Can someone explain mortgage company logic to me
Discussion
I've just been declined for a mortgage on a second house, but the reason they gave to my broker is "because the second property is less valuable than the first".
Some background...
I own 50% of a flat, bought some years back with a friend (it was easier for us to get onto the market jointly), currently worth around £450k, outstanding mortgage for £270k. I no longer live in that flat, but the other co-owner does. I live with my girlfriend in a rented flat, and we have been looking for somewhere new to buy together now we're at starting-a-family age.
Given the state of the housing market we have decided not to stretch ourselves at all. The new house costs £330k and I have a 25% deposit. I have a good income and the mortgage payments on both are easily affordable, even without the other co-owner paying his half on the first flat (which I realised early on I would need to be able to cover to get accepted on a new property).
The mortgage company (Accord), agree that I meet all their affordability criteria, but have rejected the application with the above reason. The broker speculates that they might be worried that if I had financial problems in the future, then I would be more likely to "save" the flat and not the new house, or that perhaps they believe I am buying the new place to rent out (definitely not true).
Their logic also implies that if I bought a more expensive house they would have accepted me. I'm pretty hacked off about this as you can imagine. The broker has been appealing to them this afternoon but there is no appeal process and their minds are made up.
So, PH finance wizards, can anyone shed any more light into the decision making process here? I find their logic utterly bizarre and don't want to fall foul on the next application.
Some background...
I own 50% of a flat, bought some years back with a friend (it was easier for us to get onto the market jointly), currently worth around £450k, outstanding mortgage for £270k. I no longer live in that flat, but the other co-owner does. I live with my girlfriend in a rented flat, and we have been looking for somewhere new to buy together now we're at starting-a-family age.
Given the state of the housing market we have decided not to stretch ourselves at all. The new house costs £330k and I have a 25% deposit. I have a good income and the mortgage payments on both are easily affordable, even without the other co-owner paying his half on the first flat (which I realised early on I would need to be able to cover to get accepted on a new property).
The mortgage company (Accord), agree that I meet all their affordability criteria, but have rejected the application with the above reason. The broker speculates that they might be worried that if I had financial problems in the future, then I would be more likely to "save" the flat and not the new house, or that perhaps they believe I am buying the new place to rent out (definitely not true).
Their logic also implies that if I bought a more expensive house they would have accepted me. I'm pretty hacked off about this as you can imagine. The broker has been appealing to them this afternoon but there is no appeal process and their minds are made up.
So, PH finance wizards, can anyone shed any more light into the decision making process here? I find their logic utterly bizarre and don't want to fall foul on the next application.
TallMark said:
I've just been declined for a mortgage on a second house, but the reason they gave to my broker is "because the second property is less valuable than the first".
Some background...
I own 50% of a flat, bought some years back with a friend (it was easier for us to get onto the market jointly), currently worth around £450k, outstanding mortgage for £270k. I no longer live in that flat, but the other co-owner does. I live with my girlfriend in a rented flat, and we have been looking for somewhere new to buy together now we're at starting-a-family age.
Given the state of the housing market we have decided not to stretch ourselves at all. The new house costs £330k and I have a 25% deposit. I have a good income and the mortgage payments on both are easily affordable, even without the other co-owner paying his half on the first flat (which I realised early on I would need to be able to cover to get accepted on a new property).
The mortgage company (Accord), agree that I meet all their affordability criteria, but have rejected the application with the above reason. The broker speculates that they might be worried that if I had financial problems in the future, then I would be more likely to "save" the flat and not the new house, or that perhaps they believe I am buying the new place to rent out (definitely not true).
Their logic also implies that if I bought a more expensive house they would have accepted me. I'm pretty hacked off about this as you can imagine. The broker has been appealing to them this afternoon but there is no appeal process and their minds are made up.
So, PH finance wizards, can anyone shed any more light into the decision making process here? I find their logic utterly bizarre and don't want to fall foul on the next application.
Sounds to me like the broker's right.Some background...
I own 50% of a flat, bought some years back with a friend (it was easier for us to get onto the market jointly), currently worth around £450k, outstanding mortgage for £270k. I no longer live in that flat, but the other co-owner does. I live with my girlfriend in a rented flat, and we have been looking for somewhere new to buy together now we're at starting-a-family age.
Given the state of the housing market we have decided not to stretch ourselves at all. The new house costs £330k and I have a 25% deposit. I have a good income and the mortgage payments on both are easily affordable, even without the other co-owner paying his half on the first flat (which I realised early on I would need to be able to cover to get accepted on a new property).
The mortgage company (Accord), agree that I meet all their affordability criteria, but have rejected the application with the above reason. The broker speculates that they might be worried that if I had financial problems in the future, then I would be more likely to "save" the flat and not the new house, or that perhaps they believe I am buying the new place to rent out (definitely not true).
Their logic also implies that if I bought a more expensive house they would have accepted me. I'm pretty hacked off about this as you can imagine. The broker has been appealing to them this afternoon but there is no appeal process and their minds are made up.
So, PH finance wizards, can anyone shed any more light into the decision making process here? I find their logic utterly bizarre and don't want to fall foul on the next application.
At the end of the day lenders are being cautious, and they are not under any obligation to lend to you. The fact that your first property is jointly owned will make it more complex if you get in finaicial trouble, so they just don't fancy it.
Lenders are just being very cautious at present. Anything out of the ordinary and they don't want to know. I know this as I'm trying to raise some capital against my place, which is worth circa £350k, I've lived here 20 years, own it outright with no mortgage or lein against the place, but as it also has my shop in the front of it, all lenders are running scared. I'm only looking for £60k too!
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