Mortgage application

Sncjw

Hi all

its finally come the day where we can finish the application for our mortgage. Since the intial appointment I’ve come across a few things that has worried me due to this board. 

Will the interest be different to advertised? 

Will they ask me to pay off my credit card debt despite it on 0% until September 2021? 

Will they refuse due to my partners low wage? 

Will they flag something up on my credit report despite no missed payments or ccj. 

Will they value the house les than what we are paying? 

Will they see that we are short of the 10% deposit as we were lead to believe the help to buy bonus would help pay it. Although we can cover the shortfall without it if the Exchnahe is delayed. 

Just a lot is worrying me. 

onthemend88

Hi there! 

We submitted our full application on Tuesday and although I have slightly different worries to you, this whole process is worrying me and stressing me out. So many 'what if's'. 

No real advice really but just wanted to say you are not alone

[Deleted User]

Hi, 
Firstly good luck with it all, and it is stressful, especially if you're a first time buyer!

Interest Rate - unless you've applied to a specialist lender (usually through a broker, and generally only if you've got poor credit), you'll either get what you've applied for or nothing at all.  So in short, no, you should get what you saw. Only issue is if the valuation comes back lower and you have to pick a different product (it looks like you want 90%. If property is valued a lot lower then you might have to take 95% to get the same loan you originally asked for = higher rate)

Credit Card debt - it depends on affordability. They'll factor in the repayments - usually 3%. So if you owe £10k, they'll assume (usually) £300pm/3% - regardless of whether that's what you actually pay or if it's interest free or not - since it has to be repaid some day. If you pass affordability by miles, it won't matter. If you're tight and it matters, then yes they can insist you pay it off.

Partner's low wage - no, assuming you're both named on the application, they'll assess both your incomes. Partner having an income will be more helpful than no income at all, even if it's minimal income

Credit File - no, not unless one of you have taken out a stack of credit/missed payments etc. which the other one doesn't know about. In my experience, the only credit file queries are re: undisclosed commitments (store cards, loans etc) or undisclosed adverse. To make life easier, make sure you declare everything (including buy now pay later)

Value - nobody will know until it's done unfortunately! I personally think re-mortgages are more likely to be valued lower, since most of the time it's the customer's 'guess' as to what their house is worth. With a purchase, you'd hope in an arms-length transaction the vendor has properly researched the market and with a bit of haggling etc. the buyers have also come up with a sensible number (but it does happen that buyers want to pay considerably more than what the valuer thinks the property is worth)

Deposit - depends how far short you are and your incomes etc. If you earn £60k combined and are £3k short, I'm sure they'll let it slide (I would). If you earn £20k combined, have 2 kids and are £5k short, we'd be asking questions (normally proof of funds etc, so still nothing to really worry about if you genuinely will have the money). 

If it's a Help to Buy ISA, lender will probably factor in your bonus - but it'll be worth speaking to Solicitors to see exactly what is required at exchange (not sure how that all works, I've got Lifetime ISA)

Most people are surprised how easy it is. You always hear the "nightmare" stories, but there are many cases each day that pass from application to offer without a single query

Sncjw

Somerset_La_La_La said:

Hi, 
Firstly good luck with it all, and it is stressful, especially if you're a first time buyer!

Interest Rate - unless you've applied to a specialist lender (usually through a broker, and generally only if you've got poor credit), you'll either get what you've applied for or nothing at all.  So in short, no, you should get what you saw. Only issue is if the valuation comes back lower and you have to pick a different product (it looks like you want 90%. If property is valued a lot lower then you might have to take 95% to get the same loan you originally asked for = higher rate)

Credit Card debt - it depends on affordability. They'll factor in the repayments - usually 3%. So if you owe £10k, they'll assume (usually) £300pm/3% - regardless of whether that's what you actually pay or if it's interest free or not - since it has to be repaid some day. If you pass affordability by miles, it won't matter. If you're tight and it matters, then yes they can insist you pay it off.

