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

I think this is an issue at the moment, the couple buying my flat had some issues.

As they tend to look at three months bank statements (I think) can you do a bit of a three month strategy?

When I was trying to get a mortgage I took on call shifts (which they said they wouldn’t count as income but would count as a point in my favour sort of thing) started cycling everywhere (couldn’t now, as disabled, but could back then), stopped going out much and basically lived on carrots, brown bread and peanut butter 😂.

I am 100% not in favour of those ‘money saving tips’ articles that mask the fact this is the government and billionaire’s fault not ours. But in the short term it might help add affordability margin?

Also can you find the criteria documents the bank staff use to assess mortgages online anywhere? If you can find out what margin they want as a buffer (e.g. still ok if interest rates rise to 10%) you can work to that.

Don’t know if it might also be possible to go in for a meeting and give any evidence about security of partner’s job - or marketability of his skills. Don’t know if it works that way anymore, or if it’s all tickboxes?

Or yeah just get a broker, probably a lot easier!

Maybe see if you can afford mortgage protection insurance to protect his salary?

Sounds ridiculous when they know you can afford double the monthly repayment in rent just now. Hope you get it sorted.

Banks seem to lurch from reckless lending to tight-fistedness and nothing in between. When we got a mortgage 15 years ago, borrowing £150,000, they advised us we could borrow £450,000 if we wanted to. We didn't, there's no way we could have afforded that kind of monthly repayment at the time.

ChickenChickenHen · 19/05/2023 16:36
Thanks everyone this is really helpful. Looks like it is the income to dependents ratio that's the issue. It's extremely conservative though - the amount we're being offered would mean our mortgage was literally half of our current rent”

Heard on Radio 4 last week that Skipton Building Society are offering 100% to people who can prove they’ve been paying their rent without issue for 12 months at a decent interest rate. Not sure of other criteria. May be worth a look?

In the same boat!

Apparently, having children classes you as 'risky' (which is why single people with no kids are offered more money no questions asked) irrespective of whether you have childcare costs.

One DIP only offered us x2 our salaries - with a £130k deposit!

Just in the middle of buying and I refuse to get excited as it's quite likely our mortgage won't even get approved (we need to borrow another £50k)

As you say, the worst bit is they won't tell you what the bloody problem is.

Nationwide are cautious so don’t be put off by their rejection. I was rejected by them 12 years ago as they refused to count tax credits as income. This was through a broker who basically said to forget it as all lenders would be the same. I contacted both Halifax and Northern Rock myself and neither of them had any issues. I went with the Halifax. My LTV was low but I was a lone parent working part time and Nationwide wouldn’t have me. Some years after they did start accepting tax credits as income again. It put me off brokers too.

Good luck.

apologies as I've not had time to read through all the replies so if I'm repeating someone else - sorry! I work at a Financial Advisers and have to say Banks are THE worst place to apply for a mortgage, its defo worth speaking to a proper independent mortgage adviser (a proper independent not one who's tied to a specific company or lender!) as they know which providers are best suited to which client (for example, if you're pushing your multiples they'll know x or y provider is best) and they have access to ALL the mortgage providers and deals available - what you've described should have sailed through (unless you were borrowing over a really short period causing a monthly payments issue but again a mortgage adviser would simply tell you to apply for the mortgage over a longer period, pick a provider who lets you overpay and shorten the term yourself if you can afford more than the minimum monthly payments). If you go onto Vouched For (just google it) they're like the directory enquiries of financial and mortgage advisers and you should be able to find an independent adviser near you to speak to, first meetings/general advice is usually free! Anyway, hope that helps?

As others said I would go through a broker, we do she is amazing and used to work as regional manager for one of the big banks so we are lucky to have known her for 23 years so know I cam trust as circumstances over last 4 years have led me not to trust anyone in life

Good luck but definitely use a broker

I had a woman start my work place once. Only for a couple of months. Until her husband and her got accepted for a mortgage. Once they were accepted she quit. Went back to being a stay at home mum.
the bank is only offering this much because there is four people dependent on one income. And it’s a huge risk to take.
if you want the lending to be higher. You’re gonna need to get a job.

Go to London and Country. They are brilliant brokers and will find you a decent mortgage.

The problem probably is just one salary but you've got a large deposit.

I am currently in mortgage hell with nationwide too op.

We already have a mortgage with them, plus bank accounts and everything else.

They are supremely hard work.

Massaging your income and outgoings short term just to get a mortgage at the size you want is a serious risk. The lender is lending based on false criteria and artificially low risk. I don't approve of irresponsible lenders exploiting people but if you lie to them, they can't lend responsibly.

Have you checked nationwide as they are offering a 5.5 x salary mortgage so maybe could stretch to 3.5 x in your situation?

I did that and the silly buggers got really pushy after sending me all the details of the mortgage and who it was with .
Walked into The Halifax and walked out 20 minutes later all done , cost the broker £1200 !

If you have 63% of property as a deposit you
don’t need to borrow much, unless of course you are looking at something way beyond your means? Maybe that’s what they mean about affordability, they may see it as you’ve got such a huge deposit why do you need to borrow so much? Could you go for something cheaper?
obviously without the numbers it’s hard to tell

It might not be to do with affordability, it maybe that weirdly because you have not had loans and credit you have not built up your “ credit points “ it’s ridiculous I know but the more you have borrowed and proven you have paid back the higher the rating .

if you have used spreadsheets etc and think your earning capabilities will improve I would keep trying to see if you can get close to what you need .

im not in the UK but family and friends are finding consulting mortgage brokers/advisors far more productive than traditional banks these days.

our DD has bought her first home with a mortgage broker’s assistance and what her bank would provide and what the MB organised through another traditional bank was miles apart in value.

don’t give up !

It wasn’t Barclays by any chance was it? As we had a very similar problem with them. They wouldn’t even give us an appointment to speak to a mortgage advisor based on our “figures”. NatWest have given us over £100k more than Barclays. I’d strongly recommend going through a mortgage broker.

Dudley building society are really good, they assess everything on a case-by-case basis and it's done by people rather than being a computer saying no. We got our mortgage on one income, one disabled adult and 1 child, although probably a smaller amount than you're wanting I would always recommend them for anyone who have been rejected by one of the big banks.

That's not true. I am a dependant and I am on the mortgage.

The Guardian had an article recently where a single mother earning over 200k was refused a 240k mortgage because of her childcare. Our mortgage was bigger and less than 1/3 of her salary, a few years before the pandemic. They said that banks have become very strict. I can't see this reflected in the prices EA want though.

Would they have refused a single father in exactly the same position?

I would like to think that they just enter your details on their credit-risk application which are not sex-based, or are they?

Another woman was self-employed (maybe a contractor and they have a hard time getting mortgages) and she and her husband were rejected for a 40k mortgage to build an extension although they had been mortgage free up to now. After they were rejected she said they managed to save the amount in 10 months! I think she was in her late 50s if I remember correctly.

Its based on whether they believe you can afford the monthly payments, it's not done based on 4x annual salary any more.

Yes they absolutely would
I am a Mortgage Underwriter and some of the absolute rubbish that is on this thread is laughable
It either meets affordability or it doesn't
If it doesn't under one lenders criteria it may on another
Banks are constantly bashed over reckless lending which I agree with. In the past it was reckless but now they have to ensure an application meets the criteria that they say they underwrite to. If it doesn't it can be impossible to get around.
I can only speak for the bank I work for and say that we so do not and cannot agree affordability exceptions and haven't been able to for some time apart from in cases where its an existing customer and no increase in borrowing