Mortgage in Principle

Jaco70

So, my mortgage has just reverted to a higher rate and I applied for a new one via a credit checking app that I use.

I’m applying for 160k to carry on paying down my prime residence as well as pay off a small balance left on a BTL property. I’m 52, my wife 42.

As someone who has borrowed loads of money over the decades, but who has an impeccable credit score, I have been amazed at how many questions I have had to answer. It has taken hours of form filling and telephone questions this week (the two properties are worth 600k at least). Also, I’ve had to forward tax returns, payslips for my wife, and other things. 

I have now been told that a decision in principle should take two days and the final decision around 40.

The problem seems to be (I’m making an assumption here) that I have other mortgaged BTL properties, as well as some un-encumbered ones. The rentals have been in place for years and my accountant compiles accounts every year, although strangely they haven’t asked for these documents.

This level of questioning has come as quite a shock for me and it’ll be around a month and half before I hopefully get the loan.

How likely is it that a decision in principle leads to a firm offer?

ACG

Its impossible to say. 
Assuming you have checked that you and the property fits criteria, it passes affordability and you can provide what is requested them probably 99%. If something falls out, then probably 0%.

I would say over 99% of our applications go to offer, but occasionally something falls out because of something unexpected but we try to check everything we can upfront. 

Straight forwards applicants can probably just pick a lender and apply. You appear to be less than straightforward but I imagine if you have unencumbered properties receiving rent then your overall portfolio should be fine and stack up. You should have gone to a broker. One factfind, they could have done the 2 applications. They would have also checked everything stacks up before applying. 
 

Jaco70

Thanks, I like the sound of 99%.

Although I started on the credit app, all the dealings have been with a broker. I have a local broker also, but he hasn’t come up with such a good rate.

I understand what you say about being less than straightforward, but there must be hundreds of thousands, if not millions, in my position.

Another thing that surprised me was that they said they’ve found a company that takes into account my share of profits from my other company, rather than how much I take in dividends (sometimes a much smaller figure). I just thought “shouldn’t all lenders do that?”, it’s not an unusual situation. 

I’ve borrowed money many years ago, where some kid sitting opposite said “how much do you earn, 80k ?” (I didn’t) without looking up, and the deal was done. It feels like good borrowers are being punished for lenders laissez-faire ways in the past. 

ACG

I do not take all of my profit out of the business, I was limited to a handful of lenders. It is what it is, its easier for lenders to work of self assessments rather than going through accounts to determine your shareholding and how much you would be due. 

Im not sure being able to just say you earn £80k and getting a mortgage classes you as a good customer haha. You need to be able to evidence you can afford the mortgage. Good customers should be able to do that. They are all over money laundering and tax evaders now. The "good" old days are long gone. 

Some lenders are easier than others, but they all have the same legal requirements. 

Jaco70

ACG said:

I do not take all of my profit out of the business, I was limited to a handful of lenders. It is what it is, its easier for lenders to work of self assessments rather than going through accounts to determine your shareholding and how much you would be due. 

Im not sure being able to just say you earn £80k and getting a mortgage classes you as a good customer haha. You need to be able to evidence you can afford the mortgage. Good customers should be able to do that. They are all over money laundering and tax evaders now. The "good" old days are long gone. 

Some lenders are easier than others, but they all have the same legal requirements. 

I understand what you say and it makes sense, but I’ve borrowed on mortgages for decades and not once made a late payment. Also, as I said, I keep annual accounts for the rentals and they’re profitable, but they haven’t asked to see these.

It is what it is but another 40 ish days to possibly be told NO, seems a real drag. Fingers crossed though. 

ACG

Jaco70 said:

ACG said:

I do not take all of my profit out of the business, I was limited to a handful of lenders. It is what it is, its easier for lenders to work of self assessments rather than going through accounts to determine your shareholding and how much you would be due. 

Im not sure being able to just say you earn £80k and getting a mortgage classes you as a good customer haha. You need to be able to evidence you can afford the mortgage. Good customers should be able to do that. They are all over money laundering and tax evaders now. The "good" old days are long gone. 

Some lenders are easier than others, but they all have the same legal requirements. 

I understand what you say and it makes sense, but I’ve borrowed on mortgages for decades and not once made a late payment. But this is the bare minimum that is expected.


 Also, as I said, I keep annual accounts for the rentals and they’re profitable, but they haven’t asked to see these. Some lenders would, some lenders just go off your self assessments, your profit from those would be declared under land and property. This is the great thing about having 80+ lenders, there are multiple ways to look at things to help as many different people and circumstances as possible.  

It is what it is but another 40 ish days to possibly be told NO, seems a real drag. Fingers crossed though. 

Not all lenders would take 40 days. It sounds like you/your broker has gone to either a slow or a fussy lender. When we speak to customers we try to get an idea of priorities - ie cheapest, longest term fixed/security, quickest etc. Usually the cheapest lender takes the longest as most people just look at the rate and go for that. They do not consider anything else. The amount of times on this forum we used to see "I have a rate of 0.99%", but then they would say it came with a £2k fee and their mortgage was £100k... They would have been better with a 1.5% rate and no fee. 

I am sure you will be fine, but as someone less than straight forward you might get extra questions. If you have not already uploaded one/do not have one, it might be worth putting a spreadsheet together with your portfolio on (property address, mortgage lender, rate, repayments, and rental income). Some lenders will want this and might not ask for it as standard.