HELP Mortgage offer withdrawn after exchange

klopper

We have had our mortgage offer withdrawn after we had exchanged contracts . It is a new build house through the help to buy scheme due to complete in Feb 2019, they have told it was withdrawn because we took out finance on a second hand car. Is there anything we can do?

kingstreet

Is it a credit issue or an affordability issue?

Did no-one tell you what you planned was very unhelpful in such circumstances?

klopper

i think it could be an affordability issue, and no, no-one told us this would be an issue

kingstreet

Your broker should be looking at alternative lenders, checking affordability and how the new credit impacts HTB affordability as well.

Standard advise is never to apply for any new credit between application and completion.

garth549

This is one of the big issues with new-build houses and exchanging contracts months beforehand.

Any change in your credit file could mean your mortgage offer is withdrawn. It could be something as simple as a missed payment caused by fraud on a current account as happened to one of my friends once. Luckily he hadn't exchanged contracts and got it sorted quickly.

Have you asked them exactly why the offer was withdrawn? If the finance has caused the mortgage to be un-affordable could you sell the car and pay it off?

If not then you might be restricted to finding an alternative mortgage or forfeiting your deposit and the new house.

klopper

all the broker has said we need to sort it out urgently as we are in breach of contract, nothing about looking for other lenders. We didn't know about not taking extra credit after we got the offer, as it was well within our means we thought it would be fine (wife is an accountant so did all the sums before went for it)

garth549

A lot of lenders have very strict affordability criteria. As an example they might lend you your combined salary, minus monthly commitments, multiplied by a factor (usually around 3.5 - 4.5)

eg a combined salary of 60k but with £800 monthly credit commitments might only allow a mortgage of £150,000-£180,000 with some lenders

it varies massively.

financegeek

garth549 wrote: »

A lot of lenders have very strict affordability criteria. As an example they might lend you your combined salary, minus monthly commitments, multiplied by a factor (usually around 3.5 - 4.5)

eg a combined salary of 60k but with £800 monthly credit commitments might only allow a mortgage of £150,000-£180,000 with some lenders

it varies massively.

This isn't quite right (to my knowledge anyway!) most lenders have a max loan to income criteria (usually based on gross income) but the application also needs to fit to their affordability criteria, which is essentially income minus outgoings plus a margin for rate increases etc.

You would need to pass both tests to qualify for the mortgage. it seems as though your application was tight and taking out finance for the second hand car tipped you into the mortgage being unaffordable.

had your broker seen if the mortgage fits on affordability with any other lenders? or could you repay the car finance even if it means borrowing money from a family member? or selling the car?

making sure you can complete is what's most important now, even if it means getting public transport for a few months

AnotherJoe

Have you a relative who could sub you the price of the car (buy out the finance) and then square it later? Failing that you'll have to see if you can find a new lender.

csgohan4

if you cannot find a lender, you are going to lose your deposit at the minimum.


I will be saving this thread for those wanting to take out credit after exchange




Good luck op

LRmortgage

Who is the Lender?
I would suggest your Broker should be finding a new one ASAP.