To ask why we were declined a mortgage agreement in principle

[ChickenChickenHen]

Slightly perplexed. We just applied for a mortgage agreement in principle with our bank. We need a loan of just under 3.5 times my partner's salary (I'm a SAHM). We thought this was fairly conservative. Just discovered that the most they can offer is only 2.25 times his salary! We checked with another bank and they offered slightly more but still only 3 times salary, so not enough.

We have a huge deposit (63% of property price), no debts, excellent credit scores (just soft checked), very secure income. We do have two kids but outgoings fairly low.

Now obviously I know about the disaster budget and the cost of living etc, but my understanding was that 4-4.5 times salary was still typical. Is that wrong? Is it just for people without dependents?

We asked the bank for an explanation but they just gave us a rote statement about affordability that didn't explain anything. Maybe this is normal and we will just have to wait for prices to fall, but any insights would be gratefully received

Go through a broker -they will be able to identify the best lender for you.

I imagine it is tighter with it being based on a single income - if there were 2 incomes it would be different ime

Yes that sounds like the right thing for him. We do pay rent, although it's less than the monthly decreases in house prices in my area. What to do...

Honestly it sounds like this would be a high risk mortgage with only one of you working and dependents. I would try to look at more affordable properties

I don’t want to be negative but I’d also consider this - the boundaries are there for a reason. They also have to factor in affordability if interest rates have risen when the fixed term comes to an end, it’s scary how quickly an extra couple of % can have on a monthly payment when you come off a fixed deal. But speak to a broker and see what they can find for you.

Things have changed over the last few months and they have really tightened up their lending criteria. It makes no sense because you know you can afford it - I'm having a similar problem - but they won't back down because they don't have the power to, it's only the underwriters who can do that! It's very much a 'computer says no' situation I'm afraid. But I would go to a broker as they will look at every possible option.

I am a mortgage broker with over 20 years experience. Some lenders are being very cautious at present. Speak to a broker (preferably one that has been recommended or at least check the reviews for that individual). If you can’t get a friend to recommend one then speak to a couple and pick the one you think will do their best for you.

How much is the house you are looking at?

Definitely go via a broker with that amount of equity- each lender has their own criteria and the variables are massive- I know someone who got 4 times joint who had 70% to put down - and that was recent too . They also only wanted it over 15 years due to age. They had quite a few offers at that.

I was a SAHM for 12 years and we managed to get mortgages for 3, 4 and 5 kids on only my husbands salary so i wouldn’t get job hunting yet of you’re happy being a SAHM!

I agree with this recommendation, they’ve been great for us in the past.

We had this think even though move was going to leave us much better - partly costs being lowered and much lower interest rate and well with borrowing guidelines.

They wouldn't say why - but suspect it was because I was a SAHM at time - we were doing a huge move to new part of country so if I had been working would have had to leave job to move - we tried our original firm - Nationwide and they were fine we got one with a good rate.

Definitely go through a broker
And another point to consider when applying for a mortgage is get rid of any unnecessary direct debits for anything that includes

Subscriptions
Gym memberships
Also worth doing is putting shopping and petrol for example on a credit card and pay in full every month, although you have a good credit rating so maybe no need for that.

It'll be because you only have 1 salary, if you want to borrow 4.5 times your salary you need 2 wages. If I put on of our salaries into a calculator (we earn similar) we can only borrow 1/3 of the amount than if I put both salaries in. Can't you get a job if you need to borrow more?

I think the industry has got more cautious with the interest rate increases. We remortgaged recently have a good chunk of equity but were only able to borrow 2.5x our joint salary - we arw self employed. Very disappointing but we were told it was a sign of the times....

Typically a bank stresses the affordability at a much higher interest rate to make sure if rates rose you could still afford the mortgage. When I worked in mortgages it was steessed at 4.99% when interest rates were around 1.5% typically. If banks are still doing that now that rates are much higher it might be that which is causing the affordability to fail.

As others say, you need to go to a Financial Advisor. They will look at the whole market and have access to mortgages that aren't on the market to the general public.

I have always used an IFA to obtain a mortgage.

Yes, completely agree, that's kind of what I was trying to express.

Although, my plan would have been to fix for say 3 years, and probably look for a job to start before the end of the fix (definitely if interest rates don't come down).

Try London and Country whole of the market mortgage brokers, completely free and recommended by Money Saving Expert. I am a long term sahm so we have had mortgages over the years just based on Dh's salary and have 2 children. We have used them for 20 years.

We found them very helpful, we have done 2 incomes, one employed income, self employed for a decade and then back to employed.

DP is having a look right now!

Also on rightmove looking at cheaper houses 😕

There are two criteria for mortgage amount and it's the lesser of the two you will be offered. First is a straight forward multiple of salary so 3 or 4 or 3.5 or whatever the lender does. The second though is based on NDI net disposable income, the lender will have an amount needed for each dependent so not unlike a loan repayment they will take that amount into account as a monthly committment, set monthly committments cannot exceed a certain percentage of net monthly income so that is probably the one you are being caught on. Going for the longest term possible can help otherwise it's lower loan or increase income, I would agree with trying a broker who will know which lenders in market might be more open to your case.

Don't fool yourself in to thinking this.

If your future mortgage payments are less than what you're currently paying in rent, you can clearly afford this!

Speak with a proper independent mortgage broker - they'll be able to find you something I'm sure.

we bought our house 20 years ago on my salary alone as Dh wasn’t working. We borrowed 3.5x my salary. We were offered 7x my salary but I was scared. My dad said 3.5x was sensible and affordable and it’s been fine for us. Dh did actually get a job about 6 months later. We fixed the mortgage rate for 5 years so we knew we could afford it and figured in 5 years time we’d probably have had pay rises.

This makes no sense to me because surely a one-income household is less of a risk (as long as there are 2 adults in the household). They have huge potential to increase joint income by the SAHP getting a job if they need to. They'd lend me and DH over 4x joint salary, but what if the cost of everything goes up even further and we can't afford it - we can't increase our income in the same way.
Also we have costs that SAHPs don't have, like a big childcare bill.

And I wouldn’t wait for prices to go down. They’ve been saying this for at least 4 years and they just keep going up

Good luck op