Reply to: Mortgage Woes

[Emma Power Mortgages]

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.

It would appear that your broker has overlooked the information on your credit report. They have forgotten to factor in the PCP payment for the borrowing figure, if this was on your credit report that was supplied to them then it would be an error on their part, if not then its an honest error.

The information they have requested from you is correct to do so and, in the majority of cases, is enough to give you an AIP. A full credit score with the lender also relies on the correct information being put into the application at the point of submission, any changes after submission will invalidate the score.

All lenders are different and will apply different rules and calculations to an application - its highly likely they will be able to place your case with someone else and the application will be successful now they are using all the correct information.

I hope it works out for you this time

[scooterscot]

Possibly why no one wants to lend you much money?

... for your crazy overpriced house and your poor wage growth over the last 10-years.

[DimPrawn]

Martin Lewis urges homeowners remortgage to avoid bonkers EU rules | Personal Finance | Finance | Daily Express

The new EU laws could see UK homeowners stranded on their lender's expensive Standard Variable Rate (SVR) when their mortgage term comes to an end.

The EU 'Mortgage Credit Directive' officially comes into force in March 2016 but can be backdated by six months.

In effect, the directive is an extension of the mortgage affordability criteria that was introduced into Britain last year.

The stringent rules stress test borrowers to make sure they can afford their mortgage deal, not just now but if interest rates were to rise to six or seven per cent.

Under British rules lenders can bypass the checks when an existing homeowner is remortgaging. But under the EU directive lenders won't be able to do this.

Possibly why no one wants to lend you much money?

[CoolCat]

Try Neil Murray of London and country

[kaiser78]

Try going direct to the lender(s) as you can discuss your financial position and history directly with them rather than through a third person. Nothing is misunderstood then.

[marius123]

It seems existing broker has managed to get a decision in principle with Halifax for the mortgage I need.

Feeling a bit devoid of confidence that it'll be fine but hopefully. Still, not the ease I expected employing an expensive broker.

[marius123]

Perhaps if you had been more honest with the figures and reduced your borrowings it would have been easier.

Great comment, thanks(!)

I was totally honest with the broker (they had my credit report at the start). We discussed my PCP and when I asked if I should reduce my borrowing upfront I was told there was no need.

[Incognito]

Try Martin @ as-financial, he's got me two mortgages in the last five years off my day rate. Can't rate him highly enough.

AS Financial | Independent Mortgage Brokers | London

[WTFH]

Perhaps if you had been more honest with the figures and reduced your borrowings it would have been easier.

[quackhandle]

I went through a broker last summer, years of accounts however I had one tulipty year and it ballsed things up, they had to base it on my day rate (which wasn't too bad, but was annoyed by that one crap year where the gigs were a bit thin on the ground)

Anywho I was granted MIP from Halifax (seems the only one who will touch us contractor scum) up to £450k, however we were never looking at something that high. In the end I have a mortgage of 160k (and a house beyond our expectations - thanks to previous owner's son and his philandering ways! ) and only small credit card bills, car was paid off in January. Does seem strange why the car PCP would mess things up and a 300K mortgage seems high to me but YMMV.

qh

[marius123]

As someone mentioned it's a £300k mortgage, it's on about a £370k house. I can manage if I get about £275k.

I wouldn't have got the car if I knew it would screw things up like this. It's like £220/month I still can't see how it makes such a difference but a lot of people are saying this to me now. I'm really disappointed that the mortgage broker despite knowing my situation in detail warned me about none of this.

There's an application with Halifax going in tomorrow and I've agreed to pay off a credit card and a loan to improve the affordability.

Will see what happens. I spoke to the main competitor of this broker today and they seemed much more knowledgeable and confident about what we would need to do to get the mortgage I need. May have to switch..

[Scruff]

The Broker never makes you an offer. A relatively small PCP can make a huge difference in the AIP, since they take the repayment amount into account.

[ASB]

I recently added myself to partners mortgage when her ex came off it. No additional funds were being raised and it was a ruddy nightmare. So you have my sympathies.

In this case the lender was Santander and the mortgage is not even 6 figures. It's actually less than my annual salary, but they needed convincing about affordability.

The basic problem was that they take:-

1. Income.
2. Expenditure.

Then if the mortgage payment is more than 40% of the difference it's tough, not affordable.

Lots of discussions with a real live person in underwriting eventually got it through but we were stymied for a while by:-

Lots of holidays = lots of expenditure (because it's affordable and comes from capital)

I have a number of credit cards. They are paid off in full each month. But they regard it as a recurring commitment.

Different providers have different rulesets, but they are guided by government policy and it is down to affordability. So with a big income and an expensive lifestyle (which you may curtail a bit) it makes it difficult.

[Andy O]

The maximum that a lender will advance will still only be a percentage of the value of the property you're buying.

£225k against a £300k property isn't bad imho.

£445k would be against a much more expensive property.

Or am I missing something here?

Yes. He said he wanted a mortgage of £300k, he didn't state how much the property was.

[Churchill]

The maximum that a lender will advance will still only be a percentage of the value of the property you're buying.

£225k against a £300k property isn't bad imho.

£445k would be against a much more expensive property.

Or am I missing something here?