Help! Not sure why mortgage has been turnd down!

judi24

I'm sorry if my post is a bit long winded but I could realy do with some advice!

I split with my husband 6 months ago. I want to buy him out of the house we own jointly and he ia happy with this!

We currently have a mortgage of £157,000 on a fixed rate mortgage with the Alliance and Licester. I applied to borrow an extra £30,000 (the amount he agreed to accept) to buy him out. (house has been valued at £250,000)

The A&L refused to allow this as they said thier afordability calculator showed I did not have enough income - but I coul transfer the equity and take on the current mortgage. (there is penalty of around £4500 to get out of the mortgage early)

I then applied for a secured loan to raise the £30,000 with a view to remortgaging in sept with someone else clearing this loan.

The A&L asked for proof of my income. I sent my wage slips, bank statment etc

I earn £45,000 and get £4,200 CSA for my 2 older children and £2,800 family allowance per year.

The A&L have said they will not use family allowance and therefor will not let me transfer equity unless I pay them a £43000 lump sum!

My ex has agreed to pay £200 per month CSA for the younger 2 children (I have 4 children) but I have not got proof of this cos he won't start paying it till I buy him out of the house (he is currently paying half the mortgage instead)

I have £10,000 in credit card balances - the minimum payment being around £300

Basically my questions are-

Why have A&L refused the transfer of equity and additional borowing when thier calculator shows I can borrow more than this?

How do I make my case more attractive to other lenders?

Will my loan application (i have not agreed to it) affect my credit rating and stop me getting a mortgage with someone else?

Who should I try for a new mortgage?

Any advice would be great cos I really want to keep the house for the sake of the children!

Thanks

homer_j_3

will the csa be court ordered or not? Family Allowance - is that working tax credits and child tax credits?

Employed Applicants
Applicants must have been in permanent employment for the last three months. We will not discriminate against applicants on maternity leave, or subject to a probationary period of employment
The allowable income is defined as:
Basic salary, pension, permanent disability allowance, working tax credit, child tax credit, mortgage subsidy and large town allowance
PLUS 100% of guaranteed secondary income including overtime, bonuses and commission. Maintenance payments can be considered if a 12 month track record of receipt of payments can be provided (please note that maintenance payments will not be considered at all unless 12 months evidence can be provided)
PLUS 50% of regular but not guaranteed secondary income
For occupations which are mainly commission and or overtime based, 100% of these items will only be used if a three year track record is proven

this is the lending criteria to new applicants

dunstonh

based on that criteria posted by homer, the snags are potentially the lack of 12 month record for the CSA payments and the £10k on credit card would reduce your income down by using a typical monthly payment. The secured loan application will further reduce your income and make you less attractive to lenders.

Tiddler_2

Family Allowance is Child Benefit and is NOT counted as income by the majority of lenders.

Whilst your minimum payments for your cards are 3%, most mortgage lenders take 5% when working out affordability.

So without provable maintenance they see your income as:

£45000 less £6000 for credit cards = £39000 allowable income.

or £43200 if the maintenance for the older children is provable.

You're asking for £187k in total so need 4.33 x highest income figure, 4.8 x lower income.

The fact that you have 4 children also comes into the calculation aswell.

If it's this September that your ERCs finish, then you will be better waiting til then to remortgage away from A&L, but you may get the same answer from a few lenders I'm afraid.

Using Accord Mortgages might be an option as they take Child Benefit into account (and gross it up).

Speak to a whole of Market broker to see what they can sort out for you.

judi24

First of all i want to thank thse who have replied and secondly appologise for my terrible typing and spelling in my post! I had just finnished night shift!

I just wanted to clarify that I have applied for a secured loan been accepted but not actually completed (which i am not planning to do as I cant get the transfer of equity) - does this application go against me when aplying for a mortgage in September even though I haven't actually taken the loan?

The child support has been done through the CSA and so I have a written agreement and a years proof of payment - so i assume that can be counted as part of my income.

Tiddler I have never heard of accord mortgages but will look into it thanks!

herbiesjp

judi24 wrote: »

I have never heard of accord mortgages but will look into it thanks!

You'll need to go via a mortgage broker for Accord mortgages

judi24

My next question is how do I find a decent mortgage broker?
I have had advice from a mortgage broker before and found it biased! I didn't feel they searched the whole market - just honed in on thier 'favorite' or most leucrative lenders!

I did look at the accord website and thought it looked quite favorable
but how do I find a broker that uses them?

I also wanted to ask if reduceing my curent mortgage to interest only until sept when, the fixed rate runs out, will make any difference to getting a new mortgage? My ex is not happy to wait till Septand wants to only pay half the interest but I am worried it will adversly affect my ability to get a new mortgage.

Tiddler_2

Whilst your financial arrangements with your ex are none of my business, I'm just a little bit concerned on the affordability of the whole situation.

I may be reading in between the lines a bit but is the half of the interest your ex is offering to pay, more than the £200 he's offered to pay for child support? Does he currently pay more than half the interest?

If it is and you're asking to reduce the mortgage payments to interest only now, how are you going to afford it when you have:

1. A higher interest rate to deal with (almost certainly from Sept rate will be higher than current deal)
2. £30k more on the mortgage
3. The reduce income as ex is now only paying £200 child support.

judi24

Thanks Tiddler
Just to clarify things with my ex - at present he is paying half of the repayment mortgage. I am paying the other half - this is an informal agreemnt we made when we first split in Dec 2007.
As it is a repayment mortgage the actual amount we owe has obviously gone down since then.
He agreed to accept £30000 for me to buy him out - this is not half of the equity as the situation is complicated in that I was lent £30000 by my mum 4 years ago which was put into the house but he is not entilted to.
The longer we have a repayment mortgage the more the equity in the house increases.

Rather than paying him more than £30000 he wants to convert the mortgage into interest only so that the equity doesn't increase (and i benefit!) - so that I can wait til Sept and remortage when the tie in with A&L has finnished.

He doesn't want to pay half of the penalty to come out of it early and I don't want to pay it all for the sake of 3 months!

It is nothing to do with my affordability that I am looking to convert to interest only more to do with doing what he wants so that I can wait til Sept to remortgage.

Yes I understand that my repayments will go up substantially when i take on the house in my name but I have done my sums over and over and can afford it.

He will be paying substantially less which than he is now which is why he is pushing for me to buy him out!

On the plus side I did som calculations and reserch last night and discovered that my salary will go up by more than £5000 in the next 6 months!!!

dunstonh

I have had advice from a mortgage broker before and found it biased! I didn't feel they searched the whole market - just honed in on thier 'favorite' or most leucrative lenders!

Go fee based adviser with commission rebated. That way you eliminate any perception of bias.

space_rider

You could try abbey as they are quite sympathetic or they were, but what would happen if the childrens father stopped paying maintenance. Also remember that once the children get older the maintenance will stop.