Mortgage Woes

[marius123]

Was hoping I could get a bit of advice from anyone who's gotten a mortgage based on their day rate in the past...

I am using one of the contractor specific brokers (don't feel like naming which one quite yet as I'm quite angry with them) and they did the usual of giving me rough borrowing figures based on my day rate, telling my I could borrow approx £450k. They went as far as to look at my and my wife's credit reports and generally do what seemed like due diligence.

Based on this we've found and agreed to buy somewhere. We need a much smaller mortgage than that amount (about £300k) but having put the actual application the lender (Nationwide, who we've been with for 15 years) has come back and said they'd only lend us about £225k.

This would obviously scupper everything and is half what the brokers thought we'd be able to borrow.

At the moment the broker is now going through my credit report with me with a fine tooth-comb and looking for discrepancies between what's on there and what we've told the lender. There's one significant discrepancy we're going to correct but I can't see how even that would make such a large difference and messing around with these numbers strikes me as fiddling while Rome burns.

He's suggested a different lender may come up with a different number and although we'll try that I guess I'm really worried.

My questions to experienced hands are as follows:

Are these brokers charlatans, effectively lying beyond all belief before the application goes in?
Has anybody been through the process and experienced similar problems with amount the banks are willing to lend them but has managed to sort things out (different lender, tweaking figures, etc).

Please, any advice gladly received.

[GB9]

Have they quoted what they would lend against the specific property you want? They may not think it's worth as much as you have offered.

Was the broker surprised by the decision? Remember that this means more work for them too.

My experience has been that a mortgage is possible on a day rate but I got a better deal from having years of accounts.

And don't forget house prices fell by 0.8 % in April according to the HFX.

[PurpleGorilla]

I was quite surprised to learn you can't get a mortgage on a contract rate if you have multiple contracts on the go. Too risky apparently, multiple rather than single contracts.

[BrilloPad]

I bet the broker is mad too. All that work, and now they have a load more to do.

IMO you should wait until they report back.

BP

[WTFH]

At the moment the broker is now going through my credit report with me with a fine tooth-comb and looking for discrepancies between what's on there and what we've told the lender. There's one significant discrepancy we're going to correct

What is the "one significant discrepancy we're going to correct"?
How did it come about?
Was it you who told the broker/lender this information which has made the significant discrepancy?

If the broker is basing the lending criteria on information from you and there is a sginificant discrepancy in that information, it's not the broker who is the charlatan/lying!

[FrontEnder]

Was hoping I could get a bit of advice from anyone who's gotten a mortgage based on their day rate in the past...

I am using one of the contractor specific brokers (don't feel like naming which one quite yet as I'm quite angry with them) and they did the usual of giving me rough borrowing figures based on my day rate, telling my I could borrow approx £450k. They went as far as to look at my and my wife's credit reports and generally do what seemed like due diligence.

Based on this we've found and agreed to buy somewhere. We need a much smaller mortgage than that amount (about £300k) but having put the actual application the lender (Nationwide, who we've been with for 15 years) has come back and said they'd only lend us about £225k.

So you made on offer without an agreement in principle from the mortgage lender? Until you get that, the broker is only giving you a guide, so I think you've probably misunderstood the process.

[marius123]

Thanks for the replies everyone. Will try to answer some of the stuff I've just been asked.

I don't think this is about the value of the property. The survey hasn't happened yet so I don't think that could have affected things but there certainly shouldn't be that much difference anyway. LTV has also not been mentioned.

The discrepancy is a Car PCP purchase. I discussed this at the time with the broker and we submitted the monthly payment for the car to the lender under affordability. We didn't submit a loan amount. This is effectively the full value of the car (so about £16k) which although I won't ever repay in full is something I am on the hook for so to speak. I struggle to see how this can make such a huge difference to the allowed borrowing amount.

You're right that I made an offer without a decision in principal. This seemed wrong to me at every turn (as it's how I've always done things as a permie) but this was explicitly on the advice of the mortgage broker. They said they had done sufficient due diligence to make sure that the figure was achievable and agreed to speak to the seller's estate agent on my behalf to persuade them of this. On this matter I'm feeling rather mislead at the moment.

[Support Monkey]

the lending criteria is now much tighter, just going through the process of a re-mortgage and they want to know what colour socks your wearing, much more in depth than the last time, you maybe have something in your credit history that scared them off.

I would be getting the broker to look at alternative lenders, if you get the same issue then you have an issue with your credit rating

Have you been on Experian and checked your credit score ?

[marius123]

the lending criteria is now much tighter, just going through the process of a re-mortgage and they want to know what colour socks your wearing, much more in depth than the last time, you maybe have something in your credit history that scared them off.

I would be getting the broker to look at alternative lenders, if you get the same issue then you have an issue with your credit rating

Have you been on Experian and checked your credit score ?

We've been through my Experian report (and the wife's) with a fine tooth comb. They both have the delightfully high(!) score of '999'.

I have a reasonable amount of open credit because it's convenient and allowed me to have lots of free cash for the expected move. I made it clear a couple of months ago to the broker that if that was a problem I could pay lots of it off. That's something else they said was unnecessary and I guess is too late now.

[marius123]

My last post of answers doesn't appear to be here yet (was being moderated I think) but my more recent post has appeared so will try to recreate the missing one:

1) Don't think it's the value of the house. Survey hasn't been done yet anyway and there has been no mention of LTV related issues and we're right on a boundary.

2) The discrepancy is a car PCP. The broker knew about this, we discussed just before the application went in and provided a monthly payment to the lender as part of affordability but no amount on the credit commitments list (I guess as I won't pay it all back, I'll just give the car back). This effectively means £16k in credit wasn't declared. I still don't see how that can make as much difference as it seemed to.

3) On the decision in principal, I thought this was very wrong too. The broker was the one who convinced me that I didn't need one yet as they'd done enough due diligence to be certain the lending figures were close enough. They even offered to speak to the estate agent of the seller on my behalf to persuade them all was well with my mortgage status. Feel let down about this