declined a mortgage

RoloCookie

We are hoping to buy our first house in the next couple of months but I am worried about being refused a mortgage. We got a DIP for the amount we wanted, a hard check was done but I did not want to waste a mortgage advisors time if it is likely we will be refused and have work to do. 

- I am self employed and a director of a business.
- My wife is currently on a FTC which expires in Feb 2021, however she will be applying for a permanent contract for same role in the next few weeks. (Not sure how long they like to see you in the same job)
- We have a 15% deposit.
- My credit score is 'good' (No missed payments) and my wife's is excellent but has missed payments from 50 months ago or so
- We have been in our overdraft in our bank every now and again but it is always topped up within a day or so, also worried we over spend.

RoloCookie

I also received the government grant for self employment. Does this make it harder? 

[Deleted User]

Receiving the grant shouldn't make it harder (if you can claim it, why not!) - but they will want to see how your business has coped during the current crisis. e.g. are you still trading? Are you set to make the same income as last year (excluding the grant) etc.  If you supply delivery services to Tesco, it's probably apparent you're doing pretty well at the moment. If you sell luxury cruises, probably not!

You've got two aspects which aren't just the 'normal' PAYE and are a bit more involved even in 'normal times' (Self-Employment, and the FTC / FTC turning perm), so you definitely should be looking at the use of a broker to assist. Don't go getting any more DIPs that are hard checks either as that won't help - your adviser needs to match you to the lender. £X at one lender is of no use at all if the lender best suited to you uses a completely different method for calculating affordability or just won't count one of your incomes.

From what you've said, I wouldn't be especially worried about being "declined" (i.e. can't get a mortgage anywhere) - it just may take more time and effort to find the right lender for you both. 

I'm not a broker but I imagine their world has got a lot more complex over the last few months - even taking a "standard" employed case with some overtime - some lenders aren't taking any overtime at all at the moment, so getting a calculation from them would be no use. So it shows what a minefield it must be currently!

NatalieAGC

if the DIP was passed on hard check does that mean approved for full application? As most DIPs are soft search and not much substance to them? I would have thought hard search at DIP is good sign so long as lenders criteria is met.

csgohan4

NatalieAGC said:

if the DIP was passed on hard check does that mean approved for full application? As most DIPs are soft search and not much substance to them? I would have thought hard search at DIP is good sign so long as lenders criteria is met.

you can have a successful DIP and still fail on application, as it is more detailed than just a DIP

NatalieAGC

csgohan4 said:

NatalieAGC said:

if the DIP was passed on hard check does that mean approved for full application? As most DIPs are soft search and not much substance to them? I would have thought hard search at DIP is good sign so long as lenders criteria is met.

you can have a successful DIP and still fail on application, as it is more detailed than just a DIP

How is it more detailed if the dip is hard search to begin with?  I understand soft dips can obv be rejected once hard search / application is submitted but do full search dips still get rejected if the lender did hard search initially? 

[Deleted User]

RoloCookie said:

We are hoping to buy our first house in the next couple of months but I am worried about being refused a mortgage. We got a DIP for the amount we wanted, a hard check was done but I did not want to waste a mortgage advisors time if it is likely we will be refused and have work to do. 

- I am self employed and a director of a business.
- My wife is currently on a FTC which expires in Feb 2021, however she will be applying for a permanent contract for same role in the next few weeks. (Not sure how long they like to see you in the same job)
- We have a 15% deposit.
- My credit score is 'good' (No missed payments) and my wife's is excellent but has missed payments from 50 months ago or so
- We have been in our overdraft in our bank every now and again but it is always topped up within a day or so, also worried we over spend.

The whole point of using a mortgage broker is to allow them to use their knowledge to find a suitable mortgage for you.  You aren't a straightforward vanilla case where you are both full time PAYE employees and you don't seem confident in doing it by yourself so just engage a mortgage broker to do the leg work for you.

[Deleted User]

NatalieAGC said:

csgohan4 said:

NatalieAGC said:

if the DIP was passed on hard check does that mean approved for full application? As most DIPs are soft search and not much substance to them? I would have thought hard search at DIP is good sign so long as lenders criteria is met.

you can have a successful DIP and still fail on application, as it is more detailed than just a DIP

How is it more detailed if the dip is hard search to begin with?  I understand soft dips can obv be rejected once hard search / application is submitted but do full search dips still get rejected if the lender did hard search initially? 

There's more to being approved for a mortgage than just a credit search which is all a 'hard' DIP is really doing.

haras_n0sirrah

Anyone self employed needs a broker at the moment
With the seiss some lenders won't like it as by taking it you have declared your income has been adversley affected by Covid, some will x the grant by 4 to get your annual income, some will accept your income but you will need 3 months bank statements showing you are back up to normal trading
It is a bit of a minefield 

Arefer

haras_n0sirrah said:

Anyone self employed needs a broker at the moment
With the seiss some lenders won't like it as by taking it you have declared your income has been adversley affected by Covid, some will x the grant by 4 to get your annual income, some will accept your income but you will need 3 months bank statements showing you are back up to normal trading
It is a bit of a minefield 

Do you know Halifax’s position on SEISS?
Thanks.

haras_n0sirrah

It is taken into consideration when assessed at head office. Halifax have no hard and fast rules. Self employed cases go to head office who consider the clients industry, length in business, any grants taken (Seiss is self declaring your income has been reduced by covid) and whether they feel you are likely to bounce back. We are told to put down sa302 income but we don't actually know what will be used whereas other lenders are a lot more transparent e.g Seiss x 4