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Original poster

Bank refused mortgage in principle. Now what?

34 replies

Maria53 · 01/09/2020 22:19

This was done via an automation on the bank's website tonight. I have a large deposit and would only need to borrow about £50,000.

I was refused a mortgage in principle, quite shocked. I checked my credit score, which is fair and a few points off good. Apparently my negative points were - wait for it - not having a mortgage!! - and not having a lot money in my credit account (I have quite a large sum in my account so I cant imagine what they mean).

After speaking to a mortgage advisor they thought I'd be offered one quite easily from the bank. Now what?

OP posts:

NotSuchASmugMarriedNow1 · 01/09/2020 22:27

It's getting ridiculous. Banks are so risk averse since Brexit and Covid it's untrue. It seems they don't want to lend to anyone who hasn't got any money or collatoral which is bizzare!

I don't know what the answer is, maybe in 2 or 3 years they'll start to relax a bit.

FlowersAreBeautiful · 01/09/2020 22:27

According to Martin Lewis, the credit score is a bit of a gimmick. You need your full credit report which will show your credit history. Any errors contact the company and ask them to update your credit file. This may take a month or two but always good to keep an eye on it each month.

My friend had a mortgage refused as she had one error in her report - just one missed payment. She did get it sorted in the end.

Moneysavingexpert has a free Experian report (only once a month though). But you also need to check the other two - equifax and another one sorry can't remember what it's called but google will tell you.

Can you contact the mortgage company for feedback? It may be they have a limit on first time buyers, buyers with a deposit from family, single buyers etc. It may not be your credit file

ComtesseDeSpair · 01/09/2020 22:29

Try another lender, they all have different criteria. Sometimes it’s as simple as not fitting a particular lender’s demographic of a desirable customer - most lenders are tightening up restrictions presently and not having had a mortgage before / being able to demonstrate commitment to repayment might just mean some are less willing to take a chance on you.

Original poster

Maria53 · 01/09/2020 22:32

Right well to be honest, I missed one payment 2 months ago and it is the only rent I have missed ever. I was so extremely stressed and forgot. It got paid 2 days late. How would I fix that?

Bugger I thought it would be easier than this. Any recommendations on finding a different lender? The mortgage advisor suggested bank instead of going with him because it wouldn't be worth their while (I'm not borrowing enough).

OP posts:

ComtesseDeSpair · 01/09/2020 22:35

Honestly, it really can be the very small and technical stuff which prevents you being accepted rather than the big stuff people assume it is. My credit file isn’t perfect at all, I have two recorded missed payments in the last six years (admin errors, but missed payments all the same and shown as such), wasn’t on the electoral roll and - I only discovered later when I checked - open credit cards with a combined available credit facility of almost £60,000 (from where I’ve applied for cards for a specific reason in the past, paid them off but never closed the account, so I could essentially access £60k of unsecured borrowing at any time) when I applied for my mortgage earlier this year but had no trouble getting lenders to accept me.

ComtesseDeSpair · 01/09/2020 22:37

Rent payments won’t show on your credit file unless you rent through a company who report go credit referencing agencies - which is rare.

Halifax are generally good, as are HSBC.

jeff1965 · 01/09/2020 22:44

Does the rent show on your credit file? Are you on the electoral roll? I think a whole of market broker might be your best

Original poster

Maria53 · 01/09/2020 23:10

I am on the electoral roll at my address from last year. I have now changed it and the application is being processed.

Havent seen the file in detail so not sure. It wasnt mentioned in negative points.

I will take a PP's advice to try the other banks. If that doesn't work I'll need to do some resesrch around a decent mortgage broker.

OP posts:

hedgehogger1 · 01/09/2020 23:13

Does being denied stuff not damage your credit rating though? I'd hold off on just applying again

Original poster

Maria53 · 01/09/2020 23:29

Does it @hedgehogger1 ?? Well actually it said it wasn't a final decision but more an indication, so I doubt it would be tracked.

