Expecting a reduced mortgage offer. Options?

Dave_Z

We're in the process of applying for a mortgage with Leeds Building Society.  We need £415k, but broker says they are currently looking to offer around £340k due to the below reasons;

- They aren't happy that my bonus is split into multiple payments across the year, so are only using half my bonus in their multiple.  This is how it has always been at my employer and I assume is driven by the desire to retain staff.  I don't understand why there should be any concern at how many payments there are, so long as the total is what I say it is (which it is) and has been consistently so (which it has).

- My pension payments are paid via salary sacrifice.  The payroll system my employer uses is quite old and manual and it can't show a SS deduction on the payslip, so it only shows my gross, net of the pension contribution.   

My MD has already written a letter confirming my true gross salary and explaining the reason for the difference on the payslip, but lender is still using the post-SS value as my salary for their calculation.  I have said I can temporarily stop paying my pension in Feb in order to generate a payslip with the full amount, but that will be nearly 2 weeks away and I'm not sure we have time, with a planned exchange date of 14/3.  I can also show money going into my pension, but broker doesn't seem to think this will help.

On the bonus subject I'm a bit lost.  My payslips show I earned the bonus I said I earned.  Broker has asked if my MD can also write a letter confirming my bonus, but I don't really see how that is going to help when they can already see it on the payslips and still aren't counting it all.

After seeing some posts on here where several people who had issues with LBS went to Yorkshire BS, I thought I'd try an AIP with them.  YBS gave us an AIP with max lend approx £75k higher than LBS and they have much better rates (albeit that could be as they have reacted to BoE base rate and LBS are yet to).  I have also spoken to YBS twice on the phone and talked through the above concerns and explained my circumstances and both times they told me they don't believe this would cause an issue for them (perhaps sales talk?).  

On the face of it, I feel that we'd have a better chance with YBS and could possibly get a lower rate too.  I'll give LBS a few days to react to extra items I'll send them, but if still we seem to be at an impasse can I just give up and apply elsewhere?  I've read some concerning stories about applying for 2 mortgages at once, so how do I play this?  If they do offer, do I need to wait for that and then formally decline it if too low before submitting an application with another lender?  Just feel like we're getting nowhere and don't want to waste another week in vain.

ACG

I do not use LBS regularly, but they are not the best lender to deal with. 
We do not have access to YBS but we do their subsidiary Accord who are pretty much one of the easier lenders to use. If I had to pick a lender, I would go with YBS over LBS every day of the week. 

Thats not to say you will be accepted btw, I do not know your case. But personally, I would probably crack on with YBS. Its generally not a great idea to make multiple applications, but realistically LBS are unlikely to back down. 

Hoenir

Bonus is dependent on criteria being met rather than being guaranteed income. An underwriter deciding to only accept 50% is a reasonable stance. Past history has no zero bearing. Given the amount you are wishing to borrow over many years ahead into the future. From an employers perspective not paying a bonus is an easy way of reducing overheads and conserving cash within the business. 

Dave_Z

ACG said:

I do not use LBS regularly, but they are not the best lender to deal with. 
We do not have access to YBS but we do their subsidiary Accord who are pretty much one of the easier lenders to use. If I had to pick a lender, I would go with YBS over LBS every day of the week. 

Thats not to say you will be accepted btw, I do not know your case. But personally, I would probably crack on with YBS. Its generally not a great idea to make multiple applications, but realistically LBS are unlikely to back down. 

Good to hear we aren't the only ones! 

Dave_Z

Hoenir said:

Bonus is dependent on criteria being met rather than being guaranteed income. An underwriter deciding to only accept 50% is a reasonable stance. Past history has no zero bearing. Given the amount you are wishing to borrow over many years ahead into the future. From an employers perspective not paying a bonus is an easy way of reducing overheads and conserving cash within the business. 

Irrelevant in any case as they are saying they would count the bonus in full if it were a single, annual payment.

ACG

Dave_Z said:

Hoenir said:

Bonus is dependent on criteria being met rather than being guaranteed income. An underwriter deciding to only accept 50% is a reasonable stance. Past history has no zero bearing. Given the amount you are wishing to borrow over many years ahead into the future. From an employers perspective not paying a bonus is an easy way of reducing overheads and conserving cash within the business. 

Irrelevant in any case as they are saying they would count the bonus in full if it were a single, annual payment.

