Refused a mortgage - any advice would be massive help

GRA1981

Hi all,
any advice would be really appreciated.

weve just been refused a mortgage with nationwide and Halifax due to utilization of existing credit. 

By the middle of September all our outsinding credit will be fully repaid through the sale of a house which will mean we will be applying for a mortgage with a combined salary which will mean affordability will not be an issue. We will repay and close existing loans and credit cards and be left with no debt.

my question is from 16th September when the loans will be repaid how long should we leave it to reapply. We’ve had an offer accepted on the property we are planning to move to and the will wait until the first few weeks of the new year but I don’t want to string them along if there’s no chance of us getting a mortgage? 

Again any advice on this matter as to when / if we can and should reapply would be greatly appreciated.

thanks

haras_n0sirrah

I am a broker. What are the figures? Debt vs income as a percentage? Deposit % against house value
A number of lenders are ok up to about 50% debt to income ratio. Others will go higher but it is about finding the right lender for your profile 

ACG

One lender declining you does not mean they all will. 
Speak to a broker, they may be able to find an alternative lender who works for you without waiting 2 weeks. 

GRA1981

Hi thanks all, more than one had declined.

current debt utilization was 95% not because we can’t afford but because we become accustomed to it. Plan is to repay it in full and be left with £0 debt.

then take out a mortgage for 350k with a 15% deposit. I’ve found a broker willing to do 20% but it means not all the debt will be repaid but I am insistent of doing 15% and ensuring all debt is repaid.

thanks again both

Thrugelmir

GRA1981 said:

current debt utilization was 95% not because we can’t afford but because we become accustomed to it. Plan is to repay it in full and be left with £0 debt.

In effect you are simply consolidating it into the mortgage (which is a debt).  The issue for lenders is that it doesn't give them any confidence that'll you'll manage your personal finances any better in the future. Statistically people reoffend in such instances. 

haras_n0sirrah

There are lenders who go up to 100% debt to income so 95% wont be a killer for all lenders but many will err on the side of caution (as if you have a lot of debt then even if you clear it there is nothing to stop you running up credit cards again and lenders tend to be pessimistic in this regard)

GRA1981

Thrugelmir said:

GRA1981 said:

current debt utilization was 95% not because we can’t afford but because we become accustomed to it. Plan is to repay it in full and be left with £0 debt.

In effect you are simply consolidating it into the mortgage (which is a debt).  The issue for lenders is that it doesn't give them any confidence that'll you'll manage your personal finances any better in the future. Statistically people reoffend in such instances. 

Hi

no I’m not I’m repaying debt through sale of a separate property in essence will make enough for the repayment of debt and 15% deposit so will no handover of debt