I run a mortgage underwriting team - AMA

[TapStepBallChange]

Clearly in the running for most boring AMA, but thought it might be helpful to someone. I run a mortgage team (for a relatively small mortgage lender), I oversee individual mortgage decisions, and look at policy changes - what we should and shouldn't lend on at a high level. I can't comment on the specifics of other lenders policies, or tell you you definitely will or won't get a mortgage, but I might be able to help.

[SilverHairedCat]

Apart from the well known things people can do to make themselves a more attractive option to lend to (good credit history, electoral roll etc) are there any anomalies or random things we might not know about that make applicants more attractive? Anything we can do?

[TapStepBallChange]

Be realistic in what you want is probably the best thing. For regulatory reasons it's difficult to lend over 4.5x income, although there is leeway in how income is defined. So earning £15k and wanting to borrow £200k isn't going to happen.

Keep on top of bills, we see a lot of issues where people have had problems with utility firms or mobile phone providers. We can sort that out, but it's more likely to end up with a no from the more automated providers. If you check your credit record before you apply you can see if there is anything you didn't know about it there, such as phone companies registering defaults.

Also taking out payday loans in the 12 months before a mortgage isn't a great idea, even if you pay them back on time. They suggest you have credit/ cashflow problems and can't access cheaper credit.

The thing to remember is that lenders do want to lend, it's what makes us money, so we're not trying to catch people out.

[MaryPoppinsUmberellaHandle]

What advice can you give for someone who is Self-Employed, where income may not be the same each year?

How would lenders decide on what amount to lend?

[YaLoVeras]

My friend lied in the stress test. They said they had two DC but they have four. What would happen if the bank found out?

[Catmatrat]

Is there any way to remortgage without much equity?

[TapStepBallChange]

To Mary Poppins - this is one area where lenders really vary and a broker will be your friend as they will know the different policies. Most lenders go by the income on SA302s. For the lowest rates it will generally be average of last 3 years earnings. There are some lenders that will taken year accounts, which might worthwhile if that's the highest. If the income has been declining over 3 years, then the lender is likely to ask a lot more questions about the sustainability of the business. But find a good experienced, broker in this area.

[TapStepBallChange]

To YaLo

If we find fraud, which would include what you said, and also things like income mis-statement, hidden buy-to-let or hidden residential, we have a range of options. The first step is always to report it to the central fraud databases that lenders use. This means that the information we have will be made available to other lenders, it's up to them what they do with it, but may make it more difficult to get a mortgage or other banking products. In some circumstances, we may also report to the police.

We can also increase the interest rate in some circumstances, and we would refuse to offer any other product at the end of their product, e.g. at the end of their fixed rate.

It's fair to say we wouldn't tend to seek out this kind of information, particularly if they are paying the loan as agreed, but you'd be amazed at the number of people who will write to someone else's mortgage provider to shop exes or relatives they have fallen out with. We would never just act on a letter alone.

[TapStepBallChange]

To Cat

How little equity? If you have at least 5% you'll find a lender, but that's really the minimum. Rates will be higher and you may not get free legals and valuations, which are common on most remortgages. Having said that, the 95% is generally only true for houses, it will be harder if you are in a flat.

[TapStepBallChange]

Meant to add - regarding lying about the number of kids - it may not help anyway. Some lenders use actual expenditure which they can see through bank statements etc, so they'll just think you spend a lot on 2 kids, rather than less on 4. Others use ONS data, and depending on the tables used, may well not reflect the number of kids, especially over 2. So your friend may have damaged her credibility with mortgage lenders, while it made little difference on affordability.

[YaLoVeras]

Thank you for your reply.

[Parsley1234]

Are there any mortgages available for developers now ? And at what loan to value please ? I’m self employed with buy to let’s as income

[MaryPoppinsUmberellaHandle]

@TapStepBallChange, thanks for your detailed reply.

Can I also ask; if we're only looking to remortgage, rather than move house, then how does it work with the lender and/or equity, that's potentially in the property?

[TapStepBallChange]

Parsley - when you say mortgage for developers what are you looking for? There are a few options, there are self-build mortgages if you are looking to build the property, although often aimed at those looking to live in the property. If you just want to do it up and move on, you can either get a normal BTL mortgage, if you are planning to keep it for a couple of years, otherwise it's probably bridging finance, which is more expensive, but you might not need to pay anything while the work is underway and you can sometimes borrow on the final property value (although lTV is not high).

[TapStepBallChange]

@Marypoppinsumbrellahandle (not sure if I've worked out how to do tagging.

Worked example below, hope this helps.

