Why has our mortgage in principal amount gone down so much?

[Pickleball]

Ideas I have as to why…

Recently moved into MIL house (3 months ago) to save for new home and mortgage in principal amount looks drastically smaller since we ran the figures last year while renting.

I have given up a £10k pa pt job but have a second job that got a payrise and dh had a payrise that led to almost recovering the £10k job so I’m not sure why it’s so much lower than last time I ran the numbers online.
I’m imaging it may be not living in the same address long enough?!

Dh also turned 40 since the last time we ran the numbers through the bank not sure if that affects it as well.

I don’t think your husband turning 40 will be relevant or your address.

It’s more likely to be you giving up your job or something completely unrelated to your situation like your Bank changing their lending strategy.

If you are thinking of moving soon I would talk to a free broker about how much you could borrow - they will be able to access a range of Lenders not just one.

L & C are a decent free brokerage if your situation is not complicated. But there are other brokers of course and some specialise in more complicated cases involving self employment, for example.

Thanks we are both employed in stable long term jobs with pretty much perfect credit scores so was surprised how much it had changed. I will look into brokers as well thank you.

That’s ok … could just be that particular Lender has tightened up their lending policy at the moment but a different Lender would be happy to offer you a bigger mortgage.

How much has your income dropped by and how much has the mortgage in principle dropped by?

Being lodgers reduces your credit score. Are you on the electoral roll there? That's also important.

how long have you been in the new job?
is it also part time?
your dh is self employed?

I have given up a £10k pa pt job but have a second job that got a payrise and dh had a payrise that led to almost recovering the £10k job

but why would you have need to “recovering the £10k job” when you have replaced it with a better paid job?

I read that as the first job gave them a pay rise which meant they could give up the second part time job, with no financial impact.

Your income is lower

it’s all a bit wooly really

Your income has dropped this is not balanced out by his increasing as he may be in a higher tax bracket than you so your net household income has dropped.
But lenders have also got more cautious and you may have other factors that have dropped your affordability.

You need to speak to an actual mortgage broker. The figures you'll get quoted online are meaningless.

There are SO many other factors that come into play, that just plugging your salaries into a box won't give you anything real.

It's generally based on affordability. You already paying rent previously could have shown more affordability rather than saving excess income (surprisingly). Also col costs might be higher, mortgage rates might be higher and combined with only a slight drop in income that's had an affect on what they are prepared to borrow. Also as has previously been said, their own lending criteria or your risk profile might have changed.

I'd definitely recommend a broker to save yourself a lot of hassle. I had a mortgage in principle agreed and everything was proceeding when at the 11th hour they decided they weren't happy to use my main income source for borrowing and reduced my term massively making it unaffordable. This was for £50k borrowing on a £320k house. A broker got me sorted and the money with me in a couple of weeks.

Ask your broker, they will do a proper assessment and explanation for you. I work for one that is open today, its what we do. (not the one mentioned upthread )

so an update of points…

i had two jobs for seven years hated one so recently gave it up as couldn’t string it out any longer just for a house that never seems to be happening. I’m now continuing the second one.

we are on electoral role at MIL

dc is now at a state school instead of private so no longer have to declare fees which I thought would have made a big difference

didn’t realise not renting would make things worse!

sounds like a broker may be needed

when you say you are “continuing the second one”… is this the one you got a pay rise in? but you didn’t increase your hours?

Easy solution… go from part time to full time

So children moved from private to start since you made your previous mortgage enquiry?

Although that’s entirely dependent on the employer requiring additional staff/hours in that particular role.

or… get a second job so the hours equate to full time 🫤

Are you on the Electoral role at your new address? Makes a surprisingly big difference in risk checking with some lenders.

Mortgages are based on a multiple of overall income minus outgoings. Have you any other new financial commitments/new credit cards/loans etc? What difference in AIP are we talking?

Sadly the option of going ft at this job isn’t possible. I will almost definitely get a ft job once I’ve got a home but we’re looking all around the U.K. and don’t want to start anything then chop and change afterwards.

We are on the electoral roll. No debts or loans but we use credit cards for points and pay them off every month. Have monthly outgoing of storage costs for stuff that wouldn’t fit at mil but that’s not much and don’t think would count as a commitment to bring down the mortgage amount.

@coffeeafter yes dc moved from private school to state school so no more fees and previously had to include them on mortgage quote.

I’m thinking this has to be my drop in income and possibly no longer renting but cash income wise we’ve made my salary back up again between us but perhaps the risk is higher as it’s mainly my dh that’s earning it back.

Hopefully you've been in touch with a broker today who can put you at ease a little?

I know you've said you're on the electoral roll but has that definitely updated on the various credit reference agencies? It often used to take 3-4 months to get to their systems.

Living with your MIL means you are now living off someone else, you essentially have reverted yourselves back to barely a step above children in terms of housing.

It demonstrates no known ability to budget, pay monthly bill, understand maintenance and/or run costs associated with a house which is a major thing thats taken into account by banks.

Its not 'just' your ability to make enough money to pay, that house is the asset your forfeit if you don't pay. You wouldn't lend your car to someone, if you don't know if they can drive it and they have no proof they can drive would you? same difference.

They are assessing the risk to their investment which is more than just how much money you make.

How many children were at private school? and what was the annual cost?