Niche Advice can help you get a mortgage not an empty promise.
One of the very first things we have in adult life is current account often perpetuated by going to university or by your first job. From my own experience, which I believe to be typical, the only time you consider changing this account is when you get married.
This loyalty to the provider invariably leads to approaching the same institution for your first mortgage. Regrettably the loyalty is not always shown both ways despite the length of time the account has operated and its conduct. Perhaps it’s easier to explain your bank’s reluctance to lend to the desired level than you may think or perhaps choose to hear. Put simply, how many would-be mortgage applicants personally know their bank manager these days?
Effectively, whether you or I like it we are just another faceless account number for the banks. To take it a stage further most mortgage departments are disassociated from branch level to a remote centralised unit in a cost saving location. This can mean the bank representative who has the task of sitting in front of you when you ‘pop in’ does not have intimate details of you or indeed the process.
In the past the local Bank Manager would have been able to add their name in support of your application as they would have had the background to put their necks on the line. By background I refer to the knowledge of dealing with your parents, and how they conducted their finances, and how they have financially supplemented your education to give you the best possible grounding in life. They would also be aware of the salary paid into your current account and how a mortgage would impact on your outgoings. In short, they would have built up a DNA profile and premeditated understanding of the likelihood for you to meet similar financial obligations.
The Bank Manager would also have overseen the process rather than act as a go-between with a section of the bank that they have no real influence over.
I suppose this does not present a problem if everything goes swimmingly but things rarely do these days as banks have a finite amount of funds to lend due to the economic climate and quiet simply its easy to say ‘no’ in a remote centre than personally eye-ball the customer to let them know the bad news. There is unlikely to be an appeal process and no one with any authority to fight your corner. In days gone by the Bank Manager would have to ‘front up’ to the applicant knowing the consequences might lead to the parents removing their savings or canceling their investments.
That’s right even as a current account customer who has supported the bank by acquiring their overpriced additional services such as insurances and currency exchange down the years – you are just as likely to be shown the door as the man off the street.
So why did they say ‘yes’ in the first place? Well the branch representative is tasked (and probably rewarded) for assembling a beauty parade with little understanding of the underwriting requirements in the mortgage centre. And, the same Rep will undoubtedly be performing a totally different duty in the bank in six month’s time.
Here are some of the common examples of why lenders decline mortgage cases:
- You might have a buy-to-let property and the bank requires your income to cover the combined mortgage amount with your salary for that property and your new property also – even though your buy-to-let property is let and is making more rent then the mortgage repayments are (I know madness).
- You might have had missed payments on a credit card or have had a County Court Judgment (CCJ) 5 years ago when you were a student but have conducted your finances well since you left college.
- Been divorced and have had to split assets and amassed some bad debt but are now back on track.
- Have a limited company which is making really good money for the last few years but don’t have 3 years full accounts signed off
- Your job is heavily geared towards bonuses and commission but the bank only wants to take your basic salary into account.
I can go on and on but the good news is as we are ‘whole of the market’ financial advisors we have access to an array of lenders and not just one bank, we have solutions for these circumstances and many more that do not fit the tick box mentality, and furthermore we know the decision makers at the lending institutions as we have been dealing with them or a daily basis over a good number of years.
To see how we can help you with your mortgage please complete our Contact Form and save yourself time by getting a lender that will help you or if its more urgent please call me on 0207 9932044
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.