Mortgage offer 33% lower than expected

Sensory

(Just to clarify that no formal offer has actually been received.)

• Buying with HTB (Equity Loan) at 53.475% (including deposit), resulting in 46.525% LTV.
• Numbers all crunched by two different brokers (back in mid-February), and a mortgage figure of around £210,000 was reached by both of them using the HTB Affordability Calculator.
• My husband is on a zero-hour contract, so our broker (the one we ended up using) recommended Halifax.
• Application submitted to Halifax via broker in late February, but the valuation was blocked ('£0' valuation) by the lack of a suitable cladding report.
• Instead of waiting potentially months for the EWS1 form to be issued, our broker then recommended Santander.
• Application submitted to Santander via broker in mid-March (now with our February payslips included).
• ATP from HTB received in late March (processing took one month).

Today, our broker informs us that Santander can only offer £140,000 after taking into consideration my husband's year-to-date income on his (presumably February) payslip, and I'm completely baffled. My own basic annual salary multiplied by just 4 is already over £145,000, so why would a ~£1000 reduction in calculated annual household income (year-to-date as opposed to annualised three-month average) translate to an offer that's £70,000 lower than expected?

Could it be Santander just finding any reason to not lend (regardless of veracity) given the current circumstances?

[Deleted User]

No, it's about meeting their criteria.  If they don't want to lend, they wouldn't make up a pretend reason.

The lending climate has changed dramatically and now is a challenging period for large borrowing.

Sensory

Our broker doesn't have much information other than stating Santander has stopped doing new business, finding any reason they can to not offer mortgages. Their criteria obviously have changed, but no one knows the details. Their reason could have certainly been more accurate and forthcoming, because a reduction of £1000 in annual household income does not mathematically translate to a £70,000 reduction in lending (all else remaining equal).

[Deleted User]

Sensory said:

Our broker doesn't have much information other than stating Santander has stopped doing new business, finding any reason they can to not offer mortgages. Their criteria obviously have changed, but no one knows the details. Their reason could have certainly been more accurate and forthcoming, because a reduction of £1000 in annual household income does not mathematically translate to a £70,000 reduction in lending (all else remaining equal).

Santander has stopped doing new business - not true.   They have stopped taking applications for New Build cases.  (as most lenders have due to the difficulties in valuing).  If your new build application was in already it would have been assessed as normal
finding any reason they can to not offer mortgages - again, not true. They will offer any mortgage that meets criteria. 
Their criteria obviously have changed, but no one knows the details. - again, not true. Every lender (santander included) has been very upfront and honest about the criteria that they changed.  In fact, on Santanders broker website they have a section called 'Whats Changed' so we can see at a glance any changes recently

Maybe they werent able to use your husbands income as under a zero hours contract they have to have 'Confirmation from employer of ongoing employment arrangement'.   It might be that under the current climate then the employer couldnt confirm work would be automatically coming through so they put him as a non earning dependent.  Although the broker should have this letter prior to app submission so it shouldnt cause an issue

Really there should be no reason for the questions, the broker sounds happier to make something up to fob you off than actually investigating and making calls to find out the real reason.  We have business managers just for this kind of thing and notes will be all over the case as to the reason for reduced lend

Sensory

Deleted_User said:

Maybe they werent able to use your husbands income as under a zero hours contract they have to have 'Confirmation from employer of ongoing employment arrangement'.   It might be that under the current climate then the employer couldnt confirm work would be automatically coming through so they put him as a non earning dependent.  Although the broker should have this letter prior to app submission so it shouldnt cause an issue

This was specifically requested and we provided it on company letterhead (confirming continued employment), dated 25th March.

Deleted_User said:

stopped doing new business - not true.  They have stopped taking applications for New Build cases.  (as most lenders have due to the difficulties in valuing).  If your new build application was in already it would have been assessed as normal

On 31st March our broker informed us of a note from Santander, stating the Valuation inspection had to be put on hold due to the current lockdown restrictions. I relayed this information to the developer's sales office, who then (this morning) informed us that a 'desktop survey' valuation had already been conducted on 19th March with no visit to the site required as the particular valuer would have visited the site many times for other plots previously. I relayed this information back to the broker, who then (within 42 minutes of my email) informed us of Santander's offer being only £140,000.

What do you think could be going on here? Did they really speak to Santander and reply to me within 42 minutes of my revelation to them regarding the desktop survey?

Thrugelmir

You are experiencing first hand the appetite for risk from lenders. Normal rules no longer apply. There's far too much uncertainty for lenders to make an informed decision. As is is they not the borrower that suffers the real consequences. 

[Deleted User]

On 31st March our broker informed us of a note from Santander, stating the Valuation inspection had to be put on hold due to the current lockdown restrictions. I relayed this information to the developer's sales office, who then (this morning) informed us that a 'desktop survey' valuation had already been conducted on 19th March with no visit to the site required as the particular valuer would have visited the site many times for other plots previously. I relayed this information back to the broker, who then (within 42 minutes of my email) informed us of Santander's offer being only £140,000.

What do you think could be going on here? Did they really speak to Santander and reply to me within 42 minutes of my revelation to them regarding the desktop survey?

The date of the valuation being done or not done isnt related to the reduced loan amount.  They would have either cancelled the application as 'we dont do new builds at the moment'.   OR they would have progressed as far as possible waiting for a valuation.  Its very common for Santander to get cases to Accept Subject to Valuation whilst they wait for a valuation to come back. 

The fact a valuation has or hasnt been done isnt your problem,  the problem is why they reduced the loan amount.   Was it downvalued? If not then the broker needs to be calling to find out the reason for the reduced loan amount. 

Reduced loan amounts on offer isnt a common thing.  99.9% of the time the figure matches the calculator as long as the lenders criteria is met.  Something has gone wrong, I personally wouldnt accept this without further explanation

Sensory

Deleted_User said:

Reduced loan amounts on offer isnt a common thing.  99.9% of the time the figure matches the calculator as long as the lenders criteria is met.  Something has gone wrong, I personally wouldnt accept this without further explanation

I've just used Santander's affordability calculator for intermediaries myself, and the figure provided was just over £230,000.

What options are available? I don't want to waste resources unnecessarily, but would contacting Santander directly be possible? Despite requests for clarification or just further insight from their perspective, our broker said they can't argue with Santander's underwriters and repeatedly blamed Santander for being difficult to deal with and not providing further information (how the figure of £140,000 was calculated). The only reason provided was taking into account the year-to-date figure resulting in lower annual income, so they simply "can't proceed any further with that". They then suggested either waiting for the cladding report or trying Nationwide.