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.

Try NatWest maybe. My OH is SE and we got our mortgage with them no problem via our broker. I have no idea about their rules currently about furlough payments though.

HSBC accepted us despite one of having theor own business but for less than a year, just because we have a long standing relationship (all our accounts with them for 10y+, including savings account with our deposit,
never in overdraft).
So maybe try with your bank?

I would just move on. Kensington are a bit of a joke. We had a mortgage with them out of necessity once and I have two family members who have worked for them (now northview I think) and their internal processes are just a mess so it doesn't surprise me in the slightest.

What does your broker say?

And by move on I mean apply to another lender!

Why are you doing all the running around when you have a broker? This is his job and what he’s getting paid for!

Honestly, he doesn’t seem to know what he’s doing. Either do it alone or get a different broker.

@CatsGoPurrrr

Why are you doing all the running around when you have a broker? This is his job and what he’s getting paid for!

Honestly, he doesn’t seem to know what he’s doing. Either do it alone or get a different broker.

Exactly this tbh

SEISS and furlough are causing chaos with mortgages - they suggest instability, so they make banks really cautious.

HSBC will allow furlough or SEISS as long as "all other accounts meet criteria" and you have a "strong existing relationship" - so you might fail on both parts if you've also got one year with less profits due to adopting, and no existing accounts with them, but it could be worth checking with your broker anyway...

Otherwise you really need your broker to look for providers who won't mind the furlough as much, and they are few and far between right now.

I'm self-employed and have just got our final mortgage offer from Barclays, but they weren't willing to lend if we'd claimed any furlough or SEISS payments, as they felt it made the business unstable. Kensington were mentioned as our back-up plan, weirdly, so it's interesting that they actually won't accept those!

Handelsbanken might be worth a chat, but your interest rates are likely to be even higher again.

To be honest, my first port of call would be the bank that you have your personal and business accounts with - they're likely to be a whole lot more forgiving as they can see the totality of your transactions and financial history. Barclays didn't even ask for bank statements from me, and they were happy with one months' bank statement.

TakeYourFinalPosition - My business banking is with Barclays, which I have been with for over 6 years, so they can see my business is viable, but the furlough might be an issue I'd imagine....

I went back to the broker and suggested HSBC (and the others you guys have suggested - thank you!) and he's spoken to HSBC and said they will 'consider' the furlough payments, but we'd need to find an extra £28k for the deposit. I've done the math and think I can possibly do this, plus the mortgage payments will be £500 a month LESS than they would have been with Kensington.

OH is going to get back from work later and go through my math (was never my strongest skill!) and see if I'm right, and if so will get the broker to do an application first thing!

I will update you all once I have a decision!

And yes, I should be charging him!

Ah that’s good news, @Mortgagestress! I hope HSBC can help and it all works out.

My fingers are crossed for you!

I too like @vivainsomnia are wondering why you took furlough payments when you have £113k deposit and you can magic you another £28k for more deposit. You can't just say 'be kind' you have taken money you clearly don't need

MonicaGellerBing - I've owned my house for 16 years. I have equity. I can't 'get' to the equity without selling my house, it's not available money to pay my monthly bills.
When Covid hit I didn't earn any money for 8 months, and I was offered £575 a month furlough but wasn't allowed to work (if I was self-employed I could have had £2,222 a month and been able to continue working!?).

£575 didn't even cover my office rent let along my household bills and mortgage. I borrowed.
My Father is helping me with the deposit.
I'm not going to go into it further as this is about me asking for advice, which 99% of you have done and I really appreciate it! Thank you!

• alone

When Covid hit I didn't earn any money for 8 months,

Has your industry recovered?

Your 6 years in business could look great but only show the pre-covid viability of your business. Many of the industries most reliant on furlough are actually long term fucked due to the lifestyle changes it has triggered etc.

Is it possible they are being very cautious about the future if your business?

NoIDontWatchLoveIsland - it has recovered, and just in the last 3 months bank statements they can see what has been invoiced, so we shall see.

I got a mortgage from nationwide at normal rates when I had a ltd company but that was pre Covid

Good luck! I had a four month period of medical leave receiving cancer treatment and had to have an affidavit stating as such when applying for a mortgage here in the US-it's a nerve wracking experience

@Soontobe60

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.

This!! I think it's terrible that mortgage companies get away with this

Barclays will consider 100% of SEISS payments. As long as the latest 3 months business bank statements can confirm the income stacks up against the tax calculations.

TheLoverOfTea - annoyingly Kensington will accept SEISS payments but not furlough! To me it’s the same thing.
Just hoping HSBC will look at the bigger picture.

Barclays will accept furlough income but won't accept any overtime, commission or bonus.

Barclays will do this. Trust me.

Update - Have finally got an offer from HSBC (thank you to the poster who recommended them!).
Offer given so is now valid for 6 months, and is at 1.04% rather than the 3% we were going to pay Kensington!
Fingers crossed top of chain find soon and it all goes through in the next 6 months! 🤞

Congratulations. That's amazing news.