Another FTB 90% LTV Question

LM1186

Long time lurker but this is my first post. 
I would really like to get on the property ladder and with house prices increasing by the day, it would seem, I've started to seriously look into my options. 
My Mum is gifting me £10K and I have £5k savings. I should have another £5k of saving within the next 3-4 months. I am looking at Flats around £175 - £185k meaning I would need a mortgage of approx £160K. On most mortgage affordability calculators, my income vs outgoings normally throw up anything between £150k - £170k.
The problem is that I have some defaults from Oct 2017 & Jan 2018 that were all settled by Aug 2019. No other adverse since then. 
A month ago I found a nice SO property and the agent and HA all said I passed the affordability etc so I went ahead with a broker to see if I can source a mortgage for the house. The only lender available to me due to the defaults was Kent Reliance and they came back straight away and declined saying it had nothing to do with my credit score but that they don't think I can afford more that £96K. How can all the affordability calculators be so wrong? Even the MSE one says I should be able to afford £152K. I'm so confused and feel like I'll just never get there.

[Deleted User]

did you input the rent and service charge as an ongoing commitment when you use the affordability calculators for SO?

LM1186

Thank you for your reply. The affordability for the SO was done through the HA and their MA and, at first, I was told I pass the affordability for the property and everything looked okay. Kent Reliance then came back and said I can only afford £96K which is £30K short. 
I thought the barrier to me getting a mortgage would be the defaults but now I'm worried that despite most calculators coming out around the same value, actually, they might be way off in terms of the size of mortgage I could actually get/afford.
 

LM1186

Also, I forgot to add - I have a 10% deposit but I've been told, in my situation, I would not be offered 90% LTV through any lenders and that I would need a minimum of 15% which is another £10k.

stevenbecca

LM1186 said:

Long time lurker but this is my first post. 
I would really like to get on the property ladder and with house prices increasing by the day, it would seem, I've started to seriously look into my options. 
My Mum is gifting me £10K and I have £5k savings. I should have another £5k of saving within the next 3-4 months. I am looking at Flats around £175 - £185k meaning I would need a mortgage of approx £160K. On most mortgage affordability calculators, my income vs outgoings normally throw up anything between £150k - £170k.
The problem is that I have some defaults from Oct 2017 & Jan 2018 that were all settled by Aug 2019. No other adverse since then. 
A month ago I found a nice SO property and the agent and HA all said I passed the affordability etc so I went ahead with a broker to see if I can source a mortgage for the house. The only lender available to me due to the defaults was Kent Reliance and they came back straight away and declined saying it had nothing to do with my credit score but that they don't think I can afford more that £96K. How can all the affordability calculators be so wrong? Even the MSE one says I should be able to afford £152K. I'm so confused and feel like I'll just never get there.

shared ownership runs on a totally different affordability criteria as you have to pay rent aswell, rent mortgage and service charge can't be more than 45% of your income after any credit commitments have been removed

[Deleted User]

I do a fair bit more shared ownership than I want to and I have never had Kent change an affordability figure.  At a guess maybe your income was calculated incorrectly or something. In my experience it is rare to find a housing association calculator passing and then a mortgage one failing as the housing association on is usually a lot harsher.

How many defaults have you got and what are the dates? 

Aldermore do 10% deposit mortgages and lend quite good amounts. They will take 1 settled default that was registered the last 3 years if the default amount was less than £500

LM1186

stevenbecca said:

LM1186 said:

Long time lurker but this is my first post. 
I would really like to get on the property ladder and with house prices increasing by the day, it would seem, I've started to seriously look into my options. 
My Mum is gifting me £10K and I have £5k savings. I should have another £5k of saving within the next 3-4 months. I am looking at Flats around £175 - £185k meaning I would need a mortgage of approx £160K. On most mortgage affordability calculators, my income vs outgoings normally throw up anything between £150k - £170k.
The problem is that I have some defaults from Oct 2017 & Jan 2018 that were all settled by Aug 2019. No other adverse since then. 
A month ago I found a nice SO property and the agent and HA all said I passed the affordability etc so I went ahead with a broker to see if I can source a mortgage for the house. The only lender available to me due to the defaults was Kent Reliance and they came back straight away and declined saying it had nothing to do with my credit score but that they don't think I can afford more that £96K. How can all the affordability calculators be so wrong? Even the MSE one says I should be able to afford £152K. I'm so confused and feel like I'll just never get there.

shared ownership runs on a totally different affordability criteria as you have to pay rent aswell, rent mortgage and service charge can't be more than 45% of your income after any credit commitments have been removed

Thanks for your response, the rent, mortgage, service charge, insurance & my other credit commitments came to 38% of my income. Guess it's just a puzzle. Their response was quite clear that I was rejected due to affordability. Weird also that the Housing Association and their 'preferred' Mortgage Advisors thought my affordability calcs were fine. 

LM1186

Deleted_User said:

I do a fair bit more shared ownership than I want to and I have never had Kent change an affordability figure.  At a guess maybe your income was calculated incorrectly or something. In my experience it is rare to find a housing association calculator passing and then a mortgage one failing as the housing association on is usually a lot harsher.

How many defaults have you got and what are the dates? 

Aldermore do 10% deposit mortgages and lend quite good amounts. They will take 1 settled default that was registered the last 3 years if the default amount was less than £500

It does seem quite strange. The mortgage advisor said he was really surprised too. 
I have 4 defaults - 2 of them are for the same debt - one is registers with Barclaycard and the other with PRA, on the same date, for the same amount which I'm told is common. 3 defaults are registered in Oct 2017 for between £1500 - £1200. One is registered in Jan 2018 for £1600. All of them were settled by Aug 2019.

[Deleted User]

Even Jan 2018 is now 3 years ago so you have 0 defaults in the last 3 years.   If you want to purchase at 10% then there should be a way of doing it.   15% gives a lot more lenders and might give you a significantly better rate but it doesnt look like a complete dead end at least.  

For what its worth, affordability calculators usually stack up on application 99.9% of the time.  What happened to you was likely to be user error from someone putting the wrong figures in the wrong boxes.

LM1186

Deleted_User said:

Even Jan 2018 is now 3 years ago so you have 0 defaults in the last 3 years.   If you want to purchase at 10% then there should be a way of doing it.   15% gives a lot more lenders and might give you a significantly better rate but it doesnt look like a complete dead end at least.  

For what its worth, affordability calculators usually stack up on application 99.9% of the time.  What happened to you was likely to be user error from someone putting the wrong figures in the wrong boxes.

Thank you. That's a bit more reassuring. 

LM1186

Deleted_User said:

Even Jan 2018 is now 3 years ago so you have 0 defaults in the last 3 years.   If you want to purchase at 10% then there should be a way of doing it.   15% gives a lot more lenders and might give you a significantly better rate but it doesnt look like a complete dead end at least.  

For what its worth, affordability calculators usually stack up on application 99.9% of the time.  What happened to you was likely to be user error from someone putting the wrong figures in the wrong boxes.

Just a thought, would it be that some of my income comes from maintenance payments that are not court ordered? The MA didn’t mention that this would be a problem, to be honest, had they not been recommended by the HA, I wouldn’t have used them as a broker, but I know that this is an issue for some lenders and that would have reduced my income by nearly £5k.