Maximum loan amount decreases when mentioning current mortgage even though it will stop soon.

littlemiss19

Hi everyone, we have had an offer on our dream home accepted and are working through the AIP with the London & County automated website service. 

The maximum loan amount has decreased when we are asked about our current mortgage outgoings and are confused by this as we will be selling the current property before buying the new one and if the sale of the current property falls through we will not be buying the new property. So, why would we be penalised (lending amount decreased by more than £20k) for something we won't have when we take out the new mortgage?  We answered the questions that asked whether we would still have the mortgage after the new purchase and we ticked 'no'  but once the monthly outgoings were put in the max loan amount decreased.  Is this a normal thing to happen as it doesn't make sense to me - can someone shed some light on this - is this a glitch or a normal occurrence? 

Also, is it something we can amend once we have spoken to a mortgage broker at L&C? 

Many thanks,

Littlemiss19

mathdotrandom

Hi Littlemiss19,

From my own experience L&C use a (rather daft) online calculation tool that just roughly checks what mortgages you might qualify for and the maximum LTV and salary multipliers those lenders provide.
I personally found that this was rather inaccurate and, once I started my application with them the options did not match up with what I was offered by the online tool 🤔
My advice would be quite honestly to contact a traditional mortgage broker instead, I did so and found it loads easier & quicker! And they will give you a real overview of what is available. From my own understanding though, your current mortgage should not impact lending.

Hope this helps!

ACG

L&C DIP is not a DIP. 
I do not know how the question is worded, but it should basically be asking about mortgages and commitments that will remain. 

penners324

It's asking for what commitments you have after you've taken on the new mortgage.
If your old mortgage is getting paid off by the house sale then you don't have a commitment to pay it.

littlemiss19

Thanks everyone! Its put my mind at rest.