Remortgage application refused
Discussion
Evening all,
Hoping someone could offer some advice on this.
Our mortgage is up for renewal next month so we've taken the opportunity to apply to borrow some additional money for an extension to our house. Due to the interest rates being so low, the additional borrowing was only going to cost us an extra £40 per month so we thought it would be a pretty straightforward application.
We've just been told that it's been declined as my wife, who is self employed, was on maternity leave last year meaning her net profit dropped significantly. She's been back at work for 7 months now and she's had her accountants do a projection that shows her net profit will be back in line with what it was before she went on maternity leave but this has been rejected by our mortgage provider as they "don't accept projections". We can also show bank statements that back this up but again, they're not interested.
Now I understand that there have been a lot of regulations brought in and it's not as easy as it used to be to borrow money but this seems ridiculous! She only works part time and has done for the last 4 years (she has had consistent net profit in this time). Before that she was full time for a few years with good, consistent accounts so her income is reliable (mobile hairdresser so lots of eggs in lots of baskets).
I am employed on a salary of £34k so the monthly payments of £650 are easily affordable on my wage alone, even if the interest rates climbed. Wife brings in around £10k but this dropped to £2.5k last year (which annoyingly doesn't take in to account the £5k maternity allowance that she received over 9 months). Our house has been valued at £220k by a surveyor that our mortgage provider arranged, current mortgage of £130k but looking to borrow an additional £45k.
Does anybody have any experience with dealing with mortgage providers that may be more understanding of our situation, rather than giving the "computer says no" mentality that we've been given so far? Current mortgage provider is Virgin Money.
Any help or advice would be greatly appreciated!
Hoping someone could offer some advice on this.
Our mortgage is up for renewal next month so we've taken the opportunity to apply to borrow some additional money for an extension to our house. Due to the interest rates being so low, the additional borrowing was only going to cost us an extra £40 per month so we thought it would be a pretty straightforward application.
We've just been told that it's been declined as my wife, who is self employed, was on maternity leave last year meaning her net profit dropped significantly. She's been back at work for 7 months now and she's had her accountants do a projection that shows her net profit will be back in line with what it was before she went on maternity leave but this has been rejected by our mortgage provider as they "don't accept projections". We can also show bank statements that back this up but again, they're not interested.
Now I understand that there have been a lot of regulations brought in and it's not as easy as it used to be to borrow money but this seems ridiculous! She only works part time and has done for the last 4 years (she has had consistent net profit in this time). Before that she was full time for a few years with good, consistent accounts so her income is reliable (mobile hairdresser so lots of eggs in lots of baskets).
I am employed on a salary of £34k so the monthly payments of £650 are easily affordable on my wage alone, even if the interest rates climbed. Wife brings in around £10k but this dropped to £2.5k last year (which annoyingly doesn't take in to account the £5k maternity allowance that she received over 9 months). Our house has been valued at £220k by a surveyor that our mortgage provider arranged, current mortgage of £130k but looking to borrow an additional £45k.
Does anybody have any experience with dealing with mortgage providers that may be more understanding of our situation, rather than giving the "computer says no" mentality that we've been given so far? Current mortgage provider is Virgin Money.
Any help or advice would be greatly appreciated!
Granfondo said:
The government through SSP.
Ah, SMP!No lender is going to take that as income.
OP, as you've experienced, your figures do not fit with the amount you want to lend, you could probably have covered your current balance on your income alone but not the extra £45k too.
You need a lender who would accept this outside of criteria on the strength of previous years accounts and a current year projection or reference from your Accountant.
Feel free to drop me a line you want to chat about this!
Are you sure an increase of £45000 is only going to cost you £40 a month?
For example £45000 over 25 years without interest is £150 a month. So are you restarting you mortgage? Increase the length? in which case all theses factors will change your banks current "risk" of lending you the money as apposed to simply "adding" 45k to the current term.
For example £45000 over 25 years without interest is £150 a month. So are you restarting you mortgage? Increase the length? in which case all theses factors will change your banks current "risk" of lending you the money as apposed to simply "adding" 45k to the current term.
Mandat said:
If you can't find a provider to give you a mortgage based on the current partial accounts, then presumably you can wait a few months until the full annual accounts can be prepared by your wife?
Yes, that is an option however it would be late April at the earliest until the accounts can be done. I'd rather try and get a deal now whilst rates are low (plus I'm an impatient git!).Sarnie said:
Ah, SMP!
No lender is going to take that as income.
