Some of you have asked for your names to be witheld, so we will not publish any, although all were supplied.
Case 1
A wonderful example which fortunately has a happy ending as it should exchange this week was a married couple just about to have their first baby. Mr works for the area’s largest and most secure employer and his wife is on maternity leave. Mr has 3 x p60 all showing £50k salary and his latest payslip is indicating he will make £53,000 this year with a pay rise in January pushing next year even higher. He has a 15% deposit and applied directly to 2 lenders with good rates advertised online. After 2 weeks the first declined him as they had a gap showing on the VR which they were worried about and the second just messed about for another 2 weeks. All he wanted to borrow was 112K a dream case 1 year ago as AAA credit score and all cards are cleared monthly in full and no loans.
I fortunately managed to get it through in a week with Abbey but at 6.44% fixed for 3 years as that is all they have to offer which is disgusting as the rate drops to 4.79 is you have a 25% deposit.
Case 2
I'm a mortgage broker and I'm assisting my wife in buying her mothers home (after probate).
Wife earns in excess of £250,000.
She has a current mortgage in her name alone of £656,000.
She has a couple of loans and credits cards as every normal woman does however she maintains them very well and regularly pays off large sums.
We have applied for a mortgage with Northern Rock as a second home remortgage, they have told her that she has a LOW credit score and therefore can only lend about £20k Both Equifax and Experian have her as a HIGH credit score!!!! We asked for 65% of £115,000 and on the product we were asking for the mortgage payment would have been well below £350pcm.
I should point out that we tried to remortgage the current home with NR but it was declined for the same reason so I elevated it and they approved £500k but we required a minimum of £656,000 to repay the existing loan. I then elevated this to Director level and they approved a remortgage pound for pound. (£656,000)
She had initially asked for 85% of the value £1.1m as on her income regardless of out goings NR affordability calculator would allow for this. (we decided not to continue with them after this)
Her current Mortgage requires an IO payment of £3600 pcm however she is awaiting completion of her HSBC remortgage which will be BBR + 0.69% Lifetime tracker which takes her mortgage under £2,000....
As you can see, affordability is not an issue.....
It seems to me that NR specifically are looking for a reason NOT to lend.
Case 3
I've recently had an application turned down to remortgage a buy to let property for a client, because "there are too many properties in local authority ownership in the area". It was a 75% ltv with rental income coverage of 140%
When I enquired as to how many was too many, they couldn't put a figure on it. They would only say there were too many.
Case 4
Client with BMS has £400k interest only mortgage on property valued £1.36m, plus unsecured debt £36k, UK income approx £75k plus earnings from abroad. Wants to buy new property £230k needs £195k mortgage. Existing mortgage to be converted to self funding BTL with confirmed rental £3600 per month (rental is actually sufficient to cover both BTL and new mortgage). According to BMS he cannot afford the new mortgage! When asked why not, as his mortgage will be 50% of what it is now - all I got was "because he can''t", no calculations or reasoning!. So presumably on that basis BMS will be starting repossession proceedings because if he can''t afford a £195k mortgage he won''t be able to keep paying their existing £400k mortgage!!! Oh well...next lender please....
Case 5
A couple of weeks ago I had the following mortgage case declined by Nationwide - Property value £210,000 - Loan Required £130,000 (62% LTV) - First income £33,000 - Second income £12,500 (Company pension & Incapacity benefit) - Credit histories clear - Loan included £25,000 capital raising to clear credit cards.
Declined "in case they take on more credit cards when we have issued the loan".
Case placed elsewhere with ease!
Case 6
I recently applied for a 70% BTL Mortgage with Bank Of Scotland, for a purchase of a flat valued at 110k, i have my existing main reidence mortgage with them at 520k, and 5 buy to let mortgages with them already, in total around 1 million pounds of borrowing with them, i also own 19 other buy to let flats, and one commercial unit, no missed payments on any of my mortgages.
i was declined, something was mentioned about multiple searches however all the searches were done by BOS, My broker pointed this out to them that this was the case, and was told we know but rules are rules, i make my living from my portfoilio and regard myself as a professional property investor, if they wont lend to me they wont lend to anyone, bottom line is the banks are simply not lending money any more to any one full stop.
My broker run another aplication with the mortgage works at 65% again declined, until this is sorted out values will continue to tumble and repossesions will grow, which they will dump for even less and spiral downwards out of control, the lenders are puting the noose around there own necks, which will be there own down fall, as jobs will go, all caused by there reluctance to lend, even to proffesional property investors.
Case 7
House values £1.2M
Re-mortgage £960K (80% LTV)
City lawyer earning £400K average. This year £400K in first six months.
Answer: No lender interest as LTV too high!!
My comment is that for any mortgages today you need 40% deposit/equity for best rates, and anything over 75% the rates and fees are untenable!
As for B2L re-mortgages........forget above 75% LTV!
Case 8
Scottish Widows bank have just rejected an application as follows:
House value £750k, remortgage on offset required £279k, Clean credit history. Latest net profit c £200k (provable), offsetting the whole £279k but occupation property manager/consultant and they 'won't touch anyone with anything to do with property as very risk averse at the moment' . That decision was by an underwriter, not computer. I fear that when HBOS is tied to LloydsTSB, their lending will fall into line with Scot Wids bank and C and G which will certainly not free up the mortgage market.
Case 9 - This one may be more about overly cautious valuations, has anyone come across valuations where those providing them would appear to be making sure that they might not end up with egg on their faces at some point in the future? Do you think this is an issue too?
I have had 2 recent cases where valuation has stopped everything dead. Client 1 needed to raise £50000 to buy into a small business to keep it running. He tried to raise the funds by remortgaging his property, valued 4 months ago at £410000. (Not unusual in the area.) Valuer put the price at £325000, thereby making the extra money inaccessible. New business goes down the Swannee. Client 2 at the opposite end of the scale, has a 1-bed flat, valued for second charge purposes 3 months ago at £85000, now wants to remortgage instead to take advantage of the better rates. Valuer puts the property at £65000, which also kills the deal. I do not understand why the lenders are downvaluing what are their only assets to such a ludicrous extent, unless it is the CEOs of the lenders making sure that they will get their performance bonuses next year, because none of us will, that's for sure!! Time to get tough with these sharks Mr Brown, and not just talking tough, but action or else tough!
