Mortgage affordability

[Chr1sch]

Hi all,

Currently going through mortgage applications and much to my astonishment, i'm having affordability issues with a lender when buying a smaller house than the one we currently own...

They are claiming they have to stress test affordability based on rates going up to 8%!!??

I am looking at a two year term so this is frankly rather unlikely and would bankrupt an enormous population of the UK. Should I assume this is effectively this lender trying to discourage me using them and I should shop around? (We are attempting to port rather than get a new one due to the cost of buying out of our current contract)

Any advice would be gratefully received.

Cheers

[roadsmash]

Try using an independent broker. (Rightly or wrongly) they tend to be more flexible with affordability as they have at their disposal a pool of different lenders.

[alistair1234]

Chr1sch said:

Hi all,

Currently going through mortgage applications and much to my astonishment, i'm having affordability issues with a lender when buying a smaller house than the one we currently own...

They are claiming they have to stress test affordability based on rates going up to 8%!!??

I am looking at a two year term so this is frankly rather unlikely and would bankrupt an enormous population of the UK. Should I assume this is effectively this lender trying to discourage me using them and I should shop around? (We are attempting to port rather than get a new one due to the cost of buying out of our current contract)

Any advice would be gratefully received.

Cheers

If you are porting and not borrowing any more funds I didn't think you had to pass the affordability? I re-mortgaged with the same bank recently and as we didnt borrow more or shorten the term, they just approved it straight away.

We wanted to shorten the term, but to save a load of hassle we have just upped our monthly payment so that we overpay, which also gives us the flexibility of paying the 'normal' amount when we wish.

[Chr1sch]

alistair1234 said:

Chr1sch said:

Hi all,

Currently going through mortgage applications and much to my astonishment, i'm having affordability issues with a lender when buying a smaller house than the one we currently own...

They are claiming they have to stress test affordability based on rates going up to 8%!!??

I am looking at a two year term so this is frankly rather unlikely and would bankrupt an enormous population of the UK. Should I assume this is effectively this lender trying to discourage me using them and I should shop around? (We are attempting to port rather than get a new one due to the cost of buying out of our current contract)

Any advice would be gratefully received.

Cheers

If you are porting and not borrowing any more funds I didn't think you had to pass the affordability? I re-mortgaged with the same bank recently and as we didnt borrow more or shorten the term, they just approved it straight away.

We wanted to shorten the term, but to save a load of hassle we have just upped our monthly payment so that we overpay, which also gives us the flexibility of paying the 'normal' amount when we wish.

I thought the same, and had the same when remortgaging in December. However as we are physically moving house this is apparently different and is effectively no different to taking out a new mortgage other than we have locked in a rate from last year.

[Sarnie]

Chr1sch said:

Hi all,

Currently going through mortgage applications and much to my astonishment, i'm having affordability issues with a lender when buying a smaller house than the one we currently own...

They are claiming they have to stress test affordability based on rates going up to 8%!!??

I am looking at a two year term so this is frankly rather unlikely and would bankrupt an enormous population of the UK. Should I assume this is effectively this lender trying to discourage me using them and I should shop around? (We are attempting to port rather than get a new one due to the cost of buying out of our current contract)

Any advice would be gratefully received.

Cheers

If you are failing the affordability calculation with your current lender then you have no other option than redeeming your mortgage and taking out a new mortgage with a new lender............unless you can bridge the shortfall in lending from your own funds......

[Sarnie]

alistair1234 said:

If you are porting and not borrowing any more funds I didn't think you had to pass the affordability? I re-mortgaged with the same bank recently and as we didnt borrow more or shorten the term, they just approved it straight away.

No, you are talking about a Product Transfer/Rate switch.

To port a mortgage you essentially have to reapply in full for the mortgage you already have and naturally you have to meet all of their lending criteria and affordability calculations........

[JulianPH]

Sarnie said:

alistair1234 said:

If you are porting and not borrowing any more funds I didn't think you had to pass the affordability? I re-mortgaged with the same bank recently and as we didnt borrow more or shorten the term, they just approved it straight away.

No, you are talking about a Product Transfer/Rate switch.

To port a mortgage you essentially have to reapply in full for the mortgage you already have and naturally you have to meet all of their lending criteria and affordability calculations........

^^^ As always, Sarnie is right here.

[Chr1sch]

JulianPH said:

Sarnie said:

alistair1234 said:

If you are porting and not borrowing any more funds I didn't think you had to pass the affordability? I re-mortgaged with the same bank recently and as we didnt borrow more or shorten the term, they just approved it straight away.

No, you are talking about a Product Transfer/Rate switch.

To port a mortgage you essentially have to reapply in full for the mortgage you already have and naturally you have to meet all of their lending criteria and affordability calculations........

^^^ As always, Sarnie is right here.

Agreed, the lender in question is suggesting a stress test of an equivalent monthly payment of 8% is industry standard, has anyone experienced such a thing? It strikes me as incredibly high and unrealistic?

[NickCQ]

Chr1sch said:

Agreed, the lender in question is suggesting a stress test of an equivalent monthly payment of 8% is industry standard, has anyone experienced such a thing? It strikes me as incredibly high and unrealistic?

Maybe it's SVR at 4% plus another 4% or so?

