Help with Overturning Mortgage Decline / Self Employment MA

sherbert1964

Hi all, 

I've had an application in with Aldermore for a couple weeks now, DIP accepted off the bat but on initial underwriting our application was declined as they deemed our risk to be too high. We have a large deposit (~ 30%) and good credit history but Aldermore were one of the only lenders prepared to give us max lending at approx 5x income and consider my income as newly self employed.

They declined us because:

 1) Despite the affordability calculators saying otherwise, they thought the loan was too high
 2)  I'm newly self employed and my Ltd company had a small loss in Y1. Y2 has been a large net profit and they are having to take the latest year income in isolation and ignore the Y1 loss, which was also risky (although had been pre-approved by their BDM)
 3) New payments are 4x our current mortgage as our current rate is 2.01% on a relatively small interest only loan, and new loan is 5.39% on a much larger repayment loan.

We've gone back to them to appeal and it's currently sat with their operations manager being re-reviewed but we're not hopeful.

Has anyone else here had any experience with a decline with Aldermore, or generally a mortgage app being newly self employed?

TIA - Sherbs

housebuyer143

sherbert1964 said:

Hi all, 

I've had an application in with Aldermore for a couple weeks now, DIP accepted off the bat but on initial underwriting our application was declined as they deemed our risk to be too high. We have a large deposit (~ 30%) and good credit history but Aldermore were one of the only lenders prepared to give us max lending at approx 5x income and consider my income as newly self employed.

They declined us because:

 1) Despite the affordability calculators saying otherwise, they thought the loan was too high
 2)  I'm newly self employed and my Ltd company had a small loss in Y1. Y2 has been a large net profit and they are having to take the latest year income in isolation and ignore the Y1 loss, which was also risky (although had been pre-approved by their BDM)
 3) New payments are 4x our current mortgage as our current rate is 2.01% on a relatively small interest only loan, and new loan is 5.39% on a much larger repayment loan.

We've gone back to them to appeal and it's currently sat with their operations manager being re-reviewed but we're not hopeful.

Has anyone else here had any experience with a decline with Aldermore, or generally a mortgage app being newly self employed?

TIA - Sherbs

Is there a reason you can't stay with your current lender on a product switch? 
With all those reasons as a decline it seems highly unlikely you will get it overturned. 

sherbert1964

housebuyer143 said:

Is there a reason you can't stay with your current lender on a product switch? 

With all those reasons as a decline it seems highly unlikely you will get it overturned. 

Yeah the mortgage is too low - required new loan is about double existing loan. We're moving from a flat to a house on outskirts of North London so for anyone who knows London market knows the jump is quite considerable!!

Interestingly, my broker has prepped another lender who is seemingly willing to accept and has passed pre-underwriting (pre DIP/Application) with The Mortgage Lender, their rates are higher and the loan about 10k smaller but still doable as a plan B.

Just so surprised that Aldermore would say yes yes yes all the way through the initial conversations, BDM, DIP and then turn around to say no.

They've said we'll hear back from the senior underwriters on Monday

housebuyer143

sherbert1964 said:

housebuyer143 said:

Is there a reason you can't stay with your current lender on a product switch? 

With all those reasons as a decline it seems highly unlikely you will get it overturned. 

Yeah the mortgage is too low - required new loan is about double existing loan. We're moving from a flat to a house on outskirts of North London so for anyone who knows London market knows the jump is quite considerable!!

Interestingly, my broker has prepped another lender who is seemingly willing to accept and has passed pre-underwriting (pre DIP/Application) with The Mortgage Lender, their rates are higher and the loan about 10k smaller but still doable as a plan B.

Just so surprised that Aldermore would say yes yes yes all the way through the initial conversations, BDM, DIP and then turn around to say no.

They've said we'll hear back from the senior underwriters on Monday

Good luck with TML hopefully they will lend you what you need 🤞 I don't doubt you will find someone so hopefully your broker has better luck the second time around.

It might be the BDM wasn't wrong and they do lend on that criteria, but when it got to the underwriters it just wasn't too their taste at the moment, all those different variables together.

sherbert1964

housebuyer143 said:

sherbert1964 said:

housebuyer143 said:

Is there a reason you can't stay with your current lender on a product switch? 

With all those reasons as a decline it seems highly unlikely you will get it overturned. 

Yeah the mortgage is too low - required new loan is about double existing loan. We're moving from a flat to a house on outskirts of North London so for anyone who knows London market knows the jump is quite considerable!!

Interestingly, my broker has prepped another lender who is seemingly willing to accept and has passed pre-underwriting (pre DIP/Application) with The Mortgage Lender, their rates are higher and the loan about 10k smaller but still doable as a plan B.