OP, as you've experienced, your figures do not fit with the amount you want to lend, you could probably have covered your current balance on your income alone but not the extra £45k too.
You need a lender who would accept this outside of criteria on the strength of previous years accounts and a current year projection or reference from your Accountant.
Feel free to drop me a line you want to chat about this!
Thanks for the reply. Perhaps I was being too optimistic that my salary alone could cover the additional borrowing! No lender is going to take that as income.
OP, as you've experienced, your figures do not fit with the amount you want to lend, you could probably have covered your current balance on your income alone but not the extra £45k too.
You need a lender who would accept this outside of criteria on the strength of previous years accounts and a current year projection or reference from your Accountant.
Feel free to drop me a line you want to chat about this!
I'll drop you a message later today as if there are lenders out there who may consider our circumstance then that would be great.
KrazyIvan said:
Are you sure an increase of £45000 is only going to cost you £40 a month?
For example £45000 over 25 years without interest is £150 a month. So are you restarting you mortgage? Increase the length? in which case all theses factors will change your banks current "risk" of lending you the money as apposed to simply "adding" 45k to the current term.
Sorry, should have made that clearer.For example £45000 over 25 years without interest is £150 a month. So are you restarting you mortgage? Increase the length? in which case all theses factors will change your banks current "risk" of lending you the money as apposed to simply "adding" 45k to the current term.
Currently paying £610 per month but that is due to drop to £480. If we borrowed the extra £45K it would be £650 per month. So yes, you're right, it's actually going to cost us £170 per month but in terms of affordability it's only £40 per month more than what we've been paying for the last 5 years.
Annoyingly, they're now looking at putting us on to the SVR until we've decided what to do which will be £660 per month with no extra borrowing (but they're telling us we can't afford £650 per month).
Hi Simon,
I had a similar issue to you a couple of years ago with Godvia/Coventry (in that we wanted to borrow an additional £20k and remortgage (net results the payments being the same each month), I ended up writing to their complaints dept outlining the situation and providing the bank statements etc, credit reports etc. (in my case was my wife had agreed with the bank to reduce the overdraft on our joint account with the bank by £50 p/mth rather than just using the savings that were there to clear it)
The underwriting were rude and unhelpful but the Customer Service team could see sense.
I'd suggest writing to them, explain the situation, at the very least get the core mortgage product on to the deal you want and reduce the payments, you could also borrow more at a later date if required.
I had a similar issue to you a couple of years ago with Godvia/Coventry (in that we wanted to borrow an additional £20k and remortgage (net results the payments being the same each month), I ended up writing to their complaints dept outlining the situation and providing the bank statements etc, credit reports etc. (in my case was my wife had agreed with the bank to reduce the overdraft on our joint account with the bank by £50 p/mth rather than just using the savings that were there to clear it)
The underwriting were rude and unhelpful but the Customer Service team could see sense.
I'd suggest writing to them, explain the situation, at the very least get the core mortgage product on to the deal you want and reduce the payments, you could also borrow more at a later date if required.
Had a similar outcome with HSBC around a year ago when asking for some additional borrowing (was only about £20k IIRC) to put a loft conversion on our house. The decision was mainly due to my wife having given up work to be a full time Mum thus screwing our affordability levels for the near term. Thanks to bank of Mum and Dad we went ahead anyway and even if that hadn't of happened I'd could have funded it through a personal loan + credit cards etc.
The level of scrutiny required from HSBC was bordering on the ridiculous, almost needed to tell them as to whether I'd bought a sandwich from the supermarket that week or not.
The level of scrutiny required from HSBC was bordering on the ridiculous, almost needed to tell them as to whether I'd bought a sandwich from the supermarket that week or not.
We had a similar issue to others, which was seemingly all down to the new mortgage rules.
We wanted to move house and were 2 years into a 3 year deal with first direct. We'd managed to pay a significant amount off during those 2 years (tens of thousands) and First Direct told us to whistle.....I won't bore you with the details but the level of questioning was ridiculous.
In short we ended up moving to Nat West, as they were much more friendly and happy to lend us more than twice what First Direct had offered and had much more lenient criteria.
We wanted to move house and were 2 years into a 3 year deal with first direct. We'd managed to pay a significant amount off during those 2 years (tens of thousands) and First Direct told us to whistle.....I won't bore you with the details but the level of questioning was ridiculous.
In short we ended up moving to Nat West, as they were much more friendly and happy to lend us more than twice what First Direct had offered and had much more lenient criteria.
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