Agreement in principle given 3 months ago, and now saying it's declined

[Mortgagestress]

I need a bit of advice as I'm super stressed at the moment and not sure what to do.

I have my own business, getting a mortgage is hard as there's so much info the lender needs, which is fine, and my business is doing well (over 6 years trading).
We got an agreement in principle 3 months ago with Kensington (we used a broker who my OH knows), we had to use a specialist in self-employed/Ltd Company Directors because of my situation. My OH has a full time job that pays £40k.
Kensington's interest rates are higher than the norm, we know that and can afford it. We are also putting down a £113k deposit.

I provided them with the last 3 months of my business bank statements, which did have furlough payments on there, nothing was said. The agreement in principle was given. We offered on a house and just had to wait for top of chain to find, which we have now been told may be next week (2nd viewing happening which EA said is promising).

So now, almost 3 months after we got the AiP and had our offer accepted, our broker has gone to get the mortgage offer and been told by Kensington that they will now decline us as I have furlough payments on my bank statement, and I have to have 3 months clear statements with no furlough payments!

This is information they have had for 3 months, NOTHING was mentioned before about it as I could have stopped them back then if I knew it would effect the mortgage situation (it's only £500 a month).

Our broker has said this is their rules and they won't budge, even though if someone was self-employed and got SEISS of £2k a month this would be accepted?!

So I've been told I have to have 3 months bank statements clear of furlough, which I can obviously do, but that then means our broker can't apply for the mortgage until the first week of November. Not a huge issue if it all goes through okay, but if it doesn't we (and the rest of the chain) will be buggered.

I have already sold my car, where the payment was £680 a month, and Kensington gave us the agreement in principle with me STILL paying this?! Plus I have an office I have handed my notice in on, which is £600 a month, and they know that too. So I will have £1,280 more disposable income than I did when they gave us the AiP, and the furlough payment is less than £500 a month, yet they have declined us.

I just don't know what to do next. Do we just wait and hope it's all okay, or does anyone know if there are other lenders that specialise in Company Directors etc?

Please be kind, I have been in tears all evening and this morning, I just want to know if there is anything we can do. I don't need any comments on how much the car payment was, or anything negative. I am just asking for advice and help, please.

I'm no expert but I believe this can be pulled for any reason and there is nothing you can do about it. Has your broker started looking for another lender?

Dh was an IT contractor when we got our mortgage. We went to a specialist broker who got us a mortgage through Halifax. The exact same mortgage we had been refused when we went directly to Halifax ourselves.

Is there a similar specialist broker in your field?

Kensington reduced their income multiple calculations last month. From 5x to 4x.

That’s more than likely the case, unless an app was submitted before the deadline you’re back to the drawing board.

My dd had her mortgage declined a week before they were due to exchange because the property was on an unadopted road. Her broker found her another one straight away, and they got a better rate than the original one!
Your broker should be be able to find a company that will offer you a mortgage in your circumstances.

Thank you both for your replies.

Spanglebangle - I have a mortgage with Halifax at the moment, which I've had for over 10 years (been in my current house for 16 years, and both me and my OH have a 999 score on Experian), so do you think he could approach them maybe?
The issue has been getting someone to use my last 3 months bank statements, plus my last 2 years business accounts. They're not bad, but one of those years I only worked for 5 months as we adopted, so the profits were lower than they would normally be. Kensington seemed to be okay with that explanation so I guess someone else might be too.

I will have a look to see if there are any specialists in my field, don't want to give it out as it might be outing.

HSBC are generous with SE/Ltd co as are Santander. Santander will want you to be clear of furlough/SEISS before you apply though.

Singlebutmarried - My OH is in the NHS so they have offered him 5 x salary, then used my business accounts.
Our broker sent us their terms on furlough/SEISS yesterday, which does say furlough isn't accepted.

Singlebutmarried - Okay thanks, I might speak to him about HSBC, see if they will accept furlough.
I even said I would pay back the last 3 months if it helped!

If you didn't need the furlough money, why did you take it?

Definitely get them to seek out other lenders - I’m in a similar situation being self employed except my chosen lender refused to accept my seiss payments but said if I’d been a director and paying myself furlough they’d have looked on it more favourably, so the opposite to you!