If you originally bought the house for £100k and borrowed £90k, you had a 90% mortgage,

After 2 years you may have paid off £5k, so mortgage is now £85k, and value of property has now gone up to £110k, then you're LTV is now 77%. You don't really get touch the extra £10k, it just helps with the LTV. You can release further equity by borrowing more, e.g. borrow another £15k, to give you a £100k mortgage which gives you a 91% LTV. This can be handy if you are planning something big like an extension, but you don't want to do it too often as you'll never pay off the mortgage.

Lenders get valuations on remortgages in a few ways, if you are staying with the same lender they may just apply an indexed value to the original valuation. If you are changing lenders, they may use an automated valuation model, which looks at the value of comparable homes, or they may do a full valuation.

Hope that makes sense

[JackReacherReader]

I'm agency, so technically a zero hours contract but I earn £2k a month and have done for years. Any advice on whether I could get a mortgage on that? Will they just see 0 hours that's a straight up no or will I have to provide pay slips for a year or so?

[TapStepBallChange]

Jack Reacher

Another one for a broker, if you have several years of payslips, you should be able to find a borrower, the issue is how much you may want to borrow as some lenders may not include the full £2k. It's probably more likely going to be with a smaller bank or building society, rather than one of the massive lenders.

[JackReacherReader]

Thank you :) my husband is on 37 so hopefully worst case scenario we'd be able to use his salary not mine is that possible?

[TapStepBallChange]

Different lenders do it in different ways. You could just do it on his, but they may then count you as a dependent, which would reduce affordability. Meet with a good broker, for the first option I'd look to include your salary for simplicity. If you've got several years of payslips, income shouldn't be the issue

[Cheeseislife]

Whst % of debt to imcome raises a red flag to your lender?

[ListenLinda]

Is it totally impossible to get a mortgage if you have bad credit?

[Whisky2014]

Hi. Me and my fiances fixed term mortgage is about to end in Nov and we hope to remortgage with the same bank our current mortgage is with (halifax).

I do matched betting and i have a fair amount of debits to betting websites on my current account. Do you think this will have a negative impact on us remortgaging?
Things to note: my wages are paid into my current account on which the gambling transactions are on but all bills are on a joint account. All bills paid on time, never missed mortgage payment, i have never been in my overdraft and my credit carc was cleared earlier this year. I have a gealthy bank balance and just use any "play money" to do the betting. All credits from the betting websites are higher than tje debits (therefor nevsr loosing always maling money but i know this cant be seen as an income).

I have an appointment set up with halifax in sep to talk about the remortgaging but panicked a bit when i read banks would frown upon the transactions. Wasnt sure whether to give them a heads up so they could tell me id be wasting my time right now and then id just not do any betting for 3 months to get all transations off my account or should i stay quiet and hope they just look at our account and our payslips to show our affordability?

[TapStepBallChange]

@Cheeseislife - there's not a fixed percentage, but what we find is that after a certain point, the credit payments lower the affordability so much that the mortgage is unaffordable. We have to take into account any credit commitments, loan payments, credit card payments etc when judging affordability. Payday loans are a real red flag.

@ListenLinda - depends how you define bad credit. Recent bankruptcy definite now, there are some lenders out there for poor credit profile, but if you're in a debt management plan or similar it will be very tricky and won't be a mainstream lender. Up to 3 missed payments in the last few years you may be OK, more missed payments/ arrears, it will be tricky and expensive. Missed mortgage payments are also a big no-no.

@Whisky2014 - I can't comment on Halifax's lending rules. If you want to stay with the same lender (and keep the mortgage exactly the same), then remortgaging is often an automated process. Lenders can do a product switch with very few checks, so unlikely to look at bank statements. This isn't true if you want to change the amount borrowed, term etc. So it might be worth checking with Halifax if they offer that and just wait for that. The only risk is you only get the rates from one lender, up to you how important that difference is. Other lenders may go through your bank statements. They will want to see where income comes in as well as what goes out. There is a range of views on gambling from big no-no to fine so long as your not in debt.

[hermionelodge]

Hi, dp an I are currently in the middle of doing a part exchange on new build, we have accepted their offer on our place so now need to get a mortgage approved. Unfortunately we only have 5% deposit and we have been told only 2 lenders will offer 95% on a new build. We were advised that if we get too much incentives from the property developer then this may go against us and we may be refused the mortgage. It wasn't really explained why this would be an issue, is this something you are aware of?

[Berimbolo]

Hi. There's been a house come up unexpectedly in our area that DH and I would love to purchase.
My problem is I have only been in my new job 2 months. I have a contract letter, 1 pay slip and my P60 from previous employer - but would that be enough as proof of income or is it always 3 pay slips that are needed please?

[ASAS]

THIS is the sort of thing we should've been taught at school.

Great thread OP.