Mortgage declined after offer accepted

Wolfe_Moon

We've put in an offer on a house, close to asking price, which has been accepted. Our mortgage advisor was confident there wouldn't be any problem being accepted for a mortgage. However, we've been declined!

After much investigation we discovered Experian is showing one of us as having a live default on an old bank account which was closed in December 2014, at which point the default should have been settled too. Ironically, the default was dated 2nd September 2014 so is due to come off now anyway!

I don't know when Experian updates its September files to show that it's now come off completely, or whether this is going to cause an issue in re-applying for a mortgage. 

My biggest worry is that we lose the house! How long can we feasibly keep them hanging on until we get a mortgage confirmed? We have no onward chain so can move immediately once this is all sorted out. 

[Deleted User]

It will no longer have been visible from 2 September.

It's impossible for anyone here to say how long the vendors will wait.  You'll have the best idea.  But it's immaterial.  You just need to get moving on the mortgage.

Wolfe_Moon

Experian hasn't yet updated since August and it's still visible on credit file. 

Obviously, I know no one can tell me how long they would be willing to wait, but I just wondered whether there was a specific timescale by which all the paper work & mortgage has to be completed, or could the vendor pull out now if they think we can't proceed?

SameOldRoundabout

Don’t panic. Just try again in a few days when the scores update. They only update once a month so you’re correct, it could be weeks. Not all lenders will decline because of a default so you could try elsewhere earlier but you may end up paying higher interest. Our mortgage application was a bit of a nightmare this time, with the lender waiting 2 weeks to request paperwork from HMrC which Took another Few weeks to come through. Our vendors were antsy by then but that was 5 weeks, how long since your offer was accepted? Is the chain complete?

Suseka97

Are you sure that's the reason, did the application get referred to the underwriter?  It seems a bit harsh that one default, back in 2014, would cause you to be declined.  If, however, that is the case then you need to speak to a mortgage broker who has experience with these sorts of issues (bad credit).  

No-one can really guess what the vendor may do - its early days if you've only recently had the offer accepted.  I guess you hadn't got a Decision In Principle beforehand.   Timescales can be made to fit whatever the buyer and seller agrees to and a Vendor can pull out at any time, as can the buyer - at least up until exchange of contracts.

Comms69

Almost no chance a 6 year old default declines a mortgage- look further 

Doozergirl

This one decline isn't going to affect your ability to buy the house.  I'd continue with it all, taking advice from the broker.  The vendors won't know about this.  As long as you can get it sorted quite quickly, no one will be any the wiser.  

Don't panic yet.  

[Deleted User]

Wolfe_Moon said:

Experian hasn't yet updated since August and it's still visible on credit file. 

That's on the monthly version you see.

Remember that lenders see a live view, so they won't see the default.

Wolfe_Moon

Thanks everyone. Yes, it does seem very harsh to decline over something so minor and so long ago. Mortgages have really tightened up recently and we're limited to ones offering 90% now, a lot are only offering 85% since Covid19. 

The offer was only made and accepted this BH weekend, so it's early days yet. Our first house purchase, hence the panic. We've only just scraped together 10% deposit and at our borrowing limit, so fingers crossed! Oh, and no we didn't get a mortgage in principle as our advisor said it's not necessary as criteria changes with each property 🤷‍♀️

Comms69

Wolfe_Moon said:

Thanks everyone. Yes, it does seem very harsh to decline over something so minor and so long ago. Mortgages have really tightened up recently and we're limited to ones offering 90% now, a lot are only offering 85% since Covid19. 

The offer was only made and accepted this BH weekend, so it's early days yet. Our first house purchase, hence the panic. We've only just scraped together 10% deposit and at our borrowing limit, so fingers crossed! Oh, and no we didn't get a mortgage in principle as our advisor said it's not necessary as criteria changes with each property 🤷‍♀️

Is it sensible to be borrowing the maximum amount you can at times of mass unemployment? 

Wolfe_Moon

Good point! I know nothing is guaranteed but we're both in a very secure employment position.