The wording of their criteria for bonuses is very ambiguous I think. When I read this (which is under Bonus paid quarterly). 3 consecutive payments to me would be monthly, but with it being under quarterly, surely 3 quarterly payslips would be consecutive...? I would have checked this before applying. If I was told it would/could be accepted I would be arguing it. But none of that is guaranteed to get it overturned. With it being ambiguous, I could also see why they would only take 50%. 

Variable income sources such as bonus can be considered. If regular 50% can be used and if guaranteed and evidenced 100% variable income ban be considered. We require 3 consecutive payments as proof

Dave_Z

ACG said:

The wording of their criteria for bonuses is very ambiguous I think. When I read this (which is under Bonus paid quarterly). 3 consecutive payments to me would be monthly, but with it being under quarterly, surely 3 quarterly payslips would be consecutive...? I would have checked this before applying. If I was told it would/could be accepted I would be arguing it. But none of that is guaranteed to get it overturned. With it being ambiguous, I could also see why they would only take 50%. 

Variable income sources such as bonus can be considered. If regular 50% can be used and if guaranteed and evidenced 100% variable income ban be considered. We require 3 consecutive payments as proof

Indeed.  And it doesn't help that my employer pays bonuses the way in quite an irregular way, I'm sure.  Broker told us it would be fine before applying and he'd had a detailed breakdown of my bonus payments and timings.  

My MD has said he's happy to write a letter confirming my current bonus level is a minimum and is guaranteed and also a bit of waffle around why they do it how they do it.  If I get that into them Monday I'll give them 2-3 days to consider it before jumping ship. 

Maybe I should ask if they'll pay me my 2025 bonus now and as a single payment!

ACG

The problem with "guaranteed bonuses" is that they are rarely guaranteed - otherwise they would just form a higher basic. 

I think in 12 years as a broker I have only seen one that was actually guaranteed, but only in the sense that part of it was guaranteed as a minimum. 

I suppose if it is not paid monthly/quarterly/annually I can see why Leeds might be reluctant to take 100% of it - and I say that as someone who is not their biggest fan. I am not on here to call other brokers, I would like to think it was all pre-checked but being completely honest I am not sure Leeds would have been my first choice even if they were the cheapest. Fingers crossed the broker can sort it though. Your boss is probably due a pint if it goes through.

Hoenir

Dave_Z said:

Hoenir said:

Bonus is dependent on criteria being met rather than being guaranteed income. An underwriter deciding to only accept 50% is a reasonable stance. Past history has no zero bearing. Given the amount you are wishing to borrow over many years ahead into the future. From an employers perspective not paying a bonus is an easy way of reducing overheads and conserving cash within the business. 

Irrelevant in any case as they are saying they would count the bonus in full if it were a single, annual payment.

They is corporate. Ultimately Underwriters are the ones empowered to make decisions on behalf of the bank. 

Dave_Z

Ok, so quick update. Application in with YBS and sounding positive. 

Nothing much good coming out of Leeds and then, out of nowhere, we get news that they’ve offered today, but £5k short of what we wanted, though we can probably make it work. 

Bit confused about what to do next. All the feedback from YBS seems very good and they are happy with my bonus, etc. They have arranged a valuation on 5/3 which seems an age to wait as presumably very earliest an offer would arrive will be the 6/3.

We’ve been upfront with YBS about the existing application with Leeds, but I’m still feeling a bit nervous now. Don’t want YBS to say no or offer even less and then risk Leeds pulling their offer if they get wind we’ve applied elsewhere. 

No19v87

Dave_Z said:

Ok, so quick update. Application in with YBS and sounding positive. 

Nothing much good coming out of Leeds and then, out of nowhere, we get news that they’ve offered today, but £5k short of what we wanted, though we can probably make it work. 

Bit confused about what to do next. All the feedback from YBS seems very good and they are happy with my bonus, etc. They have arranged a valuation on 5/3 which seems an age to wait as presumably very earliest an offer would arrive will be the 6/3.

We’ve been upfront with YBS about the existing application with Leeds, but I’m still feeling a bit nervous now. Don’t want YBS to say no or offer even less and then risk Leeds pulling their offer if they get wind we’ve applied elsewhere. 

Other more knowledgeable folk will be along shortly to confirm but I don’t believe there is many Whatsapp messages between lenders letting each other know who had applied where.

Your Leeds offer should be valid for 6 months. That won’t be going anywhere. Let YBS do their work and see if they offer. You then may have 2 offers potentially to consider and decide which is the best one based on your circumstances.