Shopping around killing your mortgage credit score :-(

Cash_Cow

I have a BTL mortgage offer from a company but they have drastically reduced the amount from my decision in principle offer.  From £416k to £370k as they insit im a higher rate tax payer - despite my accountant proving im not, and they knocked £30k off the house value.  This means I can't do the deal I wanted.  So I have started shopping around and found a better offer with another lender, but they are offering me even LESS due to my now affected credit score.  I would have thought my credit rating excellent as Credit Karma says it is but its the fact that there have been a few searches that is putting them off. 
We are talking £600k property and £400k loan - loads of equity in there for them but i'm getting nowhere.  Any thoughts or tips to make myself look more attractive to a lender?
Thanks

csgohan4

please clarify:
Gross income and deposit
debt
Adverse credit e.g CCJ, DMP e.t.c

What you meant by shopping around? Have you been getting AIP with different lenders and if so how many? This will affect your credit history

Credit score is irrelevant, each lender has their own criteria

Generally you can borrow x4.5 of your gross income not including debt

ACG

Lenders do not determine how much they will lend you based on yoru credit score in the main (I think there may be 2 lenders who do), but it is generally you either pass or you do not. 
There are a lot of questions here, I think it would probably be a good idea to see a broker as things you are saying do not sound correct and there may be some misunderstanding. 

[Deleted User]

test

[Deleted User]

I wouldnt say to dismiss out of hand the credit reference agencies credit scores as “irrelevant” without context. If you have defaults and problems - it will show poor or very poor scores when you check. 

Similarly if you have “excellent” showing the chances are in the credit files at least - there are no hidden nasties, defaults, CCJ’s or electoral role problems so these scores give a basis of indication on past history and are a good start. Obviously banks then score the applicant factoring in current issues like job security, income and property details so the whole lot is then taken into account and a decision is made. 

Keep applying for DIP’s and then not going ahead can look like you are getting turned down by every lender and multiple scores will affect your chances. 

I hope its not a broker doing this damage for you ? 

Thrugelmir

Are Cash_Cow said:

From £416k to £370k as they insit im a higher rate tax payer - despite my accountant proving im not, 

 You'll need an income greater than £50k pa to achieve that level of borrowing. What's amiss? 

ACG

Thrugelmir said:

Are Cash_Cow said:

From £416k to £370k as they insit im a higher rate tax payer - despite my accountant proving im not, 

 You'll need an income greater than £50k pa to achieve that level of borrowing. What's amiss? 

This is what was confusing me. I think there is a technicality - ie taking dividends and so our OP is classing themselves as a non higher rate tax payer despite being over the circa £45k income... could be wrong though, it has been known. 

[Deleted User]

Is this a Buy to Let application?  Thats the only thing that will make sense given the lender reduced the loan amount on the tax status

MCam

Assuming it is because of the tax status. The IR35 changes come into effect soon. Perhaps they're taking that into account.

amnblog

Some points to note here Cash-Cow.
A 'Credit Score' set my Karma Credit or any credit reference agency will not be affecting your affordability calculation.
Neither will the extra searches on your record.
An undervaluation of 10% (£30,000) which you alluded to here, can do, as your loan to value has gone from 67% to 70%
If a Lender's system decides you are a higher rate tax payer, then as far as affordability calculations are concerned, you are.
If you want to 'make yourself look more attractive to a Lender' approach them via a Broker.

Cash_Cow

Thanks for all your replies - much appreciated.  I'll answer a few points as I do need to get to the bottom of this and the broker confuses me as he gives me info i find unclear sometimes and I have to chase for these snippets of info as he similarly has to chase the lenders to try to work out their rationale in doing things that are not what was expected or predicted or advised.
I'll just put it out here as I see I am lucky to have have experts responding am so perplexed by what is going on that it is ruining plans and deals!

Gross income and deposit - £45k as self employed Ltd (usual logical accountancy procedures - farm some of over £45k off to wife etc).  Deposit for BTL is based on desired drawdown of £400k from BTL valued at £600k (£570k by mortgage actual valuation) .  The lender offered £370k as they did indeed decide I am a higher rate tax payer - even though I have not paid it in years and could not be dissuaded by my accountants' statement. This sunk my proposed new deal based on the anticipated £416k DIP (£400k would be fine...).  Monthlies on it are £1975 income AST.

Debt - >redacted for privacy as thread has run its course<

Adverse credit e.g CCJ, DMP e.t.c - none, ever

Have you been getting AIP with different lenders and if so how many? 1 in Oct 2019 and then 1 other in Jan for same property.  Actually, is there a difference between a 'quote' and a DIP?  I know the first one was a formal DIP as I got a document. Would my broker get a DIP as the 1st 'we can do this' response or would he have to formally request one?  (I just get voicemail when I call him and feel i really badger him for detail and am always to-ing and fro-ing to ensure i'm confident in decisions and approach and try to feel fully informed.  I don't ever feel fully informed though - hence your kind help here. Maybe im a nuisance client :-(  )

Thanks for any help - just understanding better how it all works and how a DIP for £416k gets down to £370k based on the very same person is baffling. 70% of downvalued  to £570k is still £399k - job done!

Thanks for any clarity.