Mortgage broker - ask me anything

K_S

marvelman1985 said:

Hi again guys. Quick question on some confusing and conflicting potential mortgage offer amounts I’m getting from NatWest - direct via two sources, as well as through my broker…

Basically, I got a decision in principle from NatWest via their website at £177k. Then, from another thread on here, I found the RBS Group mortgage calculator for intermediaries and entered the exact same info as I’d entered to get my decision in principle, and was presented with a second figure of £166k. Finally, my broker says NatWest will only lend me £163k - different yet again.

Any idea what could be going on here? Especially with regard to the two different figures direct from NatWest?

I guess the obvious answer in terms of my broker’s figure is that he may have entered some income details incorrectly (the offending item could be around the discretionary bonus I receive from my employer, of which NatWest intermediary guidance suggests they will consider 50% of the lower total annual value from the past two years. When we last spoke - before I’d read that guidance - it sounded like the figure my broker was using was 100% of the lower figure. However, if anything this means I am underestimating my income versus him, yet still seemingly obtaining higher offers!)

One other thing it could be related to is dependents - the intermediary calculator asks for ‘number of dependents’ and, of course, I know that my two year old son is a dependent, but do I also need to count my wife due to her not being employed at the moment (while looking after our little one)?

When I enter ‘2’ in the dependents box, the offer (understandably!) drops to £153k. But again, this is different from my broker’s £163k figure. (Using his incorrectly higher bonus figure ups it to £159k, still different!) 

What’s odd about the dependents thing is that I was able to specify my wife as ‘not employed’ on the NatWest decision in principle tool, yet it gave me the highest offer of the lot!

I’m so confused as to what figure to trust as we embark on our house hunt and making potential offers! At this point the only thing I can think to do is try another broker?

@marvelman1985 I don't know anything about the NatWest direct process but with regard to the NatWest intermediary affordability calculator, generally speaking -

- for the bonus you key in 50%

- the wife goes on as a joint applicant with zero income

I don't mean to doubt your capabilities but any broker will be doing at least a few NatWest cases every month and it would be exception if one didn't know how to key in a NatWest affordability calculator accurately (ie as per NatWest criteria). The difference might be down to how the credit commitments were entered, it's hard to get the income part wrong.

marvelman1985

@K_S  No, honestly I’m definitely aware I’m far from an expert in all this… to say the very least! 😂

The only things that had me starting to question my broker at all were his mention of using 100% of my lower bonus, plus he also referred to a limiting factor for my application being me having two financial dependents -  namely my son and wife.

In terms of credit commitments, we literally have zero - cleared everything about four months ago, including my student loan (wife doesn’t pay hers as not earning at the mo), but maybe he has left something on there?

As I say, even beyond any misunderstandings between my broker and I, I am still very confused at the disparity between the DIP offer and offer via intermediary affordability calculator based on exactly the same info. Have you ever come across a DIP being massively out in this way? There’s obviously a (soft) credit check function of the DIP, so I would assume if anything it is based on a more accurate picture of my financial state… but I’m probably wrong!

K_S

@marvelman1985 Lender affordability calculators give black-and-white answers, if keyed in correctly. A DIP (if keyed in correctly and consistent with what was put in in the affordability calculator) that passes *should* give a similar or lower result than the affordability calculator.

If there's no debt at all, this should be fairly simple. What is the affordability calc giving you when in the "Applicant 1 main income annual gross £" box, you put in basic + 50% of (average of last two years bonus or most recent year if lower)? And, I'm assuming you have put in £1,100 in the 'other income' for Child Benefit as well.

greenpanda

We finally have our mortgage offer from Santander but it turns out they have the wrong address for our solicitors. They say it will take 10 days to change it and reissue it. Any advice? I'm worried we will lose our purchase. Is there anything the MB can do?

marvelman1985

@K_S Yep, that’s what I’ve been doing, although putting the Child Benefit as ‘other income’ for applicant 2 (my wife, as it’s in her name).

Curiously, when I enter the £1100 Child Benefit as ‘other income’ for applicant 1 (me), the offer drops from £166k to £163k. Any idea why this might be?

As I say, the Child Benefit is not paid in my name, so I didn’t think I should put it as my income - especially so if it is seemingly worth £3k to our offer this way! The plot thickens…

GeorgianaCavendish

What is realistic when looking at mortgage terms? Joint mortgage, borrowing between £300-£380K with £75K deposit on joint income of £120K. Both applicants will be 38 years old - is it realistic to ask for a 30 or 35 year term given our ages?

K_S

GeorgianaCavendish said:

What is realistic when looking at mortgage terms? Joint mortgage, borrowing between £300-£380K with £75K deposit on joint income of £120K. Both applicants will be 38 years old - is it realistic to ask for a 30 or 35 year term given our ages?

@GeorgianaCavendish For borrowing based on employed income, most lenders will cap the term at 70 years of age, so 31 years in your case.

Some lenders will consider up to 75 if the job are plausible to carry on beyond 70 and the applicants intend to work beynd 70. So in that case you could theoretically go up to a 36 year term.

K_S

marvelman1985 said:

@K_S Yep, that’s what I’ve been doing, although putting the Child Benefit as ‘other income’ for applicant 2 (my wife, as it’s in her name).
Curiously, when I enter the £1100 Child Benefit as ‘other income’ for applicant 1 (me), the offer drops from £166k to £163k. Any idea why this might be?
As I say, the Child Benefit is not paid in my name, so I didn’t think I should put it as my income - especially so if it is seemingly worth £3k to our offer this way! The plot thickens…

@marvelman1985 That's odd. I just did one to check (80% LTV, 33k salary, 25 year term) and whether I put the CB under App1 (salaried) or App2 (unemployed), it doesn't make a difference to the borrowing figure.

marvelman1985

@K_S So strange, I used your example figures and found the same - no difference no matter where I put the CB.
However, when I changed the LTV to our 53% level, it started exhibiting the ~£3k difference in the offer when attributing it to each applicant in turn.
(Sorry, perhaps I should have mentioned that LTV rate!)
Also, something I just noticed, I’m seeing a much larger offer figure when using 32 years as the term (which is our plan) versus when I left 25 in there, is that to be expected? Changing the term in this way didn’t make any difference at 80% LTV.
I’m guessing low LTV is the culprit, is it just that lenders are more relaxed at this level due to lower risk involved?

marvelman1985

@K_S I just tried playing around with some figures, seems the ~£3k difference thing starts to appear at LTV 75% downwards.

Would that be related to some kind of lending criteria or just a bug?! 🤷‍♂️