How not to get a mortgage - Please share your tales of woe!

[NotAnotherNewNappy]

DH and I thought we'd done our homework and got three AIPs before we finally made an offer on a property. Now we come to the full application, it turns out the first bank is only prepared to lend us 82k less than originally thought due to our 500pm childcare costs

We have some more interviews next week and I really don't want to screw them up. Please can you tell me other common reasons for being denied a mortgage? We have a 15% - 20% deposit, know we can afford it and really don't want to lose this house. TIA!

Telling lies to get a mortgage could get you in serious trouble. Really not worth it.

You still sign forms, even if your broker fills things in initially- you are complicit in any lies.

But for us the broker was absolutely worth his fee (small amount up front then commission). He dealt with the incompetent fools bank and, most importantly, told us we could challenge the valuation on our remortgage. That challenge made the difference between being able to remortgage or not.

We nearly failed to get the mortgage because the valuer didn't notice one of the reception rooms despite going into it to check for damp and so compared with totally different houses and undervalued the house by about £65k. He changed his mind without a quibble when we challenged his figure.

We are remortgaging just now and are waiting to hear if we have been successful....valuation was lower than expected so we had to drop the amount we are borrowing to keep within the right LTV but not the end of the world.

Our Financial Advisor charges £300 but ONLY when the mortgage has gone through so if you are not approved, she gets nothing...nice incentive for them to help you! Obviously she will get commission too.

I think it is money very well spent as she has given us lots of advise and the mortgage she is attempting to get for us isn't one I can find on the lenders website so I think brokers can sometimes find better deals. Plus, they know how it all works, they deal with these lenders every day and they can guide you, taking some of the stress etc away.

True, you are complicit. And if you are talking about lying about your salary or not mentioning your 50k credit card debt, I'm with you all the way. It's not worth it, and you'll probably be found out eventually anyway.

But if you are talking about the other barriers to a mortgage, that's a different question. For instance, for us, there was barely any question that we wouldn't have passed our work probation periods - it was a formality. But banks are inflexible, so would have refused us anyway. At the time, house prices were rising so quickly that if we had waited six months until we were formally confirmed in post, we would pretty much have been priced out of the market. For us, it was the difference between getting on the ladder or not. Chances of being found out? Negligible to non-existent. Was it worth it? 100%.

Ditto childcare costs. The affordability criteria for mortgages are hugely inflexible, and don't care whether outgoings such as childcare will massively decrease in a year or two once the kids are at school. The chances of being found out? Pretty much zero. The brokers know all this - they do want to know you can afford your mortgage, they don't want it refused because you can't jump through spurious hoops set up by the mortgage cos.

You aren't talking serious fraud here, just being selective. Worst that can happen is that you won't get the mortgage...that you wouldn't have got anyway if you hadn't bent the truth in the first place.

One of the reasons the economy is so shit at the moment is because of subprime lending, including people making up stuff about their ability to repay a mortgage. This includes other outgoings (childcare costs) and job stability (permanent vs probation).

Obviously it is more fun to blame the evil bankers, but at the root of the problem is the attitude some posters have towards the truth. No one wants to think of themselves as a credit risk, but the lender should be making that decision, not the borrower, and the lender needs all the facts.

I think celebrating mortgage brokers who "lie through their teeth" is morally wrong.

We nearly lost the purchase of the house we are now in because of a paperwork error - we needed a remortgage from residential to buy-to-let on our rented-out house, which was in dh's name only. At the same time we were getting a small residential mortgage, jointly, on the house we were buying, to make up the difference. The paperwork was done by Halifax and they passed on the info to Birmingham Midshires (sister company), and somewhere along the line, wires got crossed and the application for the buy-to-let was put in our joint names...solicitor rejected it at the last minute. Re-applied in dh's name only, but the repeated credit searches had ruined his credit rating (which had previously been perfect) and they refused it! Spent a frantic few days scrambling around for extra cash, increased the residential mortgage to the max, emptied savings, borrowed from parents, and managed to get it by the skin of our teeth.
Complained to Birmingham Midshires about the ridiculous decision, even went to the Ombudsman, but got nothing.

Primafacie we were not subprime lendees! I object to that. We had a deposit of 40% of the property price, built up through strenuous saving for nearly a decade. The mortgage repayments were about 20% of our income at the time. We were in about the safest jobs you could possibly imagine, and we are about as risk averse as it's possible to be. And you think we shouldn't have got a mortgage because 'the computer says no'?

You can have differing views to me about the morality of bending the truth to a bank, but, like I said, the reason some good brokers lie is because they can build up a better picture of someone's true ability to repay a mortgage than a bank, which has no flexibility whatever to account for individual circumstances. Some of them are crooks, but just because they lie does not make them so. You are barking up the wrong tree if you think we are the root cause of the property crash!

And interestingly, when we got a mortgage more recently (directly through a bank), they were entirely happy to lend based on our (honest) account of our financial circumstances. Yet if I'm honest, I think our situation is far more financially precarious now (single earning household as am now SAHM, DH working in private rather than public sector, higher proportion of earnings spent in repayments) than it was when we were first time buyers. But based on stupid tick-box criteria, the bank would have had it the other way around.

I agree libelulle there is a huge difference between what is being discussed and sub prime mortgage lending which are a totally different product and often with no deposit or LTV of 125%+

No it's not all 'evil' bankers fault as everyone needs to take responsibility for there own borrowing but very often here we are talking about families that really have done there homework on affordability ect but don't tick the right box.

We have used a mortgage advisor and he has been excellent looking at our situation and recommending us relevant products for our circumstances eg Halifax will lend to us and Principality will not so without us having unnecessary credit searches and wasted application fees.
Our deal is the same price as I would have got going direct and his fees that the lender are paying is clearly marked on the paperwork so very transparent.

And actually sub prime lending is only a problem when it is defaulted on - and it is American sub prime mortgages that have been the issue not ones in this country - houses prices have not fallen to the degree they did in certain parts of America (and they were deliberately over priced in the first place). I have two mortgages which would not exist nowadays - one is for 125% and the other is a buy to let. I have never in 5 years not paid them, they pay for houses which house two families who are on benefits and otherwise would find it very hard to find a home if I did not accept HB. They give my family an income now too and in 20 years or so will be an asset for my children. If you know you can afford to pay it then there is no harm to anyone to tell the bank what they want to hear.

For instance my DH is buying a new house for us and one bank turned him down for not having enough credit rating - he has deposit, absolutely no debt (that is the problem not even an overdraft or credit card in his life) and earns a big salary in a very perm job and our broker went to another bank and found their criteria and DH fitted in there and we have a normal (very non dodgy) Halifax mortgage for a normal, non inflated rate. I think the borker is getting about £800 from the bank when it is all done. That is completely fair as far as I am concerned - he saved us from a bad credit rating and having to pay a higher interest rate as a consequence.

The problem is if you get turned down for something (even if it is because you don't have enough debt) then it is left on your record and is held against you. Having a broker can save you all this and makes it worth the money.

And I am not talking about major lying either - not falsifying income or something but if DH said how many children we had then on paper we could not afford it and that is dumb. I have an income as big as his but don't want to buy the house with him so we know we can easily manage. The chances of being caught are nil and it means we can have the house we need. Getting on a moral high horse about fibbing to a bank is laughable really.