Agreement in principle declined

[Firsttimebuyer1]

Hi,
I’m a first time buyer and I just applied for a mortgage agreement in principle with Nationwide (it was an automatic online process, with a soft credit check only), which was declined due to failed credit file.
It didn’t say what the problem was, it just said it was due to credit score, and “this may not be due to adverse bureau information”.

I am puzzled. The only thing I can think of is that I accidentally went into my unarranged overdraft twice while a student (2 years ago) but now I have a full time job with a good salary so it won’t happen again. I’ve got 2 years of a solid income and no debts other than student loan.

I am viewing a house on Saturday and had hoped to het the AIP so I could potentially make an offer.

What should I do now? Shall I try for another mortgage in principle with Halifax or another bank that does soft credit checks only, to see if I get a different outcome from them, or is that unwise? Does this mean I won’t get a mortgage from anyone?

Any advice appreciated!

[quote PawsQueen]@browneyes77 4.10% is what I've got [/quote]
Thanks Paws.

That’s not nearly as bad as I was imagining!!

Op you need a broker. All lenders have different lending criteria. A broker will be able to asses your application and suggest a lender they know will lend to you. They will also know who is more generous with income multiples etc . You need a broker basically.

Seen you have had good advice with checking your credit score. Not sure if anyone has asked you this but how much did you apply to borrow in comparison to your salary. Sorry not being personal I just mean many banks will lend you about 3/4 times your yearly salary and only 90% of the house value. So for example if you earn £30,000. The max they would lend you is roughly might be £120,000. But if the house was worth £120,000 they would probably only offer £108,000 as they expect you to pay a deposit.

So much good advice, thank you, am taking it all in. I emailed a broker today and hope he will get back to me on Monday.

@stressed58382 To be honest it’s about 4.5 times my salary, and 90% of house value. Maybe I’m being too optimistic. The online calculators suggestsed I could afford it, but maybe it’s too much.

I earn 42K a year (will go up in Sept to 43) and I have a 20k deposit. The house is 190.

@girl71

Op you need a broker. All lenders have different lending criteria. A broker will be able to asses your application and suggest a lender they know will lend to you. They will also know who is more generous with income multiples etc . You need a broker basically.

You don’t necessarily need a broker, and often you can get better deals going to the lender.

I got my mortgage from First Direct, who don’t sell through brokers. It was the best rate I could find, and better than anything any broker offered me.

Oh hang on I did my sums wrong there and divided the property price by my salary, not the amount I want to borrow...

Oh interesting, good to know, thanks Doris!

@browneyes77 no prob! I'm crossing everything it goes through, have a surveyor coming to do the valuation this week but the lender has requested a transfer of equity form and other bits that make me hopeful
I'm using simply adverse as the broker and mortgage is with a company called the mortgage lender

[quote PawsQueen]@browneyes77 no prob! I'm crossing everything it goes through, have a surveyor coming to do the valuation this week but the lender has requested a transfer of equity form and other bits that make me hopeful
I'm using simply adverse as the broker and mortgage is with a company called the mortgage lender [/quote]
Hope it all goes smoothly for you!!!

No need to pay for any sort of credit service, you can check it for free with the Moneysavingexpert credit club or credit karma. It is probably also worth looking at the MSE first time buyer's guide OP, with lots of tips about presenting yourself in the best possible light to lenders. Do you have a LISA for the government top up?

It could be that you're a borderline case, high LTV and income multiple at the top end of what they're willing to lend. But I'm sure you'll be able to get a mortgage from somewhere, hence the recommendation to speak to a broker, they'll know which lenders will accept people with your circumstances, and a PP has said Nationwide are pretty strict.

Have you tried your current account provider, assuming this isn't NW? Banks where there is an existing relationship might be more forgiving, because they already know how you run your account.

Also, do you use your credit card? If it's just dormant, it might not be as useful to how lenders see you than if you use it every month for some of your normal spending and then pay it off in full every month.

On the matter of overdrafts, it's best to avoid them totally as banks see them as a negative point, even when you have a free overdraft. Makes no sense, but there you are.

Better to use your credit card to overcome any minor cashflow issues - simply delaying the money being taken out of your account by a few weeks will keep you out of overdraft and get you plus points on your credit record, not negative.

Sign up to Experian so you can actually see what your score is first and try other banks. Don't assume because nationwide rejected you they all will. I believe a good one at the moment is HSBC.

Lack of credit can actually not be a good thing for your credit score too because you've no history of paying things off which builds your score.

I check my credit score every month , I get an email from Noddle. Totally worth doing it