Mortgage decline- please help

boxer234

It could be a few things; gifted deposit and outstanding debts.  If I were you I would aim to save up some more money before buying. 

steve866

How much is the rent, service charge and council tax going to cost on the property?

Lunchbox

steve866 said:

How much is the rent, service charge and council tax going to cost on the property?

This - are you including the rent and service charge in the affordability calculations? If you’re only buying a 25% share these are going to have a much higher monthly cost than the mortgage and have a significant impact on the affordability.

AdrianC

£21k income is not exactly huge - it's not a lot over full-time minimum wage (£17k).
It's just under £1,500/mo after tax.
You've already got £215/mo coming straight off that for other obligations - part of which is car finance, but part of which is credit card debt... So you're actually seeing not much over £1,250/mo.

Without other people giving you money, you are in overall debt. You have no savings, somebody else has just paid your loan off, and you owe money to credit cards. And that's whilst still living with your parents. Have you ever moved out before...?

The mortgage itself won't be huge, but that's not the only outgoing with property ownership... You're paying rent on 75% of the property. You're paying CT. You're paying service charge. Plus bills. Plus maintaining the property. Plus, plus, plus.

How much do you think living on your own in this flat will cost, total...?

pinkshoes

djs_97 said:

Yes I’ve checked all three agencies as my broker requested that I use Check my File. 

When going through the DIP with Halifax they actually said it was declined at first, the advisor over the phone said it was because it was still picking up the loan with it only being recently repaid, the system was thinking I hadn’t declared it. She then put the correct loan in and said it would be repaid upon completion and that’s when I was offered £13k. My loan repayment used to be £180 pm. 

You are ONLY buying a 25% share, so will need to pay rent on the other 75%, then have council tax, bills etc... So this is no doubt where the limited amount they will loan you comes in. 

I think you need to do some more saving.

If you are living at home, and are taking home around £1400 each month, then saving should be relatively straight forward now you have paid off your loan. I would put this plan on hold for 12 months and save as much as possible. 

[Deleted User]

the mistake most people make with shared ownership DIPs is to not include the rent, service charge, ground rent as ongoing commitments.   Put those in to the halifax calculator and it will show your DIP result.   Its very very unusual to get a different amount on affordability and DIP as long as the numbers were put in correctly

[Deleted User]

I completely agree with JMA. 

The rent PLUS service charge PLUS mortgage - Im sure at the stress rate (think its 4.5% not your actual  rate ) PLUS your existing debts CANNOT amount to more than 45% of your NET salary. 

You need a specialised shared ownership broker to work for you as these things are a different beast. 

There is a lady of here who knows her stuff. 

From my initial calculations, I do think you are outside affordability by quite a bit. 

Usually the housing association have specialised brokers that work with them who know the rules. There is also a HELP TO BUY excel sheet for shared ownership that you put your figures into and it calculates. I’ll try and find it. 

[Deleted User]

https://assets.publishing.service.gov.uk/media/58d55b72e5274a06b300000e/Homes_England_initial_eligibility_and_sustainability_shared_ownership_calculator_-_March_2020__CFG_.xls

There you go. Pop it all in and see what the answer is 

djs_97

Hi all,

Thank you for your responses and I do totally understand. I have always declared the rent and service charge on online calculators which is £249 and a further £9 per month. 

Of course it isn’t cheap to run a house but I will also be living with my partner. I know the mortgage company can’t take his income in to account with him not being on the mortgage. I suppose I am a little confused why I was assured it’s best I apply on my own for better interest rate when broker knew my income and outgoings! 

I do have my own savings like I said and provided proof to Leeds that I’d been putting money away each month. I haven’t saved enough to cover 100% of the deposit but I may speak to my broker about paying the credit card off and see if he thinks this will help at all. I’m happy to do this but like I said after the DIP was approved with Leeds they only asked that I repaid the personal loan. 

Thank you for the calculator Densol I will certainly take a look. I remember doing something similar with the Housing Associations agent when first applying for the shared ownership alone and I passed what I presume is their affordability criteria which is why they allowed me to reserve the property in my name alone.