Mortgage Rejections

danpk

Hi, I'm just looking for some advice as we have had two mortgages rejected in a week and are concerned about making further applications. I'll try and provide as much background context as I can.

We are a couple and are both first time buyers and want to purchase a new build property from a smaller regional developer. We have a deposit which is about 32% of the total property cost and the amount we are asking to borrow is roughly x3 our annual income. We have no monthly credit commitments (loans, car finance etc.,) and owe nothing on any of our credit cards.

We viewed the development twice before deciding we wanted to buy and at this time paid a £500 reservation fee to hold the property. At the time we had a mortgage in principle with Nationwide, the agent advised us to avoid Nationwide and Santander as they were both over-exposed on the development. We have used a mortgage broker throughout the process as I work in academia and like many in this field work on fixed-term contracts and have been told this limits the lenders you can go to, my current contract runs until 2026 and my partner is employed on a permanent contract.

Our first mortgage application went to Platform a couple of weeks ago, they sat on it for a week before rejecting it as the property is being sold with a Global Home Warranty rather than one of the more routine ones like NHBC. On Monday this week the broker sent an application to Halifax who on Tuesday asked us to pay for a valuation which was booked for yesterday (23/2/23) and the application was rejected today because they had discovered they are also over-exposed on the development. We had to pay to learn that they've already lent out too much to other people, great.

We genuinely don't know what to do, our broker has recommended we apply for a Virgin Money product that is similar to the Halifax one in both rate and monthly payment etc., can we just keep applying to lenders like this and them doing hard searches of our credit files without it impacting the chance we'll be offered a mortgage. For the sake of what we've spent so far I am leaning to just walking away from this whole thing and resuming our search and staying clear of new builds.

Any advice would be appreciated.

ACG

The global home warranty thing should have been picked up before applying really. If you were asked about the warranty and gave the wrong info, thats on you. If the broker assumed the wrong thing, they should be covering the cost of that on the first application. 

The over exposure thing I think is just one of those things. 

You can make multiple applications, at some point your credit report is going to take a big hit. It will improve in time, but you wont know when until you start to see more declines. 

You have not actually been declined, its the property that has been the issue. If you like it, I would crack on and give it a try personally. 

DullGreyGuy

ACG said:

You can make multiple applications, at some point your credit report is going to take a big hit. It will improve in time, but you wont know when until you start to see more declines. 

You have not actually been declined, its the property that has been the issue. If you like it, I would crack on and give it a try personally. 

Do Mortgage Underwriters take the same approach? They'll see its a mortgage application and unlike loans its not likely that the OP is approved for all of them and so takes on 4 new mortgages at the same time (which they could do with loans).

Inevitably they may get skittish that other lenders have declined or offered poor terms but they will equally know that different lenders have different criteria and so whilst they may lend to property above shop they know others wont so a decline can very easily be to do with a non-OP factor.

I know our first mortgage application was declined because our mortgage broker hadnt spotted that the lender had changed it terms and had capped lending on a flat with our LTV to £500,000 but for houses they'd go up to and beyond our lending requirements. The second lender approved exceptionally quickly.

JMA74

I just submitted a case with Skipton and one of the case requirements that came through was 'please explain the declined mortgage as declared on the application'.  I noted that it was declined due to survey and they passed it no issues.  

Your broker should search for new lenders based on your contract type, warranty type, and exposure.   Really should be liaising with new build sales office and lenders bdm to check exposure now they know its an issue

JMA74

Send them the following link if you want to make sure. ctrl+f for 'global'

https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1913/

danpk

ACG said:

The global home warranty thing should have been picked up before applying really. If you were asked about the warranty and gave the wrong info, thats on you. If the broker assumed the wrong thing, they should be covering the cost of that on the first application. 

The over exposure thing I think is just one of those things. 

You can make multiple applications, at some point your credit report is going to take a big hit. It will improve in time, but you wont know when until you start to see more declines. 

You have not actually been declined, its the property that has been the issue. If you like it, I would crack on and give it a try personally. 