Out of curiosity, why has your broker waited until now to put your full application in?

Although not a business, we had the same issue with furlough payments being present on my DP's wage slip despite him being on 1 day a week flexible furlough, having a letter from the business advising that job security was not at risk, and also recieving a pay rise in that time alongside my own pay rise! Although our broker escalated it and pushed right to the underwriters, they said it was a blanket ban on furlough payments and that we had to provide a wage slip for DP showing no furlough at all before we could proceed.

I really feel for you, it was a horribly stressful few weeks whilst it all got ironed out! Hopefully you will have more luck x

A few years ago, we went through a broker who used NatWest. The broker’s opinion was NatWest were fair with SE.
Ask your broker for other options.

Being Ltd with two years accounts means you still have a lot of choice. I’ve been with a Halifax and Nationwide in these circumstances with no issues (excluding any issues with furlough). I did see something on LinkedIn about banks having to re-examine the calculations they used for the bounce back loans and directors being made personally responsible/possible fraud implications. Banks may be concerned about furlough payments also being scrutinised in the near future.

vivainsomnia - please read the OP, be kind, this post is about asking for help not being kicked when I'm down.

thetaleunfolds - try Kensington! ;) Which lender did you use, I'll have a look at them!

newnamesameold - top of chain hadn't found, and we didn't want to put it through at the time as it would only be valid for 6 months, and we didn't know how long they would take to find somewhere. Even the EA said it may not be before Xmas, so if we'd applied straight away it would have expired anyway.

weshallneversurrender - thank you. It's so frustrating as we have a £113k deposit, plus my business is fine and they can see that.

If your husband has a good salary and a decent deposit, can he take the mortgage out by himself? I don't think you'd be counted as a dependant because you are working, so it's the best of both worlds.

Jubilate - afraid not, the house we want would need both incomes, and even though 'the computer says no' I do earn more than him.

Agreement in principle are time limited. After three months, you might well get caught out as a mortgage lender will review especially if they've recently changed their criteria.

Just as you were worried about a formal application expiring, an application in principle can expire. You knew that hence why you didn't apply at the time.

The market changes all the time. Its very common for one mortgage to available today but be gone the next day. The only thing you can do is look for another lender unfortunately. As much as it sucks

Unfortunately people put too much emphasis on an AIP - they're not really worth anything - just a rough idea of what they may lend you. My broker told us not to even bother with them.

Surely the broker should know which firms require no furlough payments. there are plenty of companies that will lend to self employed people so I'd have him look into other options. I don't understand why this bank is the only option for you?

I think you need to look for a new broker. They don't appear to be advising you very well. You can put an application in and it can take weeks and weeks and weeks for the offer to come through, especially when there are more complicated circumstances such as being self employed or having furlough showing in your payslips. Get them to look for another lender and do the full application straight away.

Bells3032 - I have gone back to him and asked what else he can do, and that surely there are other lenders out there not just this one.
I've not bought for 16 years so am a bit rusty on this, and genuinely thought an AiP would be pretty solid. How wrong, eh!

newnamesameold - I have asked him to look at other options, and if he does find one I will get it done asap. Just frustrating as yesterday morning we were annoyed but thought we had time, and then the call (we'd been waiting 3 months for) that the chain was potentially complete was NOT what we wanted to hear!

Are you able to afford your mortgage payments if interest rates rise? I only ask as inflation is a real concern at the moment and interest rates may have to rise if inflation takes hold.

sweetheartyparty - the rate was fixed for 5 years. It’s a higher amount than the norm, but we could afford it and would know that was what we had to pay.

We’re both self-employed, both took SEISS grants. Getting a mortgage was a total nightmare- we had a mortgage in principle that meant nothing when crunch time came.

When it looked like Santander would decline (despite being a previous customer, no defaults etc but with a short break), we pulled out. Lots of hoop-jumping, finally got one (for over £50k less) with Halifax. This was through a broker and having owned various houses for 9 years.

We have over 50% equity in our £500k+ house and still only scraped it by the skin of our teeth!

Go to CMME and speak to them. We are contractors and CMME specialise in them and self employed. They were really helpful.