What's the landscape like with regards to applying for new mortgages?

[Satsuma]

Specifically:

- I will hopefully be clearing my (single) mortgage in the next 2 years. At some point in the mid-term future OH and I would probably look to move and therefore need a new (joint) mortgage of some amount. Both our credit ratings are tip-top and we'll go via a mortgage broker I imagine.
- There used to be a 'thing' whereby it was advised to keep a very low balance on a mortgage account - historically this was explained as free storage for your deeds (no longer relevant I believe); and lately for retaining "credit worthiness" on your credit file with the regular payments.
- However my last few credit reports have all contained the details of credit card/mortgage balances and monthly payments, so I can't see how having a notional £1000 left on a mortgage would make any difference when it is all laid out to see anyway.

I have heard horror stories of quite solvent friends finding it the devil's own work to even get a fairly measly sum from their existing lenders, let alone new ones, more recently. Any recent experiences or market commentary gratefully received.

Thanks
Sats

[GrandOiseau]

Wouldn't make a difference, don't worry about it.

[Satsuma]

Wouldn't make a difference, don't worry about it.

Keeping a low balance won't make a difference you mean?

Any thoughts on the general state of making applications these days too? I probably only hear about the cases where it's difficult or things have gone wrong, so they may just be the minority - or are they?

[GrandOiseau]

Wouldn't make a difference, don't worry about it.

Keeping a low balance won't make a difference you mean?

Correct

Any thoughts on the general state of making applications these days too? I probably only hear about the cases where it's difficult or things have gone wrong, so they may just be the minority - or are they?

Invariably the people who have had problems, have had problems for a reason. People don't like admitting they have debts or are disorganised or didn't give the full/correct information when applying. Make sure all your finances are in order and clean. Don't try and beat the system and you will be fine. At the end of the day lenders want to lend, they are not out to deny you finance. If they do, it is usually for good reason.

[UncleEbenezer]

Invariably the people who have had problems, have had problems for a reason.

Invariably?

Once upon a time I'd've thought so too. But real life says otherwise.

[GrandOiseau]

Invariably the people who have had problems, have had problems for a reason.

Invariably?

Once upon a time I'd've thought so too. But real life says otherwise.

Eh? Care to elaborate?

[Satsuma]

One of my friends (i.e this is from the horse's mouth, not a friend of my aunty's dog's cousin anecdote!) has an extremely well paying job, has been in it for 20yrs plus and spouse also on good salary. They were living in a house they were comfortably overpaying and needed a relatively low LTV for a move. Credit scores and living costs all fine etc

He approached his existing lender who wouldn't give him the time of day, despite having been mortgaged without issue with them for many years.

They eventually found a lender who would offer, but on the condition they could stress test their finances to interest rates of 10% (he had done sums based on stress testing to 5% but that wasn't enough for them). This was a couple of years ago, so maybe things have calmed down a bit now, but it stuck in my mind, clearly!

[UncleEbenezer]

Eh? Care to elaborate?

My own experience not long ago.

Seeking a mortgage in the ballpark of 50%, and about 1.5 * expected income. Age 54. Term very negotiable, but my startingpoint was "until I hit state pension age".
Credit record of creditcard (paid in full every month), plus credit-ish contracts like mobile phone (ditto). No blemishes of any kind.
Age 54, so less than a year to availability of pension lump sum, which could repay the mortgage in full (not that I planned to touch the pension so soon - just that it's a security).
Amount also more than covered by other investments outside the pension, but which I also didn't want to touch straight away for tax reasons.

I was surprised to be turned down. Offered £20k less (cash offer) than I had anticipated (with mortgage), and wasn't surprised to see the house subsequently sold at the latter price.

[GrandOiseau]

One of my friends (i.e this is from the horse's mouth, not a friend of my aunty's dog's cousin anecdote!) has an extremely well paying job, has been in it for 20yrs plus and spouse also on good salary. They were living in a house they were comfortably overpaying and needed a relatively low LTV for a move. Credit scores and living costs all fine etc

He approached his existing lender who wouldn't give him the time of day, despite having been mortgaged without issue with them for many years.

They eventually found a lender who would offer, but on the condition they could stress test their finances to interest rates of 10% (he had done sums based on stress testing to 5% but that wasn't enough for them). This was a couple of years ago, so maybe things have calmed down a bit now, but it stuck in my mind, clearly!

So, just to confirm, they got what they wanted in the market place?

