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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To ask why we were declined a mortgage agreement in principle

200 replies

ChickenChickenHen · 19/05/2023 16:27

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

OP posts:
Stressedandexhausted · 19/05/2023 18:49

We had similar @ChickenChickenHen . 6 of us are being supported on one salary (I'm a SAHM). DH on a decent wage, no debts, credit cards etc, and we were only offered just over 2 times DH salary which isn't anywhere near what we need so we are stuck in a 3 bed for 6 of us

ChimChimeny · 19/05/2023 18:51

You can search on money saving expert putting in your criteria and it spits out what's available so that would give you an idea.
we always use London & Country, i think we've always got a competitive or lower interest rate but also cash back as an extra bonus

Jmaho · 19/05/2023 18:52

I work for a bank we don't discriminate over whether both parties are working. We would never decline on this basis but in reality you have one income supporting two adults and two children
Most lenders will stress test at a higher rate then the actual product so for example say the fixed rate is 5% they will stress at 8% or higher. As interest rates have gone up so will the stress rate
You might find that different fixed terms will allow more affordability (that's how we do it) so a longer term fix would allow us to use a lower stress rate
Like many others have said speak to a broker. A good whole of market one. They will know which lenders offer the most in terms of affordability. A good broker will check the affordability before they submit an AIP
In terms of products brokers often have access to exclusive products so will likely find you a good rate

OhwhyOY · 19/05/2023 18:54

It has been in the news recently about people being declined mortgages who you really wouldn't expect e.g. a high earning couple both working with no dependents and a large deposit. Apparently banks are being exceptionally risk averse at the moment, yes following the mini budget but also cost of living and general economic uncertainty at the moment (risk of global crash etc). Second the advice on getting a broker to advise you on who'd be the best fit for you at the moment.

utterraiin · 19/05/2023 18:54

@PinkPlantCase
Completely agree!!
We were offered more on lower salaries 5 years ago and didn't pass affordability for the lowest rates this time, even tho our LTV is now 50%, we have no debt and decent savings.
I work for an IFA and used a broker through them..they explained how affordability is a problem for a lot of people in the present market due to the rate changes. Our friends fixed for 1.4% last year, we got 4% even though our financial circumstances are far better than theirs (I'm part qualified as an IFA, ex accountant and slightly anal about finance), I was shocked and also pretty pissed off with the timing of it all and wish we'd gone with our original plan to repay our ERC charge last year and fixed at a much lower rate

Postapocalypticcowgirl · 19/05/2023 18:55

ChickenChickenHen · 19/05/2023 18:12

For those of you who went via a broker, did you have to pay much higher rates on the mortgage? I've been basing my own affordability calculations on the assumption that we'd be offered a relatively low rate (by today's standards) due to high equity, good credit rating etc. But obviously that's in question now too.

I recently went through a broker, and got what I consider a good rate (it's actually now lower than current interest rates!).

If you're seen as more of a risk, then you may have less choice of rates. But the broker will tell you exactly what your monthly payments would be, as well, so you can decide if you can afford it or not.

Careerdilemma · 19/05/2023 19:06

Whatever you do, do not put the house just in his name! From your OP it looks like you're not married so this would make you very vulnerable. I'm sure you think you'll be together forever and he'd never screw you over. But that's also what the endless posters on here who find themselves homeless and penniless also thought at one point.

On a cheerier note, London and County are excellent and don't charge a fee.

FANCHEA · 19/05/2023 19:35

Is he self employed or freelance?

GoodChat · 19/05/2023 19:38

How old are the children?

You'd only need 3 months worth of payslips if you were able to get a job to increase what they're willing to offer quite substantially

Katy123g · 19/05/2023 19:42

Loads have already said this, but I'll echo again use a broker!

When we wanted to buy our current house we naively approached the bank who we had a mortgage with thinking it would be an easy yes as we'd been with them 5 years, never missed a payment and we weren't borrowing that much more (in our eyes). They turned us down.

I was devastated thinking we were forever stuck in our 2 bed flat with 2 kids.

We then went to a broker and within days we had a mortgage offer.

I would never remortgage or move without using a broker now.

Truestorypeeps · 19/05/2023 19:44

Our bank loan isn't a traditional mortgage. I tried to get a mortgage for a sum which was only barely twice my annual wage, but because I wasn't on €40k plus they said no! If he's not a high earner, this could be another reason. They seem to take issue with people on only OK money if there's only one earner.

Nocutenamesleft · 19/05/2023 19:50

Use a broker. it’s not unusual to get 5 times salary for a family on one salary?

Ap42 · 19/05/2023 19:55

I'm a single parent of 2 children. I managed to get a mortgage (albeit with a 60k deposit) I found an amazing broker, who walked and talked me through the whole process. Would only ever use a broker going forward.

DarrellRiversCriminalBehaviourOrder · 19/05/2023 20:01

Someone on here crunched the numbers on rising interest rates a while ago, although I can't find it. I was alarmed at just how much difference it made to affordability. I knew it wasn't good, of course, but I hadn't appreciated the full extent of it. And as PPs have said, you all living on one salary is a risk for a lender.

Good luck, you're getting great advice and being very practical.

HowcanIhelp123 · 19/05/2023 20:05

Definitely get a broker. Their job is literally to find you the best deal!

And it will be because he's the only one working. You're also his dependent in addition to any kids. Every dependent cuts the affordability calculation.

RenegadeMrs · 19/05/2023 20:07

I'm an ex mortgage broker, and will echo what everyone else has said... use one!

Different lenders have different affordability calculations, for example, back when I was doing it Halifax would take a big chunk off for dependents, and HSBC wouldn't. (No idea what the criteria are these days so this may no longer be true). The best brokers will know who will be most generous to you.

You don't get penalised rate wise for going via a broker either, banks want to lend, they don't particularly care if its via broker or in house adviser.

MrsEG · 19/05/2023 20:10

Banks are being extraordinarily strict at the moment with rates / the market the way it is (I’ve just come out of a highly stressful remortgage!!) - do you have any plans to go back to work in the next few years? A second income, combined with rates (hopefully!) dropping in the next couple of years could definitely help. Good luck!

DailyEnergyCrisis · 19/05/2023 20:12

Both times we’ve applied we were given most money with Nationwide. Both times based on just DHs salary with dependents. But we went via a broker to find the various offers.

Annfr · 19/05/2023 20:15

Another vote for a broker - they make a huge difference

HowcanIhelp123 · 19/05/2023 20:16

Also, every time you run a MiP it's a search on your credit file, which will reduce your DHs credit rating, reducing what he can borrow! If you go by a mortgage broker they will only apply for MiP to lenders they are certain will lend to you to stop that happening. Jumping lender to lender will be negatively impacting your chances.

DarrellRiversCriminalBehaviourOrder · 19/05/2023 20:18

OP says he's a DP. Does not being married make any difference?

YukoandHiro · 19/05/2023 20:19

Use a broker. You will definitely be able to get a an agreement of 3,5 times on such a low loan to value.

YukoandHiro · 19/05/2023 20:21

Eudaimonia5 · 19/05/2023 16:38

It's pretty risky having one person financially supporting 4 people. What if he's ill or comes out of work? You're classed as a dependent like the kids. Can you get a part time job? Even if it was like 12 hours per week or something. At least it shows you're able to make a financial contribution.

That's why you buy mortgage protection insurance

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