Partner's low wage - no, assuming you're both named on the application, they'll assess both your incomes. Partner having an income will be more helpful than no income at all, even if it's minimal income

Credit File - no, not unless one of you have taken out a stack of credit/missed payments etc. which the other one doesn't know about. In my experience, the only credit file queries are re: undisclosed commitments (store cards, loans etc) or undisclosed adverse. To make life easier, make sure you declare everything (including buy now pay later)

Value - nobody will know until it's done unfortunately! I personally think re-mortgages are more likely to be valued lower, since most of the time it's the customer's 'guess' as to what their house is worth. With a purchase, you'd hope in an arms-length transaction the vendor has properly researched the market and with a bit of haggling etc. the buyers have also come up with a sensible number (but it does happen that buyers want to pay considerably more than what the valuer thinks the property is worth)

Deposit - depends how far short you are and your incomes etc. If you earn £60k combined and are £3k short, I'm sure they'll let it slide (I would). If you earn £20k combined, have 2 kids and are £5k short, we'd be asking questions (normally proof of funds etc, so still nothing to really worry about if you genuinely will have the money). 

If it's a Help to Buy ISA, lender will probably factor in your bonus - but it'll be worth speaking to Solicitors to see exactly what is required at exchange (not sure how that all works, I've got Lifetime ISA)

Most people are surprised how easy it is. You always hear the "nightmare" stories, but there are many cases each day that pass from application to offer without a single query

We are about £800 short of the deposit. So my partner said he can cover it if needs be as I’m covering the majority of deposit due to his low wage.

also regards to debt I have £1.850 on credit card and I earn I pay £100 a month if I can which is more than minimum payment.  

[Deleted User]

At £800, I'd be amazed if they query it

The £1850 card impact depends on the rest of your case,
£1850 @ 3% per month  = £55 added onto the calculations (which are already stressed at some ridiculous rate). Essentially the question is does that £55 break the case, or not?

Did you get an DIP at all or any indication of a maximum lend? Generally speaking, if your max lend is far higher than you need, it'll be fine. If your max lend is say £81k and you're borrowing £80k, then you'll probably have to repay it.

Sncjw

My max lend on dip is 138k and we are asking for 75,150. 

The minimum payment on card is around £45 so I pay around £100 if I can but deffo the minimum. 

[Deleted User]

So your lender will probably assume you have to pay 3% (I believe some are 5%, most use 3%) - but with those affordability figures, that relatively small balance isn't going to affect you. Your joint income must be approx £30k or more to get those figures - £1850 / £30k = 6%, not concerning assuming no other issues!

I wish I saw more applications like yours - with nearly £65k of room, it sounds like it'll be quite easy all round!!

Sncjw

Yeah it’s around that figure. My partners income flucatea each month depending on what shifts are given to him. 

What do you mean by the first part? 

Sncjw

Oh forgot to say he has to pay his car finance at £200 a month. Sorry just was writing my own finance. I also do have 5k limit on next account but I haven’t touched in months and I have 3k limit on another card which has £13 balance on as I use it for Netflix to create a regular balance and pay off in full each month. I had to use it this month for a spend as I couldn’t find my current account card in time

Sncjw

I have found this on a nationwide site. I wouldn’t be able to clear the debt would this cause issues? 

Clients intending to pay off unsecured debt, that has more than six months to run, may be asked to provide proof that the debt has been paid off in full before we can proceed to offer.  

[Deleted User]

Nope. Well - I presume you haven’t told them you’re going to repay the debt? 

If you’ve told them the debt will remain, they’ll calculate the mortgage on it remaining. No more proof needed. If debt remaining is an issue, they’ll be in touch.  

If you’ve told them you’re going to repay it, then legally you should repay it (prior to completion). Depending on case/customer profile, proof can be required. 

< £2k, I highly doubt it. 

Usually proof is for cases where we either 1: don’t believe the client or 2: it’s the difference between passing and failing (as we do have responsible lending obligations). 

In your case, with the figures you’ve given, whether it’s paid or not paid doesn’t actually make any difference - mortgage is still affordable. So I doubt they’ll probe any further, should be fine