I am working in IT on a mortgage retentions project. Obviously I can't talk to for all lenders but certainly this particular lender pro-actively offers their favoured customers new deals. Ideally they don't even want these customers to even go out into the market place but if they do they want you to have their best offers already on the table. It's highly unlikely to my knowledge and experience that your friend would have been turned away by this lender - quite the opposite - given your statement of their affairs. And any lender rejecting their best customers like that on a regular basis really isn't open for business at all. It is possible there is some specific eligibility criteria that they failed but clearly there is nothing you describe that suggests that. And my point really was that even if they had knowledge of this they are unlikely to confide in close friends - far easier to paint the lender black. I had a friend who had a commercial mortgage revoked. And he couldn't understand it, thought he was the perfect customer, only to then discover his business partner and brother had been cooking the books. Not saying it's as drastic as that but it's an example of how things can not be all they seem. Banks do sometimes make mistakes - or rather they are given false information or interpret information wrongly. Any decision making process, especially a complex one, can fall foul but clearly it's in the best interest of lenders to avoid this.

For what it's worth gross mortgage lending is flatish in 2017 so there isn't anything significant happening in the market in general.

[Satsuma]

Thanks all - good to hear first hand and "behind the scenes" accounts of what's going on. As I say, my friend's epxerience was a few years ago when things were stricter I think, but they had no real axe to grind about any lender given they were casually telling me this tale over a coffee in their new home, so all was well in the end.

I am younger than UncleE, but other than that our circs are broadly similar (albeit I have less investment income abut longer till retirement so I cancelled one out with the other )

It'll be interesting to see how things develop as Brexit negotiations start and everything gets thrown up in the air again!

Many thanks for contributions on the thread
Sats

[melonfool]

Thanks all - good to hear first hand and "behind the scenes" accounts of what's going on. As I say, my friend's epxerience was a few years ago when things were stricter I think, but they had no real axe to grind about any lender given they were casually telling me this tale over a coffee in their new home, so all was well in the end.

Sats

Actually, things are way stricter now. The way mortgages are assessed has changed dramatically and it's all about affordability, not income. Unless you have no income, then it's all about income.

I have oodles of affordability, having 3x the mortgage amount I want in savings, and current income, but that is due to end in Nov (short term contract) and I have been refused £60k, on a £260k house.

I have my last chance broker now looking again for me. But Charcol refused to act for me, my current mortgage co turned me down, my previous mortgage co turned me down, London and County have (eventually, their dallying about is now the subject of a complaint) turned me down....so I am now looking at this final chap for salvation - he thinks he can do it on my last year co accounts.

Ironically, I now also have one of my clients who wants me to work for him full time from the end of this current contract, which is great, but of course he can't actually put it in writing right now as he is waiting for some funding to be confirmed.

So, yes, my circs are odd, but the rules are a lot tighter than they used to be.

In your circs you will be fine, but be prepared for it to take a lot longer than you expect and to have to tell them literally everything down to how many teabags you use per week!

Mel

[redsturgeon]

I have to agree with Mel and UncleE

We have been mortgage free for 16 years, owned our own home outright for all that time. Significantly over 7 figure valuation.

We want to borrow some money for an extension, less than 15% of the house valuation.

We have business account going back 10 years, we can show more cash in the bank in our company accounts than the amount we wish to borrow and we owe no money in our company.

We are completely debt free, no car loans, no yachts, no private jet!

I could take out my 25% tax free sum to cover it also.

Went to the bank with whom we have had our current account for the last 20 years+ they can see exactly out income and spending patterns over that time. Our four children are now through school so our cost have come down significantly from ten years ago.

You'd think this would be an easy tick box exercise for them...wouldn't you?

But no they are not sure that they will be able to lend us as much as we want, they need more figures.

They need a complete breakdown with quotes of all costs to be incurred in the extension, down to kitchen suppliers, flooring, landscaping as well as the main contractors and since we are project managing and employing trades separately, plasterers, electricians, plumbers etc all need to be able to quote on this job which clearly we cannot take to planning until we have the clearance for the mortgage.

We are at a impasse in this chicken and egg situation.

I am now thinking it would just be easier to take the tax free sum!

John

[melonfool]

John

You still work though, self-employed?

I gather Santander and Halifax are best for the self-employed.

If you want, I can give you the name of the broker I am using, he was recommended by a friend who has used him a few times. He seems confident and says it's all about how you pitch the request. What L&C did 'wrong' with me was to just use my current fixed term contract as evidence of income, and then got me turned down as it has an end date and I cannot show any extension. He says if they had used my business accounts for the previous two years that would have been better.

Mel

[redsturgeon]

Well not exactly self employed but rather employed via our own ltd company at minimum rates and taking rest of income as dividends.

I think we will be OK in the end but it is just the hoop jumping that is annoying.

John