Right to Buy mortgage/credit file

2babyboys

Hi - asking for a friend.  She was denied a mortgage this week as she is using 80% of her credit thats available.  Broker suggested reducing this to 25% and then reapplying but this needs to be done within 3 months as which point the Council offer will expire.  Her buy price was put on hold for 5 years while Council looked at cladding, now they have the all clear.  After 3 months the property price will reflect prices nowadays which would have gone up substantially in 5 years.  Does this sound right, anyone else been in this situation please?  Thanks

2babyboys

Hi - I'm asking for a friend who tried to get a mortgage this week but was denied for a right to buy property.  She has used 80% of her available credit and the broker suggests she reduces this to 25% and then re run application.  This is a challenge as  she only has a 3 month timeline due to the Council offer, but not impossible.  just to want to ask if this sounds right, or for any suggestions please?  thanks

sammyjammy

To the lender someone using 80% of their available credit is a bit of a warning sign so yes, obviously it depends if its 80% of 6k or 60k.  What is her affordability like?

2babyboys

hiya, she has £14K debts.  Pays £600 council rent and mortgage comes in at £700.  Not sure of her disposable income...she is aiming to clear at least 50% of this in 3 months so £7k, but will mean selling her car so really needs to be worthwhile

Desmond_Hume

Sounds like she doesn’t meet lenders affordability criteria to me. 

Phoenix72

80% of what limit? 80% of £1000 isnt a lot but 80% of £10,000 is.

Either way it makes someone look heavily reliant on credit for every day living, something lenders don't want to see.

MEM62

Affordability tests are currently tight and it sounds as if her CC usage has just pout her outside the criterion.  Mortgage application or not, 80% utilization is not good - particularly if the limits are high.  It sounds as if your friend is sailing too close to the wind with their finances.     

GrumpyDil

Companies very rarely give a specific reason for declining so is that a definite reason or just the broker's assumption/guess? 

2babyboys

Hi - yes just the brokers assumption, no guarantees

SarahB16

2babyboys said:

Hi - asking for a friend.  She was denied a mortgage this week as she is using 80% of her credit thats available.  Broker suggested reducing this to 25% and then reapplying but this needs to be done within 3 months as which point the Council offer will expire.  Her buy price was put on hold for 5 years while Council looked at cladding, now they have the all clear.  After 3 months the property price will reflect prices nowadays which would have gone up substantially in 5 years.  Does this sound right, anyone else been in this situation please?  Thanks

In your post you don't say if this is a house or a flat but because you refer to cladding I think it's correct for me to presume your friend is interested in purchasing a flat using right to buy.  

In my personal opinion I would suggest caution against purchasing a flat via right to buy (where it is part of a much larger block of flats).  I have a different opinion if it was a house via right to buy (because you have control over the repair costs, i.e. nobody else is undertaking repairs and maintenance that you then must pay for) but your post seems to be referring to the purchase of a flat.  

The reason I say this is because if your friend owns this flat she will then become liable for a proportion of the repairs and maintenance costs that are undertaken on all of the flats including her own.  There was a story on the BBC about this approximately two years ago (i.e. a couple could not afford to pay for these costs and I'm not referring to cladding costs).  I am also aware of another person (friend of an acquaintance) who needed to sell her flat because she could not afford the apportioned costs that she was liable for.   

Ahead of your friend looking to purchase the flat via right to buy I think it would be sensible for you to understand what repairs and maintenance costs she would be liable for. 

2babyboys

really good point Sarah and you are right, she'd like to buy her flat in a high rise council estate.  She has a housing officer so I let her know and if necessary contact the housing officer for clarification.  I know she has to pay service charge of £180 per month which I think it extortionate but I have no experience.  Thank you v much