FTB - Shared Ownership mortgage problems :(

dee123

Hi,

I'm wondering if someone can give me some advise. I've been really struggling to find a mortgage for a shared ownership property and I've got a few issues.

I've basically got 2 jobs at the moment and I'm looking for a mortgage to purchase 50% of a new build property. I've tried several brokers to help but it's been a bit of a hassle as they don't really want to go into these types of mortgages but one of them agreed to help.

anyway he tried with Santander with the second income etc but he's come back and Santander have said no due to the credit report. I've checked my credit report and it's absolutely fine.

I know scores don't really matter but I've got no missed payments, no CCJ's, on the electoral roll. With experien it's showing a good score of 895 and equifax its like 505 which is excellent. The only thing I think could affect it is I've got like 3k worth of credit card bills but I've always declared this and it's 25% of my credit utilisation.

Anyway I'm thinking of trying Nationwide today as I know they accept a second income and they apparently only ask for 1 month payslips.

I'm just wondering if someone else can give me any points or advise me of any other lenders that they could recommend as I'm really struggling.

With my first main income alone I can't get the required amount as I'm looking for a 15% deposit only but not many lenders are accepting my second income on a shared ownership mortgage.

Anyway sorry to ramble on but I'm hoping someones come through the shared ownership mortgage and could help me out.

Thanks

[Deleted User]

Based on my research (I'm NOT a broker, I work in lending) I'd have tried Nationwide first - aren't they one of the biggest for FTB lending too?

I'm not sure Santander are allowed to say "no due to credit report" - they should elaborate a bit more (e.g. too much existing debt) - with the broker, not with you. The broker should then relay that to you.

How long have you been in your second job? One of the key mortgage rules is enuring your income is properly assessed and sustainable. If you've had the job say 2 months prior to the mortgage, it's unlikely they'll see it as sustainable (and more likely an attempt to inflate income)

Nationwide will accept 2nd job income where you've had the additional job 6 months (in line with most lenders I'd imagine).

Can you afford it by only using primary income if you get the builder to let you have less of a share? e.g. 25% or say 35%. That means you borrow less initially and your deposit looks healthier to the lender as a %

Although - the less you buy, the more rent is, so you'd have to factor that into affordability.

Personally I'd also go with a broker such as L&C (if you feel you need a broker) that does shared ownership, rather than a reluctent one that usually doesn't!! Or go direct to Nationwide since they accept direct applications.

Thrugelmir

dee123 wrote: »

The only thing I think could affect it is I've got like 3k worth of credit card bills but I've always declared this and it's 25% of my credit utilisation.

Utilisation means little. Having £3k of debt is going to impact your application. A primary objective should therefore be to clear this ASAP.

What's the nature of your 2 jobs? How many hours a week do work? Are the jobs compatible?

dee123

Hi,

Thanks for the reply. Really appreciate it.

Having checked the Nationwide Intermediary website I'm really unsure why my broker didn't go with them first to be honest, I think he may have seen a good rate at Santander and tried them. I've asked the broker to clarify the issue with the Credit Check but I think this will be Monday now they get back to me.

I've been in the second job for 8 months now, in both jobs I'm a team supervisor in manufacturing. In total i'm probably doing about 58 hours a week but that's mainly because I do night shifts on my main role. I think I can sustain this for a while to be honest as I don't have any dependents and single.

With the 3k I'm looking to settle that before the mortgage goes through so hopefully won't have this debt by the time the mortgage is sorted.

Unfortunately the minimum equity I can buy is 50% and I'm unable to lower my share any further on this. I think I may end up paying a higher deposit by the looks of it.

I've completed the assessment with L&C online and waiting to hear back from them.

I've approached Nationwide directly by phone and may run through an affordability with them.

Can I ask if I get approved for the DIP with Nationwide on the phone is that pretty much it for the credit search side of things? I know they will do a hard search at the application stage but providing nothing changes in the credit report and the information stays the same does that mean that they generally offer it ?

Thanks again for the replies.

[Deleted User]

I'm pretty sure Nationwide DIP is hard search - which is why I haven't gone for one yet! I presume they then won't do a 2nd hard search as that could be deemed deterimental to customers, but ultimately up to them.

They also state they can use any of the 3 agencies (although I believe they nearly always use just Experian)

I guess it's individual underwriter discreition as to how much 58 hours is sustainable - that's a hell of a lot. It does show a great work ethic though!

I mean I'd be wary if it was a case I was assessing - because we are told to ensure work/life balance too (in terms of affordability not being right up to the limit too - a client saying they only spend £10 a month on food for example).

If you only need say 30% of the 2nd job income to pass affordability, they'll be more flexible than if you need 95%. I think if it passes DIP and you need < 50% you've got a very decent chance of convincing the underwriter it's a good proposition. I assume you've stretched term as far as you can?

Not ideal to be in say a 40 year term, but in the short term it helps sort affordability and you may get pay-rises etc later on, lower interest rates later on as you get into a lower LTV etc

dee123

Hi,

Thanks for the reply. I've just been reading online too that Nationwide do a hard search so I'm a bit reluctant now but I think it may be my best option.

Yeah I'm sure right about the agencies, when I had the Santander search too it's just exclusively showing on Experien and nothing on Equifax.

Does the underwriter check each mortgage application to assess it or is only just a small percentage that get screened? I'm sure if I was an underwriter I would be worried to with the high working hours! Needs must though, house prices are going up so the only thing I could do is work harder to afford them lol

I've just worked out how much % I need from the second job and it's just below 50%, not ideal but I guess it's better than 90%.

