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Original poster

Why is mortgage offer so much lower than expected?

30 replies

ElementsOfAutumn · 01/10/2023 02:38

I did the mortgage affordability calculator on the Nationwide website, which suggested I could borrow up to £130k. I filled out the form for a Decision in Principle and they've offered me £80k! I know there are a lot of factors that can affect this (especially credit score) but I'm pretty much a "perfect" applicant. My credit score is right at the top end and always has been, I've got no dependents or unusual regular expenses, and I've actually been overpaying my current small mortgage for years. Been in my job for almost a decade. So I can't work out why I don't qualify for the full £130k, or at least almost all of it! I totally understand that the calculator shows a MAXIMUM, but I can't imagine who could ever qualify for that if I can only get £80k when I couldn't be much of a lower risk. Any ideas?

OP posts:
Original poster
ElementsOfAutumn · 01/10/2023 02:42

Oh - and I only wanted to borrow about 33% of the property value! I have £160k equity in my current home + £100k in savings and wanted to buy a house for around £375k. Even more of a puzzle.

OP posts:
NeedTheSeaside · 01/10/2023 02:43

Call them

they were very nice/helpful when I did (nationwide also)

it was mainly down to a disparity in the calculators, their internal one being much more 'sensitive' to interest rates & stress testing.

EliflurtleTripanInfinite · 01/10/2023 02:47

Sole income? It's a bigger risk if the income is provided solely by one job rather than 2. Will you hit retirement age before the term runs out? They should stress test it with at least a 1% increase in interest rates. When I was working at a bank if someone was borderline for affordability we'd stress test it at a higher interest rate. We've always been in a position of having good equity but less income because I'm disabled and unable to work, this has limited stbxh borrowing ability.

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Achdinnae · 01/10/2023 02:52

Ask them. There are a number of things it could be. E.g. if the mortgage is likely to last into your retirement,lenders may calculate affordability on basis of your estimated retirement income rather than your current pay.

Original poster
ElementsOfAutumn · 01/10/2023 02:56

It's not my age - I'm only 31. And the online calculator already knew I was a sole applicant, so that should have been taken into account. The increased stress testing may make sense though. I'm really annoyed! I will call them in the morning, just feeling a bit dejected right now.

OP posts:
WashableWool · 01/10/2023 03:03

Nationwide are one of the ‘tightest’ lenders out there; they are known for being very strict on sometimes ridiculous criteria. Can you apply elsewhere?

WashableWool · 01/10/2023 03:03

Try a L&C decision in principle instead.

Hurrahitsraini · 01/10/2023 03:07

have you used a broker OP? They don’t cost normally as they make money from the mortgage company. they can then explain in more detail why, they are also more likely to get mortgage apps through as they are versed in the applications

mjf981 · 01/10/2023 03:48

What's your income?

1FootInTheRave · 01/10/2023 05:50

Nationwide are the worst mortgage people I've ever had to deal with.

WestSouthWest · 01/10/2023 07:15

I had a similar situation with Nationwide when I was applying for a mortgage. I am the sole owner of my house (no partner) and one child who lives with me. I knew the criteria would be a bit more strict, however I was really surprised that they offered much less than I knew I could afford. I contacted an independent broker and secured a mortgage with a different lender for the full amount I needed. In your situation I would contact a broker and see if they can find you a more agreeable lender.

WildFeathers · 01/10/2023 07:25

Definitely try an independent broker. Also try a different type of mortgage lender such as Handelsbanken.

PinkRoses1245 · 01/10/2023 07:46

Use a broker instead. We bought recently, both on brand new jobs and the broker was so helpful finding a lender who would be ok with the new jobs. We used L&C in the past who were good as well, and free.

EquinoxVOx · 01/10/2023 07:52

Nationwide are crap, try first direct, mortgages brokered etc

Viggooooh · 01/10/2023 07:55

We found nationwide the most difficult to get a mortgage with. They turned us down despite us having good credit etc. Any reason you have to use them? A good broker should be able to find you a deal

CherryBlossoms88 · 01/10/2023 07:57

I’m going to guess this person makes between £25k-£30k pre tax

AlltheFs · 01/10/2023 08:02

Use an IFA
They will be able to get you more and a better rate, I’ve never had to pay mine, the commission has been all they take.

Nationwide is one of the more risk adverse lenders. An IFA will also know which companies suit your circumstances.

For example, I am married but our mortgage can only be in my name and based on my income because of my DH’s former bankruptcy (although in practice he pays 40%). We cannot have any financial association. Some lenders don’t like that, some don’t care-my IFA knows which. He was able to get me 5.5 x my salary which is obviously risky for a lender but in reality as household income it’s a much more normal 3.5 x

MammaTo · 01/10/2023 08:02

When I’ve been speaking to mortgage advisor colleagues, they’ve said how strict banks/lenders have gotten with their borrowing. Seems to be happening a lot with the interest rate rises sadly.

MintJulia · 01/10/2023 08:04

What industry do you work in OP? That can make a big difference. Also, being a single rather than dual income household.

Over-paying often doesn't help either. Mortgage companies like predictability, and want people who will pay exactly the stated amount every month for the full term, or it throws their profitability calculation out.

HidingFromDD · 01/10/2023 08:10

It’s nationwide. They’re the strictest and I think penalise single applicants the most. Try Halifax

ActDottie · 01/10/2023 08:16

Whenever I’ve done AIP it’s always been for the amount I need to borrow not the maximum I can borrow. I only get the maximum from the calculator.

Id ring nationwide and ask them. No one on here os going to know.

Aquestioningmind · 01/10/2023 08:17

Likely any number of reasons including;

  • interest rates have been chaotic recently and mortgage lenders are being tight
  • you simply don’t earn enough (a maximum doesn’t actually mean they’ll ever lend it to you)
  • salary progression - if you’ve been at the same salary for a while or little chance of promotion that’s going to impact how viable you ate (at least that’s what a broker told me)
  • Your job (a civil servant on £30K is going to be more likely to secure a bigger mortgage than a hospitality manager on £30K given security of jobs etc)

TBH on an £80K mortgage offer I’m gonna guess you earn about £23K which, even with your deposit, wouldn’t make many mortgage companies lend you £130K in the current market.

Snittler · 01/10/2023 08:19

The day before we were due to exchange Nationwide decided we couldn't lend what they said as we needed a 25% deposit as we were buying a flat, not the 10% we had told them all along.

NW are awful mortgage lenders.

Eminybob · 01/10/2023 08:29

The NW online affordability calculator is a load of crap. It's doesn't ask for any outgoings, only income, so of course once you complete a DIP and start putting your monthly expenditure in the figure drops.
No idea why they have started doing this, it used to be bang on (I used to be a mortgage adviser at NW) Now it's so misleading.

mumda · 01/10/2023 08:31

Are they concerned about house prices falling?

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