Declined Mortgage in Principle - Mild State of Panic

[romeogolf]

Mortgage adviser has just told us we've been declined an AIP from Halifax due to 'credit score'. They would not lend 95% but would agree to 90%.

Both of us have 4/5 on Noddle and well over 550 on Clearscore, with no adverse information on either.

Advisor has suggested we try again with Accord, who will also lend, in theory, far more than we require based on our income/expenditure (borrowing £275k, they'll give £359k).

She's suggested this is fairly commonplace and no big deal. Has anyone else had this experience? We're both a bit concerned as have always thought we have a reasonably good credit score/history.

The rate is a little higher with Accord, but only £20 a month so no big deal... more worrying is the variable rate it returns to is over 5%. What are the chances of us having this issue again in two years time?

Thanks!

[romeogolf]

Sarnie said:

If you want to lend at 95% LTV then your credit score needs to be squeeky clean.......that doesn't mean having no adverse credit history, it also means having sufficient history on your credit file (previous loans, credit cards etc etc) to build your credit score sufficiently to pass the AIP at 95%...............this isn't an affordability issue it seems but that your overall "score" isn't sufficient to be accepted at 95% with Halifax.

With regards to Accord, I'd be very sceptical about trying Accord after Halifax given that they are a lot stricter with their requirements for credit scoring. They are a good lender who we do a lot of business with but they can be pedantic and will be a lot more thorough than Halifax would have been...........personally, I would not be sending an AIP that been declined with Halifax to Accord.........

Hi Sarnie - It's an odd one, surely someone else in the same profession as you would know that their criteria will be stricter, and only recommend them if they feel we're likey to be accepted?

In terms of credit scoring, I don't really know what would make our score adverse. We both use credit cards which are paid off in full each month, I have a car loan with no missed payments, we've both got mobile phone contracts, on the electoral roll, I have two mortgages in my name already etc etc... None of which have any missed payments.

Is there a lender you suggest we look at instead of Accord, then? I don't want another declined loan, I'd rather just get it right.

[romeogolf]

Sarnie said:

It may not neccessarily be credit score...............it could be the property type..........it could be the age of the property.....it could be your employment profile.........it could be all manner of issues...........with all due respect, your broker should have phoned Halifax straight after the decline decision and found out why it was declined, any broker worth their salt would want to know why it had been declined and then take that info straight to the next lender (before submitting another AIP) to find out how that would assess th the reason had declined your AIP.............it's not particularly great that you have to resort to an internet forum to try and find out why your AIP may have been declined, this should all be directed to your broker........

I've asked her to call me today before going fwd with Accord. It's hard to know this from a consumer side, you just assume your broker knows what they're doing. Is there a way I can contact you directly and see if you'd be able to help?

[romeogolf]

Thanks, have emailed.

[romeogolf]

My Current Broker said:

I have completed your agreement in principle with Accord, and it has been referred to an underwriter.

This is where the computer says “possibly” but needs to get a human to check the case….

They aim to respond normally within 4 hours.

I shall of course let you know asap.

Sarnie has given excellent advice, I'm giving my current broker another shot before deciding she's not worthwhile but will keep the thread updated with any details so if anyone else has this experience they can look back at it

[romeogolf]

romeogolf said:

My Current Broker said:

I have completed your agreement in principle with Accord, and it has been referred to an underwriter.

This is where the computer says “possibly” but needs to get a human to check the case….

They aim to respond normally within 4 hours.

I shall of course let you know asap.

Sarnie has given excellent advice, I'm giving my current broker another shot before deciding she's not worthwhile but will keep the thread updated with any details so if anyone else has this experience they can look back at it

The decision came back last night that they would lend to us upon receiving proof of the income I get from my rental properties. Have sent my tax return from last year plus 12 months of bank statements last night so hopefully will hear back positively today. They said they'd lend up to £35k more than we need as well, so fingers crossed.

[romeogolf]

Sarnie said:

PS: Congrats!

Thanks!

Sarnie said:

I do try to tell people that AIP's literally mean nothing...........I could get an AIP for anyone with a decent credit score for £1m lending this morning..........but when the full application starts, it's going to unravel if your documents and details don't match up to full lending criteria, which can only be assessed when the full application is submitted and you've sent all your documents to them......

I assume if I provide documents which support what I've already told them, then it's fairly sure I'd be approved? What sort of things could/would they look for in the application which I wouldn't have declared beforehand?

[romeogolf]

Sarnie said:

Nothing is sure until the formal mortgage offer is issued.......

I get that, but what would they look for?

[romeogolf]

Update

Our broker has come back to us today to tell us "I am more than pleased to tell you that your mortgage has now been agreed and will go to offer within the next 24 hours. You will get a paper copy in the post, but as soon as I receive my electronic copy I shall forward you a copy for your information. This means that you can celebrate and your mortgage is now guaranteed! So congratulations!"

Excited faces all round here.

[romeogolf]

Dave350 said:

I'm about to go through this, i'm assuming it's as follows.

See a broker, they look for the best deals and advise which to apply for
Apply for mortgage through broker
Get mortgage in principal
Start making moves on houses I like?

Do brokers often charge upfront or take a %?

The process we followed was.

(1) Contacted broker for a "hi we'd like to buy a house, could you tell us roughly what we could afford?" type chat.
(2) House-hunted based on this. Found somewhere. Put in an offer and got it accepted.
(3) Applied through broker for mortgage. First one rejected, so tried a second one and got approval.

Our broker didn't charge a fee as she receives commission from the lender. There are some who will charge for a consulation, others who charge when you're approved, and others who don't charge at all. Sometimes the ones who charge you will give you the comission (or some of it) from the lender.

Phateuk said:

Congrats!

I'm currently at the stage where the broker has submitted the application to the lender, did it really take nearly 2 weeks for them to come back with a "yes"?

I've been (possibly naively) sat refreshing my email most of the afternoon hoping that it would be 24 hours or less?

Thanks! And yeah, I think 2 weeks is normal.