Mortgage declined -WWYD

[Potterurotter]

We are selling and got offer accepted on a property we love, today our mortgage got declined dh is self employed reason being net profit would likely be impacted by COVID. We have already committed to renewing our lease to 99 years on completion and have paid out for solicitor mortgage broker etc. If we don’t sell they will put the lease up maybe by another 10k next year. WWYD? We are contemplating applying again to another lender, we are desperate to move for a third bedroom for a baby. To save a big waste of money we are contemplating selling up and renting for a bit until we can get a mortgage agreed, I.e. he is working again, he already has a full diary booked from April 12th he is a driving instructor

@ItsSnowJokes I appreciate your advice. Yes we do have to pay their legal fees. A leasing specialist told us it would take 6-9 months if we did that.

@TailEndCharlie

Panic not. We had our mortgage dumped after exchange! Go through a broker and they'll find another deal for you. It all worked out in the end for us.... stressful though!

This is my nightmare. We are about to exchange. Why was it dumped?

I'm finding it hard to follow what you're saying about your lease. So you've only got 54 years on the lease? And you've agreed to pay for the lease extension as part of the sale?

Whether or not you do sell your flat now, the lease needs renewing asap or it will only get more expensive to renew. This should have been explained to you when you bought the flat. How long have you lived there? It gets a lot more expensive once the lease drops below 80 years.

£300k on your salaries is a lot isn't it ? I'd reduce the amount you want to borrow and you'll probably get it !

That seems like a huge income multiplier to try to borrow in the current climate, however I'm not a broker so maybe it's normal.I couldn't imagine taking on a £300,000 mortgage on our similar guaranteed salaries.

67k?
67000x 4.5 =301500

Most banks are lending 5 times now

They are not. Not when one person is self employed. My DD got 4x. She’s not been affected by Covid.

Also look at LTV ratio. Yours is 25:75. They look more favourably on a lower loan - say 65%. I think 4.5x 2 incomes with only two years of books is an issue. DD had to provide 3.

@PresentingPercy

They are not. Not when one person is self employed. My DD got 4x. She’s not been affected by Covid.

Apologies I didn't mean self employed !

I know you can borrow that much but why would you ? Especially in the current climate ! It must be thousands and thousands a month ! 😱

@Potterurotter please, please go to whole of market broker for this. You want London & Country, John Charcol or Mortgage Advice Bureau.

@huuuuunnnndderrricks surely that is up to the OP and their finances, not for you to worry about.

Well yes of course but she got declined so she should be worrying about it ! They decline for the reason that they think you can't afford to pay it back 🤷‍♀️

My dh is self employed and at the time we had to apply, l wasn't earning much at all - went through our bank cos they could see how much was going into the account every month

Yes it is at the maximum end but we will be paying the equivalent of the mortgage to live in a 3 bed of/when paying rent. This is what is happening. It is affordable for us in real terms when dh back to work 12th April

Firstly I don’t think it’s fatal that you’ve had a rejection. I had two before my successful application. I just didn’t meet those underwriters’ criteria. As long as it’s not credit related, such as defaults, there should be someone willing to consider you.

If I was you I would raise a complaint with the broker, they should be keeping a breast of the market and underwriting appetites of particular lenders. I might even suggest that their failure to have such knowledge led to them advising you negligently and there means that any losses you suffer are their fault.

(Spoiler - it’s a weak argument and ‘losses’ would be hard to prove but worse cases have succeeded).

Ask to be referred to a more senior broker who can reassess the market for your circumstances and reapply to a new lender (maybe one that manually underwrites).

Good luck!

It’s just a multiple that will be difficult with poor earnings from the self employed partner. Yes not as if a driving instructor is on a sharp upward trajectory of earnings. My DD is. They weigh up jobs and future earnings. Unless a driving instructor works more hours, there is no extra money. There’s no seniority or higher earnings from that.

£300,000 is not £thousands a month. I know DD doesn’t pay anywhere near £2000 a month for a bigger loan. Quite a bit less and hers is 20 years, not 25. I think though that loan to value ratio and the self employed issue are the barriers. Could you ask for 4 x and see if that produces offers?

@PresentingPercy also that he is newly established and has one full year of accounts but he has 50 hours per week booked in from April and plans to expand, perhaps letter from accountant would assist which they are happy to do. Nightmare

Due to COVID lenders are taking into account how SE incomes have been affected by reviewing not just tax documents but business bank statements pre and post covid. If these show a significant decline it's hard as a lender to approve with the uncertainty we still have regarding the future. Its harsh I know but a reality my SE dad has barely worked at all this last year and whilst work is there who knows what will happen. Take advice from your broker they will know each lenders process and who may be more likely to approve.

DD required 3 years. Not 1. She had to prove she was established with details of her earnings, tax account etc. Yes, details were required from her accountant.