Thanks for the reply, indeed the broker made an assumption and never asked us about the warranty, we knew who the warranty was with and had they asked we'd have said.

We are more dismayed that we had to pay for a valuation to discover that Halifax was over-exposed, but accept that it is one of those things. 

We get that it is the property that has been the issue in securing a mortgage but equally feel that the developer could have been more upfront about this. There are four properties left on the development and there has been zero movement on them since before the new year, maybe we should have questioned this in more detail before deciding to reserve one of them,

danpk

JMA74 said:

I just submitted a case with Skipton and one of the case requirements that came through was 'please explain the declined mortgage as declared on the application'.  I noted that it was declined due to survey and they passed it no issues.  

Your broker should search for new lenders based on your contract type, warranty type, and exposure.   Really should be liaising with new build sales office and lenders bdm to check exposure now they know its an issue

The fact that they made assumptions on the warranty without asking us and submitted to a lender that did not lend against the supplied warranty now makes us think they're not as good as they make out. But what is done is done, the Virgin Money product they have recommended is fairly similar to previous products and they do lend against new builds with Global Home Warranties so I think we will give it one last attempt with them and if not we will back out of the sale and write off the loss.

housebuyer143

Worth a complaint when it's sorted to get some money back. They shouldn't have applied to the first one at all and potentially not Halifax either 

ACG

DullGreyGuy said:

ACG said:

You can make multiple applications, at some point your credit report is going to take a big hit. It will improve in time, but you wont know when until you start to see more declines. 

You have not actually been declined, its the property that has been the issue. If you like it, I would crack on and give it a try personally. 

Do Mortgage Underwriters take the same approach? They'll see its a mortgage application and unlike loans its not likely that the OP is approved for all of them and so takes on 4 new mortgages at the same time (which they could do with loans).

Inevitably they may get skittish that other lenders have declined or offered poor terms but they will equally know that different lenders have different criteria and so whilst they may lend to property above shop they know others wont so a decline can very easily be to do with a non-OP factor.

I know our first mortgage application was declined because our mortgage broker hadnt spotted that the lender had changed it terms and had capped lending on a flat with our LTV to £500,000 but for houses they'd go up to and beyond our lending requirements. The second lender approved exceptionally quickly.

Lenders only know about the declined application if they ask. Some lenders do not ask, they will see applications have been made, but wont know why it has not proceeded. 

Where it is disclosed, they just want to know why to ensure they are not missing something. Having a declined application is not the end of the world and it wont make an underwriter decline your application because another lender declined it. 

Most of my cases are adverse, occasionally we get a client who is 50/50 on high street or adverse. Obviously we try the high street in the first instance knowing that if it declines, we have the adverse as back up - nothing ventured and all that... Assuming the client is happy to try the cheaper rate first (sometimes time is of the essence). 

danpk

Wanted to thank you all for your replies, we decided after speaking with the mortgage broker to apply to Virgin Money, they sat on it for a week and as we suspected it was rejected. According to the broker 'the valuer had declined the property' and when the asked for more information they were refused so they suggested again it may be due to exposure limits but cannot say for definite.

I had a feeling that it would be rejected again and spoke to another broker and explained the situation and he went away to speak to high street lenders and came back with a list of three lenders that had indicated to him that they were not over-exposed on the development and that we should qualify for. The developer when I informed them just replies with 'well x that reserved at the same time as you has just had a mortgage offer from y' but I don't think we can face another application to another lender. As the conveyancer said, the problems you are facing now could indicate problems you may have in selling the property in the future.

I do think that there is a problem in securing mortgages on the properties that remain on this development, there was three available for a number of months, since we reserved one of them the other two have remained listed for sale and unreserved. With just ~44 plots the second broker who took the time to look at all the development details suggested that for some lenders their exposure limits could be as little as mortgaging two properties.

Anyhow, thanks for all there replies and information, I think we'll be walking away from this one and resume our search in a couple of months when we've recovered from this ordeal