Last minute mortgage problems - advice and insight please

[TheEconomista]

We've been trying to find a house to buy since June. Lost a buyer, found a buyer, lost a house we loved and then literally didn't see anything for months. We've now had an offer accepted and the chain is holding, for now.

BUT. After getting a decision in principle through our broker, the deal we were going for is no longer possible, for reasons we can't quite unearth. We've tried a second lender, and something to do with our salary sacrifices (share plan, other smaller pots) is making this a no-go even if we cancel them. Both are major global lenders.

The broker is now coming up with suggestions of smaller, I assume specialist, lenders. We are high earers and admittedly borrowing a lot on a five year fix, but it's to do with a timing issue. Investments will pay out over a period of time and we'll knock a big chunk off the equity, so when we remortgage the amount will be much smaller (about 50%).

Has anyone been through this recently and managed to secure a deal? Any watch outs for considering smaller lenders? I get the sense criteria have tightened even since the summer which is what we are falling foul of. DH isn't sure if our broker has just fouled up - i.e. got the affordability wrong or not included some factors (like salary sacrifice) in his calculations, or if it's just a movable feast between honing in on a deal and securing one.

Any mortgage brokers out there?!

Mmm... I'm a broker. Was your broker an independent or working through an estate agency?

Work for a broker- would have questions but certainly wouldn't rule out smaller niche lenders just because they are smaller, there are so many brilliant lenders that most people have never even heard of. Most important that the product is the right/best one for you.

Independent broker all the way- speak to a second one for reassurance?

It's an independent broker. He's seemed brilliant the whole way through but now I have doubts. He says he's consulted eight different lenders now and my DH describes the one on the table as 'a lender of last resort' - crazy rate and product fees.

It's a hell of a lot of work to produce the info but I am wondering if we should try another broker at this point. We really don't want to lose the house and there's no need to. It's a timing issue and the whole salary sacrifice payslip thing is a shocker. Apparently the mainstream lender we honed in on won't budge.

I hesitate to criticize other brokers as most really know what they're doing (apart from some inexperienced one's usually in estate agents).
Ideally, all this work should have been done prior to you finding the house. I always go over the detail and collect documentary proof to verify qualification to the lender's criteria. It is very important to do this as every individual has different circumstances and every lender has different criteria; it can get quite complicated finding the one who will advance the right amount of money with your own background.
There certainly are lenders who will ignore discretionary deductions from your salary. Is there anything unusual about the application? What is the loan to value %?

I can't fault my broker - they deal with complex cases and mine was ridiculous (debt, defaults and transferring a property from 3 names to 1)
However they are v v expensive. I got my mortgage with the mortgage lender (that's their name!) and it completed yesterday

To add to that, I'm also on min wage and they took my commission into account which was brilliant

Anyway, definitely would recommend you get a second opinion from another independent broker. Just honestly explain the situation and ask for advice.

@JulianSt - LTV is something like 74% but it is a large amount.

I'm annoyed that the salary sacrifice is coming up now as we provided all information that was asked for and those elements were certainly visible. It's maddening as we have a perfect credit record, no other debts, good annual bonues and income from shares. Compared to the struggles many have, we really shouldn't give a lender a cause for concern. We've striven for every penny and this is our opportunity to secure the family home we've dreamed of and we might lose it over this.

LTV excellent for lender coverage. I know the advance is 'large'; the main lenders I am using at the moment for larger loans are HSBC, NatWest and Santander. Off hand, I know Santander are flexible with deductions, HSBC have started using bonus income again and NatWest easy to deal with. Halifax also have quite a useful large loans facility.
The devil's in the detail with mortgages. What part of the country are you in?

Have you gone through your bank?
We got a mortgage through Natwest.

32% deposit (68% LTV and this might we the crunch you are over the 70% band).

I pay 25% of my salary into a pension via salary sacrifice and this didn't make a difference. Paying part repayment and part interest only. Borrowed quite a chunk of money.

I appreciate every circumstance is different. I would recommend Natwest to be honest.

This is all really helpful, thank you. It’s Santander who won’t take the salary sacrifice.

We haven’t tried our own bank (Nationwide) directly. We have an existing mortgage with them.

The deals we are looking at are part repayment, part interest only. Plan is to whack the interest only bit in the next five years, then remortgage.

If the deduction is contractual, the lender will reduce the qualifying income accordingly. If it is discretionary and you can state that you'll cancel the payments if you have financial difficulty, then they'll waive it.
NatWest are good with affordability and part/part, but I guess your broker will have asked them.
Don't be put off by lenders you haven't heard of either, many are really large lenders, you've just not heard about them as you're not in the mortgage industry.

Thanks @JulianSt - it’s all discretionary. Broker has said we can just reduce/eradicate it. No dice. Unless he’s just not asking the right questions it seems definite.

We can empty every pot we have and almost literally sell the family silver to get a smaller mortgage to work but at actually feels more exposing. However we’d be taking on about £100k less debt, so there’s that I suppose 🤷‍♀️ Definition of first world problems hey?! 😳😆

I would honestly approach the banks yourselves and see what deals you can get directly- we started through a broker (independent) on our first mortgage- and there were so many delays (we were buying the house we lived in that family owned) that we felt the broker wasn't actually doing anything- so Dh spent a day with mortgage appointments in the high street and so for further house buying over the years we never tried a broker again - 💯 though go see the people you have a mortgage with right now as a starting point

Run it past another independent to make sure your broker has got it right; there's a lot of criteria to understand.
'Going direct' isn't going to help i suspect.

I'd second the run it past another broker suggestion too

I’m not a broker, nor do I work in finance, banking, etc.

But if you fix for 5 years, when interest rates are likely to rise, then you pay down half the mortgage just as you move to a variable rate. (ie, just when the bank would otherwise make some profit from you), then you’re not an attractive proposition to the bank as they’re unlikely to make much profit off your mortgage.

Can you convince the bank that (a) you can definitely afford the mortgage, AND (b) they’ll definitely make lots of lovely £££ out of you?

They’re businesses in it for the profit, they don’t care about your financial future.

Have you rang the bank yourself and asked what happened. Personally I would want to know if the bank had changed their requirements or the broker had not done it right.

Santander will lend up to £570k at 85% LTV, so you may get some joy there.

I didn't use a broker and applied direct as I'm porting a repaid mortgage so I can get my ERC back, and I have to say, they really went through my payslip deductions and monthly expenditure on bank statements with a fine tooth comb.

However, if you can get your employer to write Santander a letter saying gross salary = x amount, salary sacrifice = y amount all discretionary, you may be able to get it through to their underwriting team.

Good luck!

We used every last penny including children's savings to buy this house as I was self employed and did not quite have 3 year so accounts. We paid the broker a massive fee too but he was very good in finding someone prepared to lend. It was worth it.

I am not sure what you can do in your situation but I would probably cash everything else in - the shares etc if that is the only way to get the big mortgage.

Santander will lend £1million at 85% LTV; call a broker. ;0)