Either way they weren't giving me it. I dont want to hold off as I want to get moving on buying a property now. I've held off long enough

OP posts:

jeff1965 · 02/09/2020 00:42

Apparently being on the electoral roll (presumably at your most recent address) can be a big thing in mortgage applications so you may want to research that before you try again

Original poster

Maria53 · 02/09/2020 01:02

Good to know. Apparently I will receive an update in 10 days from the council. I wanted to get moving but maybe I should wait until that is resolved?

OP posts:

titnomatani · 02/09/2020 01:11

Don't go applying to all the banks. Every application for a loan/mortgage will show up on your credit file, further lowering your score. I'd highly recommend a broker.

Lyricallie · 02/09/2020 01:13

Mortgage in principle definitely shows up on credit score. I'm going through the process now and got a wee alert through my credit score app when my mortgage advisor put them in. We've been accepted with HSBC and Barclays as first time buyers, maybe they have less limitations on borrowers?

GeordieLass01 · 02/09/2020 01:20

Go to a broker like London and country and see what they suggest.

AldiAisleofCrap · 02/09/2020 01:20

Try nationwide they are a better bet that NatWest. But do make sure you are on the electoral role.

AldiAisleofCrap · 02/09/2020 01:20

*than

Figmentofimagination · 02/09/2020 01:22

If you filled in the online forms to get an agreement in principle (so not spoken to a bank/lender) then it will appear on your credit report as a soft check but not affect your credit score. Only when you speak to a lender/broker and they do a full mortgage in principle do they do a credit check that will appear on your file.

I discussed this with my bank this week as looking to port my mortgage/get a new mortgage. The online forms have set questions they can't deviate from, don't take circumstances into account and only give you a slight idea of what you could borrow. hence why it's a soft check.

If you actually speak to a lender and are happy for a full credit check you will get a better idea of what you can borrow. I did the online form with my bank first and then spoke to a mortgage advisor. I can borrow more than double what the online form said I could.

Rebeccasmoonnecklace · 02/09/2020 01:22

Have you ever had a credit card or a loan OP? I was once turned down for a mortgage in principle due to not being on the electoral roll at my then address and also like you I had a lot of savings but my downfall at that time was never having had a credit card. Apparently if you’ve not had credit this can have a negative impact as you’re an unknown quantity to the lender. It was described to me as would you lend £50 to a friend who had borrowed money from you before and paid you back in full or would you lend £50 to another friend who’d never borrowed from you so you were unsure if you’d get the money back. I changed my electoral roll details and got a credit card and was then accepted.

Original poster

Maria53 · 02/09/2020 01:35

That is excellent information @Figmentofimagination thank you.

@Rebeccasmoonnecklace now you mention it, no and no. My mother always told me to avoid taking loans out but now here I am. So maybe I should take out a credit card?

Ah this is so frustrating. I was so keen to buy a property this year if possible.

OP posts:

Rebeccasmoonnecklace · 02/09/2020 01:40

@Maria53 I was always told the same by my Mother too. Have a look on Martin Lewis’s website. I only used my credit card for small amounts, like petrol once a month and paid my bill off as soon as it came through. I remember feeling frustrated in the past.

sopopollo · 02/09/2020 13:24

If you're hoping to get a mortgage in the near future, it's not advisable to get a credit card now as this will show as a hard search on your file and could also affect your affordability. Unless you're willing to wait six months, don't get one now. Lenders don't actually see your credit score but they see the items on your credit report. Being on the electoral roll is really essential because they will use this to ID check you.

Mortgage advisor is your best bet as they know where to apply in your situation.

Original poster

Maria53 · 02/09/2020 14:22

@sopopollo the thing is, I only applied to the bank because a mortgage advisor suggested it. They said it was not worth their while to work with me as they wouldn't get a decent cut from it (mortgage too small). I'm a bit confused.

OP posts:

sopopollo · 02/09/2020 14:26

@Maria53, I'm sure someone will be happy to take the case! The first broker we went to was a complete waste of two weeks and they couldn't be bothered with our case at all. Shop around, you'll find someone.

netstaller · 02/09/2020 14:28

Find a new mortgage broker, they can usually sort issues and have a much wider choice of banks

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