Original Mortgage Declined Due To Sick Pay

Jacamo1981

Hello,

Hoping to get some advise about a mortgage that has just been declined.

We are going through a broker at the reputable sales agent and agreed a price etc. We signed the paperwork for the mortgage along with paying some fee's for the brokerage and search fees to speed the process up.

The under writer has now come back and said they declined the mortgage originally on offer due to me being on sick pay. I had an operation recently and have been off for a total of 7 weeks and am going back to work on the 10th week. The lender has been provided payslips since November 2021 and my sick pay is full sick pay so there has been no change in the amount i take home. They are now saying they wont take my earnings into consideration meaning we cant borrow as much. Ive been with my employer for 5 1/2 years and this operation is a one off. 

They are now trying to tie me and my partner down to a 5 year fixed though i first offer was only 2 year fixed and we are having to find an additional 10k deposit. 

Without going into to many details we are not ideal candidates so our options for lenders has been limited. I can't simply go to another provider.

Can they actually do that? is it discrimination? Also they have now done 2 hard searches on my credit file causing it to drop. 

Thank you in advance for any help/advise. 

[Deleted User]

Yes, they can do that. For it to be discrimination in a legal sense), you'd have to prove they're doing it because a protected characteristic. You haven't mentioned which one that is. It perfectly acceptable for lenders to discriminate between customers of different risk levels.

Ignore any drop in your credit scores. They're not used in lending decisions. More of a concern is why you're not ideal candidates'. What are the issues?

You should use a decent broker, rather than the one at the 'sales agent'. Do you mean it's one out of the back of the estate agent? You sound like you need someone experienced in adverse credit.

kingstreet

Most lenders I've dealt with will ask if the applicant has returned to work where there is evidence of sickpay on the latest payslip. I assumed most brokers had come across this before and would have discussed this with the lender prior to application. What's the broker fee and what group is the selling agent from?

Thrugelmir

Jacamo1981 said:

Without going into to many details we are not ideal candidates so our options for lenders has been limited. I can't simply go to another provider.

Then even more reason for an underwriter to be cautious. Your application is viewed as a whole. 

ACG

The 5 year fix is because lenders are allowed to stress test the mortgage on the rate payable rather than the SVR rate that happens on a 2/3 year fixed rate. 

If you are going to a specialist lender dont worry about your credit score. 

They can do it, you could potentially look at proceeding with the legal work - the searches will probably take around 4 weeks anyway so once that is done then you can get your offer issued. Its a bit back to the front but should help you overcome the issue.