# Refused mortgage approval at last min - what now?



## Bambo (13 Oct 2006)

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?


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## ClubMan (14 Oct 2006)

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?


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## Bambo (14 Oct 2006)

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?


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## ClubMan (14 Oct 2006)

Bambo said:


> Im trying a broker on Monday.


Who?


> Do you think a broker can do anything considering one bank have refused credit?


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.?


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## Bambo (14 Oct 2006)

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.


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## ClubMan (14 Oct 2006)

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.


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.


 Do they insist on originals? That's not how I remember it but it's been a while.


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## extopia (14 Oct 2006)

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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## Bambo (14 Oct 2006)

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?


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## Bambo (14 Oct 2006)

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?


 
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.


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## ClubMan (14 Oct 2006)

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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## ClubMan (14 Oct 2006)

Bambo said:


> and solictor fees (8,000)


You really need to shop around for a solicitor!


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## Bambo (14 Oct 2006)

ClubMan said:


> You really need to shop around for a solicitor!


 
thats agent fees aswell...solicitor is costing about 3,900 for sale and purchase of both properties.


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## Bambo (14 Oct 2006)

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%)
> ...


 
Estate agent fees are 1.25% plus vat


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## ClubMan (14 Oct 2006)

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.


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## extopia (14 Oct 2006)

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 ]


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## Bambo (14 Oct 2006)

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.


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## ClubMan (14 Oct 2006)

To borrow €24K from a _CU _you'd need a chunk of that on deposit/in shares. Not a good way to borrow.


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## Bambo (14 Oct 2006)

ClubMan said:


> To borrow €24K from a _CU _you'd need a chunk of that on deposit/in shares. Not a good way to borrow.


 
Plus...a very expensive way of owning a house...


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## ClubMan (14 Oct 2006)

Bambo said:


> Im not paying the agent for purchase of the property.


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.


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.


Why is she charging €1K twice?


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## Bambo (14 Oct 2006)

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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## Bambo (14 Oct 2006)

ClubMan said:


> My mistake - I misread your post and edited mine subsequently.
> 
> 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.
> 
> Why is she charging €1K twice?


 
1k for the sale of this house , 1k for the purchase of the other.


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## extopia (14 Oct 2006)

I wasn't suggesting for a moment that you borrow from the CU. I was suggesting using your CU savings (along with your SSIA) to reduce your mortgage requirements.


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## liteweight (14 Oct 2006)

Solicitors treat the sale of one house and the purchase of another as two separate transactions. It's fair enough because they are indeed separate. Your estate agents fees are very high and perhaps you should have negotiated a little better, but no point in crying over spilt milk. Did you physically go in to the bank and ask why you had been refused? You're not looking for a lot extra but perhaps they're sticking to the 3.8 X salary rule in your case. I would go in on Monday and look for my statements etc. back and then go to the mortgage broker. Make sure they deal with all the lending agencies, as not all of them do! You've a decent income and no loans, a good track record, and therefore, I don't envisage you having a problem securing a mortgage. Perhaps you could ask the vendor to hold off until you have loan approval in writing.


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## Bambo (15 Oct 2006)

I guess what im really asking is because this bank have refused me this mortgage does it seriously effect my chances of getting a mortgage with anyone? Would anyone ever be refused a mortgage with one bank, but another be willing to offer it to them? 

I have an appointment with a broker tomorrow.


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## MargeSimpson (15 Oct 2006)

My friend was refused a mortgage by at least two places but in the end was successful with IFG


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## Marie (15 Oct 2006)

Bambo said:


> I guess what im really asking is because this bank have refused me this mortgage does it seriously effect my chances of getting a mortgage with anyone? Would anyone ever be refused a mortgage with one bank, but another be willing to offer it to them?
> 
> I have an appointment with a broker tomorrow.


 
No - is the answer to your question!  Being refused a mortgage or any other kind of loan from a financial institution does not affect your credit rating.  It is not an undischarged debt.


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## Bambo (15 Oct 2006)

Marie said:


> No - is the answer to your question! Being refused a mortgage or any other kind of loan from a financial institution does not affect your credit rating. It is not an undischarged debt.


 
Is this definate, considering the application did go to final stages, i.e. credit search, bank statements, the lot. They did ask for additional bank statements and so Im hoping they simply felt the amount was just pushing it a bit....and that a broker will be able to sort us out with another bank.


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## Mark Purcell (16 Oct 2006)

Hi there,

A few things.

1. If you have been declined by your own bank the only thing that will be appearing on the credit bureau, will be a record that the bank ran a credit check on you. In fact it may be a case that they declined your appication before the credit check was even carried out if it was clear that you did not fit their criteria.

2. It is going to take you at least a week and most likely two to get loan offers, as your solicitor will not (should not) allow you to sign contracts on the purchase of your new property until these offers are in place.

3. The fact that the purchase of your new property is dependant on the sale of your old property and in this instance the only way that new loan offers will be issued is in a "closed bridging" situation (contracts on the sale of your own property being signed before issuing loan offers for the purchase of the new one). Also with closed bridging it is almost impossible to get same from a bank other than the one that holds the current mortgage and security over the property (i.e. your current home).

4. Not all banks require bank statements when making an application for a mortgage. We deal with at least one (not a sub prime lender) that will accept application on homeloans without the need for bank statements.

5. If you qualified under standard criteria for €270K, with your existing bank I would be amazed if there was not a bank out there that would not give you the €285K (assuming that there is not a bad credit history).


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## 26cb (16 Oct 2006)

If you have e-banking with your bank....you could print off a history for your meeting with the mortage people as your statements are with someone else at the moment.


