Mortgage offer lower than expected.

[Georgina89]

Hi, hope someone here can help us. We spoke to a mortgage advisor who said that we would have no problems borrowing £250k. (We only need 238k). So we find a house, our offer is accepted, sent all the official paperwork to the mortgage advisor, he has just come back to us saying that they will only lend us £204k.

So, we are a few £'s short. I have phoned round a few other financial advisors, but realistically is anyone going to lend us more money? Not sure what to do, and will be gutted to lose this house. TIA.

[LIZS]

Depends on what basis are they giving you a lower offer. Has the valuation come through lower than your offer or is it the loan to value and affordability level. Can you realistically afford the repayments even when rates rise ?

[RCheshire]

Go round all the major brokers. If it's still no then you have to accept reality - unless you have the sort of friends or family that are going to donate 30k...

[BikeRunSki]

If you need £238k and you've bern offered £240, then what's the problem?

If there is still a problem - even after speaking to another IFA, then sorry to be harsh, but you'll have to save or borrow the shortfall elsewhere or look for a cheaper house, just like many other people.

[LIZS]

204k not 240k

[nooyearnooname]

We had this on a previous house purchase because they valued the house lower than the purchase price so weren't prepared to lend the amount we needed.

We negotiated 50% of the difference off the purchase price and beg stole and borrowed the other 50%!

[Georgina89]

Thanks for all your replies. We sat down with the advisor and went through all our details and mortgage options, we can afford the repayments and he was 100% positive that we would get the mortgage that we would need.

He just phoned back yesterday and said after looking through all the paper work they are only prepared to lend you £204. I was just asking if this had happened to anyone else and if realistically another company would lend us more?

[MrsFlorrick]

Get your financial advisor to double check everything he entered into the banks system.

Very important. Small mistakes are vastly amplified when it comes to mortgages.

Our IFA recently made an error on entering our information into banks system (we are buying at the mo). He essentially double counted expenditure which made it look like we could only borrow half what we wanted. He realised his error long before submitting it.

Once corrected we could borrow twice what we needed.

It could be as simple as double counting a one or two monthly items or perhaps not taking into account part of your income. Perhaps he has entered guaranteed bonuses or regular over time correctly.

It sounds like a simple error somewhere. Get your broker to do the leg work. It could all be sorted within 48 hours.

[Georgina89]

We haven't had any surveys done on the property yet.

[LIZS]

Is this a tied or independent adviser ? You may have to pay a higher interest rate to get the loan to value higher. Can you ask him to review all the different packages available . Remember most lenders are still risk averse and if he is an ifa he is on commission and will recommend certain products first.

[Georgina89]

Thanks MrsFlorrick - hadn't thought of that. We have 3 other advisors calling us today. I will speak to our original advisor to double check that he entered all the info correctly, and that we have sent all the correct info too. Hopefully, someone will lend us the money!

[Fairylea]

If there are no other options you could either -

1. Go back to the seller of the house you have put an offer on and explain what's happened and offer a reduced amount. It's a risk but they may be keen to sell and may just accept it anyway rather than go through the whole process again.
   

1. Consider taking out a small personal loan to bridge the gap. If you have your mortgage offer in place it shouldn't affect it now (it may have done if you'd already had it before you went through credit checking etc).
   

Or a combination of the two.

That's what I know someone else in a similar situation has done anyway.

[Georgina89]

LIZS, as far as I'm aware he is an IFA. Our loan to value is 70%.

[wigglylines]

Try speaking to London and Country mortgage advisors. They are both free and not tied in to specific mortgage arrangements, and often recommended in the press.

I've used them for two mortgages and highly recommend them. www.lcplc.co.uk/

[Georgina89]

Fairylea, our sellers are quite stubborn. I don't think they will accept a lower offer as they know they have another family desperate to buy their house.

[Georgina89]

Thanks wigglylines, they are one of the advisors calling us back today.

[ajandjjmum]

I'd be questioning the professionalism of the mortgage advisor if, firstly, he advised you that you'd be able to obtain the mortgage no problem, and secondly, has given you no tangible reason as to why you've been refused. He should have a relationship with the proposed lender that would enable him to call and discuss it with them, so at least you know what the issue is.

Hope you can get it sorted.

[CrapBag]

We had this exact situation last year with different amounts of money.

We phoned Nationwide, who was our current lender, and asked what we could borrow. The was way above what we wanted so we thought no worries.

The rules changed but we only wanted to borrow an insignificant amount, had a very, large cash deposit and had paid our current mortgage off very early.

Applied and the amount they were willing to lend was less than a third of what they said! They said our (meagre) outgoings were too much. Credit card balances of £66 and £88 went against us! Childcare costs of £26 a month went against us as did petrol of £140 a month for 2 cars.

We told them thanks but no thanks and phoned London and Country (as we were recommended to on here). They told us what we could borrow so we went ahead and did it through them. We tried our luck and applied with Halifax for 10k more than what London and Country said we could borrow, as we knew we could easily afford it and the repayments if they rise. We got it no problem at all. It was such a hassle free and easy process. I'd always use them again in the future.

Nationwide are well known for being very picky. When we did reapply, we cleared our credit cards first (and a condition of the mortgage was we were allowed a balance on them so we didn't use them whilst we went through the whole house buying process), I didn't declare the childcare as that is optional anyway, I don't have to let dd do a full day and pay for the lunch hour and we knocked a little bit off the petrol costs.

We know what we can afford more than someone sitting in an office ticking their boxes.

[FishWithABicycle]

Are you paying nursery fees? We were shocked to find our borrowing capacity was massively lower than we thought because nursery fees were deducted from our salaries before all other calculations (ridiculous as other unavoidable and less temporary costs like commuting were not treated the same). We reduced the impact by declaring as our nursery fee amount the sum by which our take-home pay was reduced due to the pre-tax reduction of childcare vouchers - about 30% less than the official cost but the building soc were happy to agree that was a reasonable thing to do, and that brought the amount to where we needed it.

Of course 6 months later the free nursery hours kicked in and we had way more disposable income.

[TeddyBee]

London and Country got us the mortgage we needed - only one lender prepared to give it to us and our broker from L+C even managed to negotiate down the retention for us to a manageable amount. They were brilliant and we'll be using them again!

[Georgina89]

Thank you all for your advice. After speaking to 3 mortgage advisors today, London & Country have found us 2 lenders who are prepared to lend us the money!! The other advisors couldn't help us, one would only lend us £160k.

I would definitely recommend them.

[MrsFlorrick]

Brilliant news. You'll get your house now. Fingers crossed it all goes smoothly.

[TeddyBee]

Yay! I loves them :)

[Georgina89]

Thank you MrsFlorrick.

[Georgina89]

Me too Teddybee!

[FishWithABicycle]

Great news! But may I inject a teeny tiny note of caution? I don't want to dampen your elation at all, but if there were so many places not willing to lend you what you want, it's possible that you are closer to the borderline of sensible than you should be. You can sort this out by resolving now that whatever your repayments start out at, within a month of moving in you will ask to increase the direct debit amount by between 10%. This will protect you from some of the shock when interest rates rise, as they will at some point. The pessimistic lenders were giving you an amount they think you'll be capable of servicing when the rate hike comes - the sooner you can get the debt closer to this level, the better - it will be very nice if L&C are right and you have no problems, but it is possible that the less kind ones were more realistic.