Do appeals against a mortgage rejection ever work?

[TheBrewster]

I am cross! Can some lovely Mumsnetter make me not so...
We had an offer accepted at the beginning of September on a beautiful property (second home) by the sea.
Applied for the mortgage through a broker, he's a bit tardy, but was adamant that we'd get it...no problem whatsoever blah blah.
DH is self employed but we had all the relevant paperwork and everything they wanted-we even had a letting agent do a forecast of potential holiday lets income for the next twelve months, and the survey was fine.
It is a complete bargain too, the vendors are pretty desperate to get their money out.
We are putting down a whoppiing 35% deposit.
Anyway-to cut a long (and very dull) story short, completely out of the blue, after asking for extra papaerwork two days before-they rejected us.
I have just found out why. DH's business accounts took a drastic dip in profits last year-this is because he opened a new premises, and had to put alot of money into the build- but this literally tripled our income overnight. This was made clear in a memorandum from our accountant which was included in the original application.
Why can't mortgage lenders see the farking wood for the farking trees. What we are asking to borrow, is less than our annual income.
So-what's the chances of them changing their minds? Otherwise we'll have to start all over again-and I think I might scream for a very very long time...
Thankyou

Do you have any other lending at the moment. I am talking mortgage on current residential property, unsecured lending like credit cards, loans. Does the business have any lending attached?

Did the purchase of the new premise involve taking out additional lending?

Can I assume that the extra income will show in the 2012-2013 account?

Also, what kind of mortgage were you after? Was it commercial or residential? You said that the broker was a bit tardy, which broker was it and which lender. I used to be a mortgage underwriter in a brokers that dealt mainly with residential mortgages. Sometimes lenders would change criteria with no notice whatsoever and that would scupper your plans and you would have to look elsewhere. It is a very hard market at the moment, and although I am not trying to make excuses, I do think you should be on the blower to your broker asking them what the hell they are going to do about it.

I'm really surprised that your broker hadn't picked this up earlier with your prospective lender, and checked that they were happy with the situation. Might it be worth talking to another broker?

Hi fanancialwizard and ajandjjmum. Yes-there is plenty of other lending in our lives! But it is more than adequately covered by our income.
DH refinanced the business shortly before the new premises opened-but the broker was perfectly happy with all the figures, as was our accountant. There is a current year projection figure on the application by our accountant, and it is considerably more than 2010 and 2011. It's just this year showing the dip.
He's an independent IFA and the lenders are the Leeds.
It's a second home or a holiday home mortgage (does that sound right?!)
When I spoke to the broker this morning he was furious and I sensed embarrassed - he was going to appeal against the decision right away.
I'd quite happily speak to another broker-I'm just incredibly frustrated that we'd have to start all over again.

I think this might be your problem - 'DH's business accounts took a drastic dip in profits last year'.

I have taken this from the Leeds BS underwriting policy - 'Where there has been a small variation in profits, these applications can be
considered subject to:
*A minimum of 3 years accounts
And
*An improving or stable projection (please note this is not factored into
affordability, but required to assess ongoing stability)'

Without knowing the full details I would suggest the lender feels the dip in income is too big for them to be comfortable with.

You can try appealing but lenders currently have a 'can't do' mentality rather than a 'can do' mentality.

Thanks for looking into that KazzaRazza.
It is so incredibly frustrating. I thought the whole point of a human being looking at the applications is that they are bright enough to see the reality rather than looking for reasons to turn you down. We have given them 3 years accounts and a projection for next years (which are actually more than the whole mortgage ) but they don't see it I suppose.
It is blatantly obvious that we can afford this mortgage, but obviously not to The Leeds
I wonder if this will be the case with every lender. The Leeds were specifically chosen because they have no issue with flying freeholds-which this property is.
Ho bloody hum.

TheBrewster - I don't think humans even look at this sort of thing. The numbers are punched into a machine that picks up any discrepancies and sets off an alarm if it sees any huge swings. This probably is a case of "the computer says no", Your broker should try to speak to a manager at the Leeds to get an explanation and try to sway them your way.

The problem you have is nowadays there are very few underwriters, the lenders use processors and therefore they cannot assess the risk as they don't know how to.

I would suggest that if you want to appeal the decision you need to give them something more than you already have (difficult, I know, as you seem to have provided a lot already). Do you have copies of contracts showing increase in income?

Try the mortage works?
We have 5 mortages with them and have never had to show evidence of our earnings.
All they ask for is statements to show that our deposit has come from long standing bank accounts. This is due to money laundering.
These have all been BTL with 25% deposits.

The Mortgage Works don't lend on holiday lets.

After Kazza's post I actually think that even a human underwriter would say no if it was a significant dip that year. Whilst it is good to see the following years projection if that did not pull off (and some do not) then they could potentially be adding to their bad debt profile.

A small dip would probably be more agreeable because it is much less risky and most lenders do not like any form of risk at all now.

I understand everything you are all saying and that in theory a significant dip in profits would send a lender running. But these aren't normal circumstances. DH's business is recession proof and the expansion has as I said-tripled our income. He is a pharmacist-and the money last year was ploughed into a new shop attached to a large doctors practice.
I suppose the reason why I'm so frustrated is that it's really not rocket science how well he is doing-this is completely a case of "computer says no" although I appreciate that this probably isn't a computer!
Like Kazza said-it's a totally "can't do" attitude-like they REALLY want an excuse to turn people down.

I agree.

I know it is frustrating.

How about trying for a loan instead?

Hi RedHelenB. Wouldn't the repayments on a loan be huge?