income doubled, mortgage offer reduced. What?

katekavs

Hello,

I had a bit of a shock yesterday as I got an AIP done with Halifax and it was far less than I was expecting. Halifax currently hold a mortgage on my current property, which they offered me in 2012 for £25k. Since then my income has almost doubled (I'm self employed), yet the offer they gave me yesterday (which is for selling the current property, paying off the remaining 5k and buying a new property) was only £17k. Nothing else in my circumstances has changed, so I wonder if this sounds normal?

I did include my partner on the new AIP, who is a student with a part-time job and around 6k additional annual income. I expected this to increase our borrowing potential, but perhaps he's bringing the offer down? I don't know why this would be, however, as he has a credit card which he makes regular payments to and no other debts.

(As an aside, what impact do student loans have? Our earnings are below the threshold to start making repayments)

Thank for any and all thoughts on this! I will try and get another AIP done in just my name and see if that makes a difference. Online mortgage calculaters are suggesting I might be able to borrow 35-40k

Cheers,
Kate

kingstreet

If you are self-employed, Halifax will take an average of your latest two years' net profits, or director salary and dividends.

It will not lend based on latest year's income unless it is lower than before.

No student loan payments = no impact.

Did you enter the current mortgage as a commitment and note it "to be repaid at or before completion?"

katekavs

kingstreet wrote: »

If you are self-employed, Halifax will take an average of your latest two years' net profits, or director salary and dividends.

That's what I thought, that average is about 9k (this is profit, rather than total income, which I think is the correct figure to use?)

Did you enter the current mortgage as a commitment and note it "to be repaid at or before completion?"

I was doing this over the phone, but when I expessed my surprise at the amount the agent checked this specifically and said he had entered it correctly.


Maybe I was just really lucky in 2012 and have been deluding myself that I should be able to get more this time round? Or maybe my partner has some shady credit past that I don't know about?!

ACG

It is not just as simple as your title makes out.

The affordability rules for all lenders has changed over the years.
Added to that, your current mortgage is solely in your name based on your circumstances back then and now there are 2 of you based on your circumstances now.

katekavs

Yes, I was trying to give the title a catchy hook based on my underlying confusion !!!128521;

I can't see any way in which my circumstances are worse now than they were then, and several in which they're better. That's why I'm so puzzled.

Maybe I should wait and see what an AIP in just my name comes out as...

Mortgage_Adviser

I believe Lloyds banking group lenders of which the Halifax is a member of have recently changed their maximum loan to income calcualtions at least I know Scottish Widows did.

So where before they would lend 4.75x you annual income if you earn less than 25k now they will only lend 4.49.

katekavs

Mortgage_Adviser wrote: »

So where before they would lend 4.75x you annual income if you earn less than 25k now they will only lend 4.49.

Thanks, that's good to know. Doesn't explain why they didn't even offer 1.5x our combined annual income though

katekavs

EXTRA INFO: I have just checked our Experian credit scores, and mine is 999 and my partner's is 973... (both 'Excellent')

Annie35

Might be worth trying a broker? It could even be something like Halifax not liking SE or low borrowing amounts, or both even maybe.