Mortgage offer much lower than needed due to discrepancy in level of debt

Home2011

Hi all,
Hoping that someone will have some good advice for the problem we're facing.

Basically following valuation last week our mortgage lender has come back to say that the maximum they could lend us is £36k lower than what we need, and the reason is:
'The level of debt brought up on the credit search is significantly higher than what was on the application.'
This is true, however, the discrepancy in the figures is due to delay in credit report updates, so our credit report shows £7k more debt than our actual debt is. This £7k was repaid about 2 weeks prior to the application, so it seems it wasn't reflected on the credit report. The debt was also on an interest-free CC, so we had this money earning interest in our savings/current account but thought the best to pay it off prior to mortgage application. This was all evident to our mortgage advisor and he also told the lender about it. The lender did not envisage issues, yet now this has happened!!

Anyone else had this kind of experience, and how did you get around it? Our mortgage advisor does not seem to think that providing CC statements showing the new balance will be accepted as evidence of no debt, but what else can we do? It makes no sense to have to wait another month for new credit report, since there is no real guarantee that will show the actual balance either - it seems we are totally at the mercy of Credit report agencies, who can take a while to show the actual financial situation, so what can we do?! 
Surely there must be a way to fix this?!

Many thanks in advance

[Deleted User]

Who's the lender? 

Usually with these cases where the balances are significantly different I either send in statements to show current balance or go to a lender that allows you to say what the balance will be on completion of the mortgage

Home2011

Deleted_User said:

Who's the lender? 

Usually with these cases where the balances are significantly different I either send in statements to show current balance or go to a lender that allows you to say what the balance will be on completion of the mortgage

The lender is Santander, and they were told already that all the CC will be cleared prior to mortgage commencing, which they said was fine, but now they have come back with this?
 

Thrugelmir

Perhaps show the lender evidence to support the source of the funds. In that you indeed hold the funds on deposit in tandem with the BT card. More recently the upfront fees on BT cards normally would exceed the rates of interest available on deposits. Not making the exercise viable. Bottom line is that a sudden change in financial circumstances will be viewed with caution. 

Sncjw

How much in debt are you. 36k would mean a high level of debt. 

Home2011

Thrugelmir said:

Perhaps show the lender evidence to support the source of the funds. In that you indeed hold the funds on deposit in tandem with the BT card. More recently the upfront fees on BT cards normally would exceed the rates of interest available on deposits. Not making the exercise viable. Bottom line is that a sudden change in financial circumstances will be viewed with caution. 

Thank you for your answer.
We have already provided our mortgage advisor with the statements of our current accounts that show the money is there, and it has been there historically, earning interest @ 1.5-2% whilst our CC was on the interest-free with no fee for 28 month. So handsome little profit there. 
But the point is that this CC is now paid off, but the new balance has not been updated on the credit report and this discrepancy between the two balances is what the lender is stating as the reason for lower amount they are willing to lend. 
What also does not make sense to me is why wait for the valuation results to tell us this?

Home2011

Sncjw said:

How much in debt are you. 36k would mean a high level of debt. 

Well, at the time of the application we had about £5500, £4500 of which on another interest free CC, which was disclosed to the lender and which we also have money in current account, and which we said would be paid of prior to completion. The rest is the monthly spending, which is paid off in full each month. So effectively with the £7k (which was paid off but not reflected in the credit report) the total debt is £12.5k, none of which would be there at the completion!

[Deleted User]

Home2011 said:

Deleted_User said:

Who's the lender? 

Usually with these cases where the balances are significantly different I either send in statements to show current balance or go to a lender that allows you to say what the balance will be on completion of the mortgage

The lender is Santander, and they were told already that all the CC will be cleared prior to mortgage commencing, which they said was fine, but now they have come back with this?
 

Santander take what's on the credit report and very very rarely deviate from it.  The broker should have known this. 

Much better lenders for self declaring the debts and effectively over riding the credit report numbers

LRmortgage

Santander include all debts that show on the credit report even if they are going to be cleared before completion. 

They do have an appeal process and we have successfully given up to date credit card statements and bank statements to get the level of borrowing returned to the requested amount. However, it’s not an easy process with Santander and you are at the mercy of an Underwriter. 

As mentioned above, there are much better lenders for this type of scenario where debts are still showing. 

Home2011

Deleted_User said:

Santander take what's on the credit report and very very rarely deviate from it.  The broker should have known this. 

Much better lenders for self declaring the debts and effectively over riding the credit report numbers

Thank you for your reply. What is confusing to me is that Santander knew about the debt and the discrepancy between the figures on credit report as they gave us a decision in principle based on those figures. But they subsequently seem to have gone back on that decision, which makes no sense as the figures haven't changed?
Whilst other lenders might be better for self-declaration of debt, with this now obviously leaving a blemish on our credit report what are our chances? Plus it feels kind of unfair, as it simply comes down to information given by credit agencies been out of date.

   LRmortgage said:

Santander include all debts that show on the credit report even if they are going to be cleared before completion. 

They do have an appeal process and we have successfully given up to date credit card statements and bank statements to get the level of borrowing returned to the requested amount. However, it’s not an easy process with Santander and you are at the mercy of an Underwriter. 

As mentioned above, there are much better lenders for this type of scenario where debts are still showing. 

Many thanks.
The debt that is in question is already cleared, it is just still showing on the credit report because the same is a bit out of date.
An appeal, as you suggest, is what our mortgage broker is attempting to do at present, so I would really appreciate it if you could give a bit more info on your experience of the same. What timeline are we talking about? Also when you say we are at the mercy of Underwriter, if we have all the proof that is needed surely they should be willing to offer the full amount as they were prepared to do with their decision in principle. I am concerned that they will then come up with something else? Could they do that?

LRmortgage

A decision in principle is just that, it’s not a full commitment to lend and it’s only as good as the information provided. It is totally automated without human intervention from the lender side. 

By appealing, you are putting forward your case to a human being, showing them the evidence and hoping that they agree with your argument and that the rest of the case stacks up in your favour. 

Santander are not the quickest of lenders sometimes, so if your broker is appealing. I wouldn’t expect an answer much quicker than a week or so. 

There are other lenders out there that are much better suited to your circumstances, has your broker discussed these with you?