Mortgage application declined -10% deposit not enough

[AngryFeet]

Feck. I didn't expect that. Our mortgage broker is trying Santander next and doesn't seem too concerned. We are FTBers which is the issue I think. Our joint income is £78,000 and we are looking to borrow £265,500. Getting a bit worried now. We have had an offer accepted (happened very fast before we were expecting to start looking so no mortgage in principle).

This is all starting to get stressful. I thought I could breeze through the whole thing without a rise in blood pressure .

Is your mortgage broker charging you? I used to work for Santander selling to brokers. They get good commission. Make sure he's getting you the best deal, not getting himself the best commission.

No he is a friend so doing it for free. Just got a call saying Santander approved us in principle so panic over :)

Well done.

Just out of interest, who did you apply with the first time around? We are on a joint income of £75000, looking at borrow about £260,000 with a 10% deposit too. Main problem is I have a house abroad that I am paying £750 a month mortgage on.

I have had a mortgage in principle from Halifax saying we can borrow £266,000 but your story scares me!

Good luck with the application!

Nationwide said no as they were concerned about lending 90% to a first time buyer (even though we could easily cover the payments - less than a third of our salary).

Santander said yes in about 7.5 hours!

Mortgage in principle means you will be fine unless anything changes in your circumstances or something was wrong on your application :)

Not being willing to lend x% to someone because they are a first time buyer doesn't make sense. Not being willing to lend £ to someone because they are a first time buyer makes more sense.

I was told that the reason banks started requiring higher deposits during the credit crunch was simply that they needed to money, and the reason now is because they want to limit their risk to house prices, i.e. if they require a 20% deposit then if they need to repossess and the house value has dropped their money is safe up to 20%

Thanks AngryFeet, very reassuring.

RCheshire - that makes sense, wish we could get together a bigger deposit but dont think it will happen in time. We are planning on making overpayments every month. We are buying in London though so not sure if that will effect things as the property market here seems a bit different to the rest of the country.

Yes looks very different Filey1. My brother has recently sold a flat in London and had no problems.