Just so surprised that Aldermore would say yes yes yes all the way through the initial conversations, BDM, DIP and then turn around to say no.

They've said we'll hear back from the senior underwriters on Monday

Good luck with TML hopefully they will lend you what you need 🤞 I don't doubt you will find someone so hopefully your broker has better luck the second time around.

It might be the BDM wasn't wrong and they do lend on that criteria, but when it got to the underwriters it just wasn't too their taste at the moment, all those different variables together.

Thank you - yeah I guess we represent a pretty high risk profile but that's what you pay almost 6% interest rates for!!

Hopefully will become a bit clearer next couple days

ACG

I would be surprised if you got this overturned with Aldermore. 
I used to love Aldermore, they were a great lender when they first launched. Then a few key people left and their whole attitude seemed to change and they went downhill. 

The issue you have is that everything fits criteria, but you are pushing the limits in too many places - individually they are all acceptable but combined the risk is seemingly too great. Income multiple stretch, latest years accounts, big jump in income after previous losses... They probably want to see if the increase in income is sustainable. 

If you sold eggs and signed a 5 year contract with Tesco for example and that is the reason for the increase, I would argue that all day long. If you are a builder and you just took on a big job, then I would knock the appeal on the head. One can be proved to be sustainable and the other cant. 

TML are a better lender in my opinion, but they take less of a risk on affordability. 

sherbert1964

ACG said:

I would be surprised if you got this overturned with Aldermore. 
I used to love Aldermore, they were a great lender when they first launched. Then a few key people left and their whole attitude seemed to change and they went downhill. 

The issue you have is that everything fits criteria, but you are pushing the limits in too many places - individually they are all acceptable but combined the risk is seemingly too great. Income multiple stretch, latest years accounts, big jump in income after previous losses... They probably want to see if the increase in income is sustainable. 

If you sold eggs and signed a 5 year contract with Tesco for example and that is the reason for the increase, I would argue that all day long. If you are a builder and you just took on a big job, then I would knock the appeal on the head. One can be proved to be sustainable and the other cant. 

TML are a better lender in my opinion, but they take less of a risk on affordability. 

Thanks so much for this, this is super insighful.

For context I am an estate agent running my own sales/lettings business and thankfully have had several very good months and a good pipeline for new business so I can argue that the Y2 increase is sustainable, but I do see your point.

TML interestingly will give 4.5x but on my pre-tax profit rather than my net (in Y2) so the max loan is actually a bit higher than Aldermores 5x net profit, but my mortgage broker advised to go for a slightly lower loan at bang on 70%LTV as this looks better and not stretching max loan which hopefully is one of the risk factors negated.

I see that you are an MA yourself, do you deal with TML much? Do you know what are TML's turnaround time for applications right now?

ACG

Thats a tricky one with your job. 
Being completely honest, I am expecting this year to be a bit rubbish and potentially next year. My job and yours are to some extent linked as we are both reliant on a good housing market. I earn money on remortgages and you earn money on rentals so we are not completely linked. 

But I think Aldermore would probably err on the side of caution. 

I like TML, however I think you can either find everything flies through or you have to work for it a little bit. Personally, I would have gone to TML first but every broker is different and has different experiences. 

sherbert1964

Okay thanks mate, I guess I'll have to wait and see if Aldermore overturn their decision. I must admit I'm strangely confident, whether that is just sheer will and optimism remains to be seen!

ACG

I think I am less confident, but I have been wrong before. Let us know how you get on as I learn off this site as much as I try to help, every day is a school day and all that. 

Worst case scenario you have your plan b lined up and TML are on the ball at the minute so should not cause too many delays. 

sherbert1964

For sure, I'll know on Monday (they confirmed a reply Monday as were reviewing on Friday) so will let you know.

Part of my confidence on it (rightly or wrongly) is my MA has applied considerable pressure on the to turn it around considering they said yes pre underwriting, my MA even went as far to say that they'd pull all business from Aldermore if not seriously considered.

I think it's just because we did so much due diligence before ever applying as we knew its not the easiest application, they said yes several times and then to decline at underwriting either means the BDM falsely advised us or the underwriter made a mistake. 

It could all amount to nothing and they'll just say no and we go to TML but as long as we get the house that's all that matters.

Also, in your opinion if we do the same application through TML, do we go 70% LTV or go max loan at 26k more which is 73%, and their calculators have confirmed they can accept borrowing as much, but knowing this was a problem for Aldermore. Is 26k a real issue for them considering it's only 3% of loan? 

Just don't want to run into same issues but also want max loan as every little helps and means more money available for a refurb from day one, the Mrs is already picking out her preferred kitchen style...