Declined Santander Mortgage

zaidy88

Hi Guys,
Looking for some advice please.
Just had our mortgage declined by Santander for 'affortability' reasons.
To give you an overview, my wife and I are trying to purchase a new larger home for our growing family but are planning to rent out our current home after we move out. Estate agent's rental valuation of current home is higher than mortgage repayments so no issues there.
New home is costing £400k with a 10% deposit so we're asking for £360k mortgage.
Mortgage broker spoke with Santander and they advised that the income figures we provided them were reduced considerably because 2 out of the 4 businesses we operate have not completed 3 years trading, therefore, any incomes we received from these 2 businesses was marked as 0 and income was only considered from the other 2 (established over 3 year) businesses.
To give you an idea, this dropped our income by around 50% when going through their calculators, but surely this would have been the same when we checked for a DIP before proceeding?
Anyway, looking for some advice from those a little more experienced in the mortgage arena.
Mortgage broker is saying that we now try Halifax or Nationwide, paying a slightly higher interest (but we can change in 2 years to lower interest mortgage) but I'm not so sure as one decline will already affect credit rating so will this not be picked up by other potential lenders? Also, will other lenders not use the same calculations and mark 2 out of the 4 businesses as 0 income?
Any advice/help will be appreciated.
Thanks

jennhg88

Surely questions for your broker no?

DCFC79

zaidy88 wrote: »

Mortgage broker is saying that we now try Halifax or Nationwide, paying a slightly higher interest (but we can change in 2 years to lower interest mortgage) but I'm not so sure as one decline will already affect credit [STRIKE]rating[/STRIKE]history so will this not be picked up by other potential lenders?
Thanks

Credit rating will not in any way be used as part of the process since lenders cant even see it. Your credit history is what lenders etc can see. Speak to a different broker if you like, see if the response is the same.

Neutrinno

zaidy88 wrote: »

but I'm not so sure as one decline will already affect credit rating so will this not be picked up by other potential lenders?

Each lender will score you in their own way, being declined by another mortgage lender does not necessarily mean you will be declined again. Also, they may not even know - being declined for credit doesn't show up on your credit report, just that you have applied for credit. Unless they specifically ask if you have been declined they wouldn't know.

zaidy88 wrote: »

Also, will other lenders not use the same calculations and mark 2 out of the 4 businesses as 0 income?
Any advice/help will be appreciated.
Thanks

No, lenders don't all assess income in the same way. Some lenders may take 100% of all this income as they may not require 3 years of self-employment income; Halifax for example may consider just one years.

davidwood681

Go see your broker.

Sometimes their decisions can make no sense to some....like when people with bad credit history are accepted and those who are self employed are declined

Thrugelmir

zaidy88 wrote: »

Estate agent's rental valuation of current home is higher than mortgage repayments so no issues there.

Until the tenant(s) either don't pay or there's a void period. Then you need to meet lending criteria, not as simple as simply exceeding. Added to which there's the question of what you total debt will be on both mortgages.

Finally the question of how tax efficient this will be. Given the changes to the interest relief given on BTL's.

Much to be considered. Particularly as lenders are looking to derisk at the current time.

zaidy88

Thanks for all the input and advice.
Going to try with Halifax next as been advised that they accept one year figures.
Fingers crossed.
Thanks again