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## Sarah W (16 Oct 2006)

The first thing you need to find out is WHY your existing lender declined your application. Banks are in the business of lending money and don't decline cases without good cause, especially existing clients. They don't have to tell the precise reason but they should be able to give you an indication.

Sarah

www.rea.ie


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## Mark Purcell (16 Oct 2006)

Also an important point to note is that banks criteria differ from bank to bank. So if they are declining you on the basis that you do not fit their criteria, this does not mean that another bank will not be happy to lend you the money.


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## JayDub (16 Oct 2006)

Sarah W said:


> The first thing you need to find out is WHY your existing lender declined your application. Banks are in the business of lending money and don't decline cases without good cause, especially existing clients. They don't have to tell the precise reason but they should be able to give you an indication.
> 
> Sarah
> 
> www.rea.ie


 
I was actually going to recommend you contact Rea, I have a friend who went to Rea and saved a bundle on solictor fees.


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## mf1 (16 Oct 2006)

"Why is she charging €1K twice?"

1K to sell and 1K to buy. 

mf


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## liteweight (16 Oct 2006)

1K for the legal work entailed in the sale of the OP's property and another 1K for the work involved in the purchase of the OPs new property.


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## Bambo (16 Oct 2006)

Mark Purcell said:


> Hi there,
> 
> Also with closed bridging it is almost impossible to get same from a bank other than the one that holds the current mortgage and security over the property (i.e. your current home).


 
Mark...are you saying I will find it difficult to get a mortgage for a new house unless i stay with the bank who I have the current mortgage with? If so, im in trouble, because it was my current bank that have turned me down.


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## MortgageBrkr (16 Oct 2006)

Have you been sorted out with a mortgage yet?
Do you have a major issue with solicitor fees?


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## Mark Purcell (17 Oct 2006)

Hi Bambo,

Yes in order you to have a situation whereby you are given loan offers for the purchase of the new property while the old property is not yet sold, is referred to as "closed bridging". In this situation the bank will insist on contracts on tha sale of your own property being signed before issuing loan offers fr the purchase of the new property.

In our experience the only banks that offer this are the banks that hold the origional mortgage.

Your bank should have let you know about this and I would not be surprised if this was the reason that the decline came back, as a bank would not normally loose a customer over a €15K difference (i.e. diff between €270K and €285K).

Hope this helps.


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## pricilla (17 Oct 2006)

How did you get on at the Brokers?


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## Bambo (17 Oct 2006)

Mark Purcell said:


> Hi Bambo,
> 
> Yes in order you to have a situation whereby you are given loan offers for the purchase of the new property while the old property is not yet sold, is referred to as "closed bridging". In this situation the bank will insist on contracts on tha sale of your own property being signed before issuing loan offers fr the purchase of the new property.
> 
> ...


 
The contracts for the sale of our own house were only due to be signed today, i will know tomorrow if they were. 
I visited a broker today, but he mentioned nothing of this - I did tell him I was declined by that particular bank but he didnt make a big deal of it. He thinks the figure is certainly do-able, so hopefully I;ll know by the end of the week...


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## Mark Purcell (18 Oct 2006)

Hi,

I think that he figure is do able as well as banks criteria differ. While you might not qualify for the full amount with your own bank that does not mean that you will not qualify under another banks criteria (advantages of using a broker).

I always was of the opnion that prople should deal directly with the banks (as I am a sceptical Accountant) but after dealing with a number of transactions myself on a personal level found that the most time consuming part was contacting the all the instutions to find the right product, brokers (one of which I am now) have this info to hand (provided that they are independent - you should find out what agencies they have before commiting to them).

I am surprised that they did not mention the issue of having your own house sold first. I would suggest giving them a call or droping them a mail asking them to clarfiy this specific point.


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## Sarah W (18 Oct 2006)

soapy906 said:


> try [broken link removed]
> 
> they are pretty good got me throguh ok and i have quite a bit  of adverse credit etc




Based in Uxbridge????? Good try Soapy906 but this is an Irish site! 

Sarah

www.rea.ie


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## Bambo (18 Oct 2006)

I am so frustrated. We dropped everything to the broker today and he said the only problem he can see is there are one or 2 "referral charges" on our statements, which refer to one or 2 times that we exceeded our overdraft limit on our current account. Anyway, as if there wasnt enough paper work, he now wants a statement of our current mortgage - so ive ordered that but they said it can take 10 days!!?!?!? 10 days!!!!!!!!

Mark - re having the house sold first doesnt make much sense to me. Surely you could get a loan offer once contracts for the sale of your own house have been signed? Surely it doesnt mean you are tied to the one bank - if that was the case how would people ever move house or indeed banks?

To make matters worse....the people buying our house were supposed to sign contracts yesterday...we still dont know if this went ahead or not because my solicitor hasnt picked up the phone and asked. She faxed them instead. I have had so many sleepless nights over this.

You know what...im seriously considering keeping the profits of the sale..going renting and opening my own business with the profits. Im sick to death of this house buying crap. Only problem with me trying to rent is I have several pets - so that wouldnt be an easy option either.


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## Sarah W (19 Oct 2006)

If there are referral fees on your account lenders will be concerned that you are not managing financially with your current mortgage payments and therefore will not be able to cope with a larger repayment, there are a couple of lenders however that do not ask for current account statements so your broker should be approaching those lenders as a priority. And a statement on your existing mortgage is a standard requirement for any new lender. Mark is right - your own house sale needs to go through to release the equity to go towards your new house, ideally on the same day or a few days beforehand. Please speak to your solicitor about this as a matter or urgency.

Sarah

www.rea.ie


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## amofeeney (19 Oct 2006)

sarah what lenders will approve an application without seeing your bank statements?


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