Mortgage offer of 180k slashed to 98k!

gemmylouise

We earn £55k a year and applied for a mortgage with a specialist broker as we don't have excellent credit.

We were offered a mortgage for £135k for a new build on help to buy at a value of £180k. Last month we got a new car on finance. We earn £4K a month and the car payment is £450 per month so we can easily afford it and didn't realise the impact it would have on our mortgage offer.

They have slashed our mortgage offer to 74k for a new built of 98k!

Upset is an understatement! I had no idea a car would have so much impact on the amount we would be able to loan!

kingstreet

Did you put the monthly payments in the lender's affordability calculator before you embarked on what can really only be described as a "risky" purchase?

gemmylouise

kingstreet wrote: »

Did you put the monthly payments in the lender's affordability calculator before you embarked on what can really only be described as a "risky" purchase?

We are going through a specialist broker. We earn £4000 per month so had no idea adding a £450 per month to our outgoings would affect our offer so greatly! We still have nearly £2000 a month spare after outgoings including mortgage!

It's a harsh lesson to learn! Looks like it's back to saving again now!

ACG

Can you refinance the loan over a longer period? Getting the repayments down would help to increase the Mortgage amount.

You say you would have £2k a month spare, but Mortgage lenders are assessing you against an interest rate of around 6-8% not the actual rate payable. If the rate increased you would have less available.

SharkBite

This forum has taught me many things in the short time I've been a member. No credit before completion sticks out as I currently have a mortgage offer.

kingstreet

gemmylouise wrote: »

We are going through a specialist broker. We earn £4000 per month so had no idea adding a £450 per month to our outgoings would affect our offer so greatly! We still have nearly £2000 a month spare after outgoings including mortgage!

It's a harsh lesson to learn! Looks like it's back to saving again now!

So did the broker test affordability with the new payment?

Did he think the plan was a good idea or did he counsel you against? Standard advice is not to apply for any new credit between application and completion.

Typically, you can borrow 4.5 x income on HTB so £247,500 should be the approx max for £55k gross annual. Why were you being offered so little in the first place? Which lender was this?

gemmylouise

Max_Hughes wrote: »

This forum has taught me many things in the short time I've been a member. No credit before completion sticks out as I currently have a mortgage offer.

It's a hard lesson to have learnt! Back to saving now!

gemmylouise

kingstreet wrote: »

So did the broker test affordability with the new payment?

Did he think the plan was a good idea or did he counsel you against? Standard advice is not to apply for any new credit between application and completion.

Typically, you can borrow 4.5 x income on HTB so £247,500 should be the approx max for £55k gross annual. Why were you being offered so little in the first place? Which lender was this?

It was a mortgage broker and the car was a last minute decision! I imagine we are not being offered as much as others because our credit is not excellent. My husband has a couple of ccjs from 2012! I guess we will try again in 12 months time

Fisa002

Try a different lender?

gemmylouise

The broker has now emailed me this...

"I have reviewed your case again. The lender I went to in the first instance gives the best interest rates but as a result is tough on affordability. We always look to give you the lowest rates were possible.

I have run your details through another lender which has higher interest rates but easier affordability which is coming out that they could look to lend you an amount of £170,000"

Phewww what a relief!

juniordoc

That is a pretty high monthly repayment for a car.
Don't think I will ever understand the current trend of people buying new cars they can't afford and spreading the cost to make it appear that they can.
What is so wrong with saving up and buying a 3-5 year old car? Such dead money to buy a brand new car and watch it half in value a year into owning it.