Refused mortgage approval at last min - what now?

B

Bambo

Registered User
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Hi,

Im new here and looking for some advice. We are selling our house and they have signed contracts today. We were due to sign contracts on new house next week, and had been told by bank that we have current mortgage with that we had approval - however this was verbally over the phone. I knew something was wrong when they came back to me early this week looking for more statements....and they took until today to tell me that it was actually declined. I asked for the reasons why, but you have to write in and request it, for which i dont have time as I dont want to lose this house.

I have arranged a meeting with a broker for Monday - but im really stressed as this last bank now have all our statements etc. We are really under pressure to sign these contracts and I desperately want this house. We have no loans as we cleared them all in July. Our statements arent great, but nothing serious or anything. We were only looking for an extra 25k onto our current mortgage.
My main worry is...now that we've been refused by one bank...will that sit on our credit rating forever and have we no hope of getting any mortgage now?
 
Seems odd that you went ahead with the purchase without actual approval as opposed to approval in principle (if even that). Did your solicitor not point out the risks involved?

Are you dealing with a broker or are you referring to the lender's representative above?

Did you shop around and try as many other lenders as possible?
 
As we had applied only recently to current bank and had current mortgage with them, the person told us the amount was no problem at all, no need for payslips, bank statements as it was only 25k extra no probs. We even got a call to say it was approved fully - but "apparently" some mistake was made. I only found out that they actually declined us today. I didnt go ahead with any sale..we havent signed any contracts yet, but i dont want to lose the new house. We were just using the one bank , Im trying a broker on Monday.
The most important thing is selling this house which can go ahead as normal anyway regardless, Im really unhappy here.

At the same time, I really dont want to lose the new one - its a dream house and a very good price, less than what most first time buyers spend.

Do you think a broker can do anything considering one bank have refused credit?
 
Bambo said:
Im trying a broker on Monday.
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Who?
Do you think a broker can do anything considering one bank have refused credit?
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Perhaps. Why not just start calling around the various lending institutions yourself.

What is your situation - e.g. sale price on your existing house, outstanding mortgage, purchase price of new house, other debts, net income etc.?
 
we have 260,000 owing on old house, selling for 317,000.
Purchase price of new house is 310,000 , so we are looking for 92% of this, 285,000.
We have no outstanding loans and our gross annual income together is around €60,000. Net monthly income for both of us is about €3720. I think the problem is that with a few banks we would only qualify for a loan amount of 270,000.

Ive arranged a meeting with IFG mortgages. I dont think there is any point in trying the lending agencies myself...its quite difficult when you only have one set of bank statements and one p60 etc...how on earth can you submit them to a lot of banks at one time then...plus salary certs etc. The fact is we need approval in a rush.
 
Bambo said:
we have 260,000 owing on old house, selling for 317,000.
Purchase price of new house is 310,000 , so we are looking for 92% of this, 285,000.
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I don't get this. You're making €57K on the sale. Let's say €50K to allow for legal fees, other expenses, rounding etc. So why are you not looking for nearer 84% or so?
its quite difficult when you only have one set of bank statements and one p60 etc...how on earth can you submit them to a lot of banks at one time then...plus salary certs etc. The fact is we need approval in a rush.
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Do they insist on originals? That's not how I remember it but it's been a while.
 
Maybe it's a blessing in disguise as you would perhaps struggle to pay this new mortgage. You don't say what your normal monthly outgoings are but if you have no savings or loans it looks like you're maxed out at your current mortgage level.

Question: if your "dream house" costs less than the selling price of your current house, why do you want to up your mortgage? Stamp duty?
 
we will have to pay stamp duty of 5% of the purchase price, also come up with the 8% shortfall the bank dont lend you, plus solicitors fees and agents fees. If we are lucky after all of that there will be maybe 4 or 5k left over - I dont think knocking that off my appliction will make a difference to the approval.

I think they insist on originals. Would you not recommend a broker...would it not be faster?
 
extopia said:
Maybe it's a blessing in disguise as you would perhaps struggle to pay this new mortgage. You don't say what your normal monthly outgoings are but if you have no savings or loans it looks like you're maxed out at your current mortgage level.

Question: if your "dream house" costs less than the selling price of your current house, why do you want to up your mortgage? Stamp duty?
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We only have a mortgage of 260,000 on our current house. New house purchase price is 310,000. selling price on our house is 317,000 which leaves 57,000 but which is swallowed up in stamp duty (15,500) agents and solictor fees (8,000) and that 8% the bank dont finance!

we wouldnt struggle to pay this mortgage - we have no loans, we cleared them all - we did have huge loans but cleared them all. We do have savings too - SSIA and credit union.
 
SD €310K @ 5% = €15,500
8% shortfall = €24,800
Legal fees =~ €4,000 (probably a lot less!)
EA fees =~ €1,550 (0.5%)
Total = €45,850

That seems to leave at least €10K!
 
ClubMan said:
SD €310K @ 5% = €15,500
8% shortfall = €24,800
Legal fees =~ €4,000 (probably a lot less!)
EA fees =~ €1,550 (0.5%)
Total = €45,850

That seems to leave at least €10K!
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Estate agent fees are 1.25% plus vat
 
Your solicitor and EA fees look high to me. You should be able to get c. 0.5% EA fees for the sale of your house. You solicitor fees should be nearer €2K as well as far as I can see.
 
According to your figures your shortfall is less than 24k. Surely your credit union/SSIA savings can cover this if it's a dream house on which you don't want to lose out? Does the refusing bank know about your savings? A single fully-funded SSIA would almost cover the shortfall by itself.

By the way, it's a while since I bought, but is 8k for solicitor fees not a bit high?

[post crossed with the above, naturally enough :)]
 
Im not paying the agent for purchase of the property. The cheapest agent fees I could find - and i did shop around, was 1.25% plus vat for sale of house.

Solicitors fees for both sale and purchase are approx 3,900 - her fee is actually only 1,000 for each house, but the extra 1,900 is for searches etc etc - so thats the total figure.
 
To borrow €24K from a CU you'd need a chunk of that on deposit/in shares. Not a good way to borrow.
 
Bambo said:
Im not paying the agent for purchase of the property.
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My mistake - I misread your post and edited mine subsequently.
The cheapest agent fees I could find - and i did shop around, was 1.25% plus vat for sale of house.
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I'm surprised. My brother in law is in the EA game and recently bemoaned to me the fact that most people haggle them down to 0.5% these days.
Solicitors fees for both sale and purchase are approx 3,900 - her fee is actually only 1,000 for each house, but the extra 1,900 is for searches etc etc - so thats the total figure.
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Why is she charging €1K twice?
 
The thing is, i desperately need to get out of this house for a lot of personal reasons - and thought i had found the perfect place.

I'll just see what the broker says monday.
 
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