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Applying for a mortgage but spending more than we earn(17 Posts)
We have a mortgage offer in principal but....we have spent between £700 - 1000 more than we had coming in each month - over the last few months. We have to show our last 3 months worth of bank statements. We could afford it - from savings and some of it was essentials new glasses each, hefty mot costs etc but some of wasn't - meals out, birthday treats etc.
Is this going to scupper our chances? We still have a few thousand in savings - rainy day fund but it has taken a hit last few months. We weren't going to move so it wasn't an issue and now we are and I am worried it is.
No other debt and can afford repayments otherwise.
Any positive and helpful stories...please.
The thing being, those 'essential' but 'unexpected' items come round again and again during the life of your mortgage - you will replace your glasses again, your car (or future cars) will need more work, then other "one off" expenses happen such as your fridge breaking down or you get a puncture or you need some dental work, etc.,etc.
I suspect the mortgage companies would like to see that your regular expenditure is covered by your income plus a regular saving payment for covering all the "one offs" that happen in everyones lives.
Damn - I thought that would be the answer. If it makes a difference its to buy a btl property and the rent more than covers the mortgage plus we have taken into account void periods, repairs etc ( we have been landlords before).
Also taken into account an interest rate and we still have a small buffer of savings.
i guess no-one can answer this except your mortgage company but you asked for stories so here is mine.....We just (on Friday) got confirmation of mortgage offer following us sending 3 months of statements the week before. We had spent A LOT in the 3 months as had had an inheritance come through and bought stuff we'd been waiting to (washing machine etc) as well as had meals out etc so were quite nervous. I am guessing the fact that we had quite a lot in savings might have made a difference? plus we have no high regular payments (loans etc); and the proposed monthly payment for the mortgage is less than our current one.
When we did ours recently what they were looking for (or so we were told) was regular spending that's not declared in application (eg car payments, direct debits, subscriptions Etc) we were also concerned we spent too much but our reasoning was we had disposable income (even after saving a chunk) so we spent it but now planned to put it towards a higher mortgage of that makes sense. Worse case scenario you cut back dramatically for 3 months and reapply again although appreciate that may not work depending on where you are in the chain
Having to reapply would destroy our chain, we are only do it this way so we don't lose our perfect forever family home. Due to no debts our regular outgoing are quite low - we had a lot of fun in those months and bought all the bits we had been wanting for ages. We lived very happily on our salary for a long time and I know we can make the repayments but I need the mortgage company to agree!
I now cant sleep as I am the grip of what ifs! I am seeing our mortgage broker tomorrow morning so I should get a better idea then. I am keeping everything crossed - hubby rightly but unhelpfully keeps saying don't worry about things I cant control and is snoring away! Git.
In that case ..... <did I mention I'm just a stranger on the internet and certainly not a mortgage broker nor Building Society or Bank Worker? > .... if I were you, I'd take the bank statements from the previous year, tell them what you've just put in your last post, and show them the evidence. If the person is allowed to make their own judgement rather than having to tick the right number of boxes, then it's a sound argument.
My daughter remortgaged earlier this year and was worried about the same issue - meals out, lots of day to day expenses but there was no problem at all in her case (secure job, high pay, lawyer) and I don't know if that was because she has no credit card or other debt although she was up to the limit on her overdraft, but all explainable as she'd just had to move back into her flat she'd let out for 2 years so lots of ending tenancy, moving in costs etc. We were both surprised that having seen the bank statements the lender was still okay with it but she has a good deposit, it was just a remortgage, it was the same lender as she took out the buy to let loan with 2 years ago and she never missed a mortgage payment in that period. May be it helped she used a mortgage broker.
Anyway sorry for the ramble. The bottom line is just go for it and it may well be okay.
In her case the new repayment mortgage was the same cost as her previous interest only but much higher rate of interest one so that probably helped.
Thanks all I am keeping everything crossed for today - although I probably wont get a def answer today. If I had known I would need to do this to buy our dream home I would have handled my account. Sigh.
Will update with hopefully good news, thanks for all your stories they have helped.
I don't understand - how is it a BTL property and also your dream home?
(I think I was the only one who mentioned a BTL - and my daughter bought that because she could afford it and live at home and then when her pay went up this year at last could afford to move into it so remortgaged to move from a BTL to a normal loan)
OP also said her mortgage was a BTL If it makes a difference its to buy a btl property and the rent more than covers the mortgage plus we have taken into account void periods, repairs etc ( we have been landlords before).
Mortgage broker said it shouldn't be a problem as residential mortgage is comparatively small. To clarify we are raising funds against our current property - which we then rent out, hence btl mortgage. Dream house is onwards purchase and we will also have a small residential mortgage on that and are using our savings as our deposit. Should get def answer in 7-10 days but its more positive than I feared.
I missed that. Well I think that makes it even easier as the rent from the tenants is added to your salary which is why my daughter originally could get a buy to let loan (in her first job) which she obtained but not a residential mortgage as with the latter she just had her salary whereas with the former she had rent to add to the salary.
ah that makes sense. I thought BTL mortgages were more to do with the income from the property vs the mortgage, rather than your own income, so hopefully should be ok if you're keeping some equity in it
We remortgaged about 3 years ago.
I am constantly in my overdraft but they were looking to see any unauthorised overdrafts and I think any undeclared spending. We got our remortgage despite not having a penny in savings and constantly being in our overdraft. This was with our existing mortgage provider though who know we've never missed a payment.
We got our very first mortgage through a broker - if you do think the decision may be borderline, go through a broker who will know which company will be a good fit for your circumstances.
Down, my daughter also got her remortgage despite not a penny in savings and being constantly in overdraft too which amazed me. Back in my day you needed 10 years of solid saving with one building society whose manager lijked you and you were ideally male before you could even be considered for a loan and interest rates were 12% and it was all repayment mortgages.
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