What do you reckon? shall I try Nationwide directly and take my chances or see if there's any other options out there? I' think i'm just abit stressed out after the first AIP declined that I want to get it done asap.

Another thing Is the house is a new build and it's going to be ready in January, the developers have advised to complete before then but would this affect the valuation etc as the house isn't completed yet ?

dee123

Also I forgot to mention. I was thinking about the Santander issue and I'm just thinking could the LTV have played a part in the refusal as I went for LTV 90% but with Nationwide I'm trying 85%

[Deleted User]

It depends on the case - at the bigger banks they all will go through some level of validation (e.g. ensuring stated salary is correct, ensuring bank statements look OK and you aren't gambling £1,000 a month etc) but how in depth they're looked at I'm not sure.

I work for a much smaller lender than Nationwide - we look at each case a whole. Computer says yes or no at DIP stage (and if it says no, I don't see it, unless the broker phones through to appeal).

Once the application hits us, we don't use 'credit scoring' as such (e.g. you score X out of Y, therefore you can only borrow £xxx) but have to take an overall view of the case.

- Can you sustain mortgage payments of £xxx per month for the whole term?
(we all know "for the whole of the term" is a bit hard - term can be 40 years, who can predict 40 years into the future? Plus highly unlikely anyone will be with same lender for entire term, but MCOB & FCA rules say it's a must!)

- Can you have a decent and sustainable lifestyle with what you've declared?

You say you're working 58 hours - single with no dependents, I'd consider it. If you had a family with 3 kids, no chance – for obvious reasons.

Also people say they don't travel (so affordability looks better) or only spend £50 a month on 'recreational', only spend £100 on food etc etc. That may well be the case, some people are extremely frugal - but is it reasonable & fair to the client to expect them to live such a lifestyle for 40 years to sustain their mortgage payment?

I know how frustrating it is - I'm an FTB myself - but ultimately, in some situations, it is actually in the customers benefit to decline and say no come back in a few months when you've saved more etc.

The deposit etc would help, but doesn't have the effect people think (30% LTV cases still get rejected) these days because of affordability & sustainability rules.

Picturing your case as a "whole", I'd prefer a 85% in that situation but, unfortunately, there is still some manual element in it.

We've had people that absolutely smash the credit scoring. Should be a 2 minute case to straight accept them - and we've still declined as we think it's not sustainable for them to be living/operating in the way they have. Seems very harsh - but I firmly believe the decline was best for them (and that's coming from a FTB struggling to get a mortgage!!!).

I'm sure you'll find something – personally I’d wait and see what L&C have to say, since they do S/O and they might have better ties with Nationwide than the public. If Nationwide decline you, I imagine you’d need to go to a smaller lender that doesn’t use credit scoring and looks at the overall merits of the case – this may cost a bit more (it’s expensive to process apps compared to the highstreet where I imagine quite a bit is automated and “computer says no”) but if it gets you your house…

dee123

Hi,

Thanks for the reply. Well I was quite worried today after the issues with the first application and then Nationwide called me today (as I called them a few days ago to query their process) and I queried the credit search etc and she did confirm that it's a hard credit search they do but if it goes through then it won't be done again.

I know I should have waited for L&C to get back to me but I tried with Nationwide on the phone and it went through!! I got the AIP and they've only requested 1 months payslip from both jobs and they said they don't need bank statements. The adviser said they use all 3 credit reference agencies but this time the system checked with Equifax and Callcredit which is what I was hoping and everything was ok.

e-mailed over the AIP to me and I've got a mortgage adviser calling me next week and I believe he'll check paperwork and the best rate etc. I'm hoping this is just a formality though and hopefully shouldn't cancel the AIP.

Does anyone know what will happen next with Nationwide, I know there's a chance it could get rejected but how likely is this? And what are the next stages?

Thank you so much for the replies, As you all this is such a difficult time especially after being told I was rejected by 2 lenders due to credit report but I really appreciate the time you've taken to reply

[Deleted User]

That sounds great, glad they've spoken to you already!

The paperwork/best rate etc shouldn't be a big deal, just regulatory to ensure you've had the correct advise etc. If you need to swap products within Nationwide it should be fairly easy. They won't refer you to another bank as they only advise on their own products.

I believe next with them would be the formal application, as an AIP doesn't tie you or them down.

Followed by valuation of the property, checking your payslips etc. As long as what you've told them is correct and the property stacks up (e.g. value is correct, it's not above a takeaway or anything awkward like that) then sounds good and all you can do for now

Hopefully your old broker can shed some light on the Santander situation this week too - by the sounds of it I'd say it's the case as a whole they've declined, not something specific to your credit file - especially if you say there is no adverse/missed payments etc. In that case, I wouldn't be too concerned about Nationwide doing the same (different lenders like different things).

If they come back with something tangible (say a missed payment) then you need to get investigating further, but it looks like you've done that so unlikely - decline there is just one of those things

dee123

Thanks so much for the reply, Really appreciate your advise on this.

I'm hoping it should be all good but I'm sure you can imagine how nerve racking this can be.

Can I ask with Nationwide is there still a chance that the application can get referred to underwriters for further info or would that have already happened at the AIP stage if it was required? And if it does what do they normally need? Sorry just really anxious.

Also how is your mortgage going Somerset?