[Sarnie]

Chr1sch said:

Agreed, the lender in question is suggesting a stress test of an equivalent monthly payment of 8% is industry standard, has anyone experienced such a thing? It strikes me as incredibly high and unrealistic?

It's not standard but they won't change their stance if thats what they've stated......

They would have applied the same stress test when you took the mortgage out initially...........are you trying to lend more money also? Have your circumstances changed Eg more kids, lower income, more credit commitments?

Who is the lender?

[Chr1sch]

Sarnie said:

Chr1sch said:

Agreed, the lender in question is suggesting a stress test of an equivalent monthly payment of 8% is industry standard, has anyone experienced such a thing? It strikes me as incredibly high and unrealistic?

It's not standard but they won't change their stance if thats what they've stated......

They would have applied the same stress test when you took the mortgage out initially...........are you trying to lend more money also? Have your circumstances changed Eg more kids, lower income, more credit commitments?

Who is the lender?

Its CYBG who were the lender that was willing to be more accomodating when we really pushed ourselves to buy the place we have now. We do have more outgoings now, however we are looking at a mortgage which is more than £100k less than we currently have, I won't lie, im baffled by the whole process.

[Sarnie]

Chr1sch said:

Its CYBG who were the lender that was willing to be more accomodating when we really pushed ourselves to buy the place we have now. We do have more outgoings now, however we are looking at a mortgage which is more than £100k less than we currently have, I won't lie, im baffled by the whole process.

Plug your details into here and see what comes out;

https://www.clydesdalebankintermediaries.co.uk/too...

[Muncher]

Sarnie said:

Plug your details into here and see what comes out;

https://www.clydesdalebankintermediaries.co.uk/too...

I filled it out for pure interest, their max lend is about 8% short of what our current mortgage is.

[Chr1sch]

Muncher said:

Sarnie said:

Plug your details into here and see what comes out;

https://www.clydesdalebankintermediaries.co.uk/too...

I filled it out for pure interest, their max lend is about 8% short of what our current mortgage is.

Thank you I really appreciate you trying that out

[Sarnie]

Chr1sch said:

Thank you I really appreciate you trying that out

Did you do it too?

[StanleyT]

A family member works for a Bank that is in the CYB group. She was telling me the calculator is flawed. We put our details in honestly and it would loan us 2.4 times the value of the property!!!!!!!!

Mind you she is always telling us how she is due to be made redundant as the bank lent too much money in the heady days of buy to let and risky mortgages now. She is a risk analyst there. Their risk models show that the ideal mortgage is repaid after one month and that your gross income per month exceeds your houses value by 125%! Obviously they move a "bit" from ideal but they're quite a tight lender she reckons trying to dump off as much long term mortgage risk as possible.

Try another lender is always her advice to prospective customers in the family / friends group.

[shikari83]

Chr1sch said:

JulianPH said:

Sarnie said:

alistair1234 said:

If you are porting and not borrowing any more funds I didn't think you had to pass the affordability? I re-mortgaged with the same bank recently and as we didnt borrow more or shorten the term, they just approved it straight away.

No, you are talking about a Product Transfer/Rate switch.

To port a mortgage you essentially have to reapply in full for the mortgage you already have and naturally you have to meet all of their lending criteria and affordability calculations........

^^^ As always, Sarnie is right here.

Agreed, the lender in question is suggesting a stress test of an equivalent monthly payment of 8% is industry standard, has anyone experienced such a thing? It strikes me as incredibly high and unrealistic?

I work in mortgage credit risk for a large bank. Regulations state we have to stress to at least SVR +3%. So if their SVR is high 4's (ours is currently 4.19%) then it's about right.

[shikari83]

StanleyT said:

A family member works for a Bank that is in the CYB group. She was telling me the calculator is flawed. We put our details in honestly and it would loan us 2.4 times the value of the property!!!!!!!!

Mind you she is always telling us how she is due to be made redundant as the bank lent too much money in the heady days of buy to let and risky mortgages now. She is a risk analyst there. Their risk models show that the ideal mortgage is repaid after one month and that your gross income per month exceeds your houses value by 125%! Obviously they move a "bit" from ideal but they're quite a tight lender she reckons trying to dump off as much long term mortgage risk as possible.

Try another lender is always her advice to prospective customers in the family / friends group.

CYB seem to be nicking half of our credit risk department lately. They seem to be recruiting a lot in that area so seems odd she thinks she's going to be made redundant.

I was a risk analyst there in 2008-2011 (when it was owned by National Australia Bank). It was all pretty low risk / high margin existing customer lending on Resit mortgages back then.

[StanleyT]

shikari83 said:

They seem to be recruiting a lot in that area so seems odd she thinks she's going to be made redundant.

Closure of her department in the physical office she is in and it being relocated half way across the country being the reason, not lack of work.

[LoFiHamster2]

Muncher said:

I filled it out for pure interest, their max lend is about 8% short of what our current mortgage is.

I also did, and taking into account my bonus/commission, they were prepared to offer about 16% less (about 3.2x OTE, 4x Base, <75% LTV, no dependents) than I've been offered by another provider, who didn't even take the bonus into account. Seems they're pretty strict on their lending criteria.