Completely confused

HelplessH

Hi lovely helpful people! My husband and I are applying for our first mortgage and we have no adverse credit but I have apparent very low affordability as I have a car loan and four credit cards which I am paying off - all with under £1000 remaining. I also have an interest free loan for furniture in my name only which seems to have been a bad idea. All loans and cc’s are in my name rather than joint even though they are mutual and my husband pays half. Our broker has done a full application with Halifax but the original property has come back as unmortgageable, we have now found a new property but now instead of being able to borrow £280k it’s gone down to a max of £184k! Yikes! We’ve managed to increase our deposit to £43k but how likely is it that we will still be approved? The new property has accepted an offer of £227500 and Halifax has asked us to extend our mortgage term to 32 years - the repayments are still considerably less than our current rent but I’m so scared that they now won’t lend to us can anyone help? 

penners324

You'd be better paying off the credit cards and probably the car loan.

getmore4less

What income?
extending term is less of a problem as you can always overpay

Why are you borrowing money to create a deposit?.

£184k on £227.500  is  81% so in the 80%-85% rate option
LTV deposit borrow
85% £34.125  £193,375
81% £43,500  £184,000
80% £45,500 £182,000

Do you have the money for the fees etc.  you are short for 
if you went to 85% how much of the debt would the £8,875k pay off? have you assessed on that basis.
How much are you saving a month?

if you can get to the 80% LTV you would get much better rates.

On that level of borrowing 32 years
2y fix 1.78% £999 fee .V. 2.04% £0 fee - no fee option looks best 
5y fix 2.15% £999 fee .V. 2.36% £0 fee - fee option looks best
.

your broker should be advising on options here.

amnblog

your broker should be advising on options here.

Agreed, you should not have to look for solutions here

csgohan4

OP is anxious hence why they are on here, but we don't have all the info and the broker is best placed to answer your questions

getmore4less

Maybe some of this credit is new.  and has adjusted the borrowing amount.

HelplessH

Hi, thank you for the responses. No, none of the credit is new and is all almost paid off. Our broker has no idea why our affordability and the amount that we can borrow has dropped so dramatically he thinks it’s due to the effects of Covid so I wanted to see if anyone else had experienced anything similar as it’s such an extreme drop it’s got me incredibly anxious. 

[Deleted User]

I have been finding recently that Halifax just aren't as interested in people with background debts as they once were. 
Put a case through the other day:
Natwest 181k
Santander 177k
Virgin 153k
Halifax 64k

They used to be OK for affordability with background debt but they seem to be changing something.   I think credit cards are viewed worse than loans so maybe you ask how much you cna borrow if you pay off the credit cards.  It will probably be a lot higher than the cost to repay them

csgohan4

Deleted_User said:

I have been finding recently that Halifax just aren't as interested in people with background debts as they once were. 
Put a case through the other day:
Natwest 181k
Santander 177k
Virgin 153k
Halifax 64k

They used to be OK for affordability with background debt but they seem to be changing something.   I think credit cards are viewed worse than loans so maybe you ask how much you cna borrow if you pay off the credit cards.  It will probably be a lot higher than the cost to repay them

i experienced something similar with barclays, they requested that i clear my CC of 500 pounds on completion, which is odd, I clear my balance every month as noted on my credit file, so clearly they have become more risk averse now

Competsoph

I was told by the Halifax that set loans, for example car finance etc was much less concerning than credit cards. This is because a credit card load doesn’t have any specific end date and you could never pay that off. Almost unending debt if you like. I would prioritise clearing CC first then any additional loans and perhaps review your situation in a years time, though I appreciate you may need to move now. If not, why rush?

andyf1980

csgohan4 said:

Deleted_User said:

I have been finding recently that Halifax just aren't as interested in people with background debts as they once were. 
Put a case through the other day:
Natwest 181k
Santander 177k
Virgin 153k
Halifax 64k

They used to be OK for affordability with background debt but they seem to be changing something.   I think credit cards are viewed worse than loans so maybe you ask how much you cna borrow if you pay off the credit cards.  It will probably be a lot higher than the cost to repay them

i experienced something similar with barclays, they requested that i clear my CC of 500 pounds on completion, which is odd, I clear my balance every month as noted on my credit file, so clearly they have become more risk averse now

We remortgaged with TSB last October and they asked us to do the same. Not sure that it's a new thing.