when you complete.

Lets say you will be on an 80% mortgage, for a £100k house.
You'll pay (say) £500 immediately to reserve.
You'll pay 10% deposit within 28 days, £10k.
You'll pay the additional 10%, to get up to the £20k, on completion. Many moth away,
You'll get back the £500 but it will then be swallowed up by other costs such as solicitors etc)

Gary123456790

As well as service charges, anyone buying a new build needs to be 100% clear whether this is Freehold or Leasehold as sometimes even houses are being sold Leasehold, and check contracts for onerous restrictions.

New developments can have restrictions above and beyond planning, for example as featured on Radio 4 lunchtime programme recently, they called it "Fleecehold" - there were increasing service charges even for houses and restrictions on what changes can be done, e.g. sheds in garden which don't need planning but you have to pay a fee and apply to the developer to put up a shed! Similarly with minor changes to properties which would again not need planning but are restricted by the developer and you pay an admin fee to ask to do it, and they could refuse you permission.

I don't want to put you off as this may not apply in your case but you should check so you fully aware of everything.

Gary.

SuboJvR

Don’t panic.

When you actually meet a mortgage advisor, they will go through everything with you.

All you have probably done so far is speak to one of their initial customer team, who sort of does the initial checks.

When you meet the advisor they will go through it all in detail. But the job of the broker/advisor is to find a suitable lender! With one default five years ago I am sure you will be fine!