Couple turned down for mortgage after they had baby scan

davet82

http://www.independent.ie/business/personal-finance/property-mortgages/couple-turned-down-for-mortgage-after-they-had-baby-scan-29253127.html

A couple were turned down for a mortgage when the bank discovered they has been for a baby scan, it has emerged.

One mortgage expert reported a couple being turned down after the bank spotted in their financial records that they had a foetal scan carried out. The bank insisted this meant they were going to have a child – which would restrict their ability to repay a mortgage.

Bankers were also accused of turning down applicants who have children.

Seems harsh seeing you can start popping babies the moment you draw down your mortgage but its good to see the banks behaving responsibly too when it comes to sensible lending.

I'm sure this tough new criteria must have some effect on house prices too seeing people aren't getting the loans they expect, interesting.

snubbleste

Don't put a foetal scan on your credit card people!
The article does not say whether the applicant was pregnant or not. Ugh it's the Indo

quad_red

Really?

We're due a baby next month. We have mortgage approval and are currently bidding on a house.....

davet82

quad_red wrote: »

Really?

We're due a baby next month. We have mortgage approval and are currently bidding on a house.....

Tell them its a beer belly

Ritchi

quad_red wrote: »

Really?

We're due a baby next month. We have mortgage approval and are currently bidding on a house.....

They weren't turned down just because they were having a baby, they would have been turned down because they were borderline, and an extra child would mean they would not match the criteria. If you are having a baby and can still meet the repayments(including the stress test) it won't affect the application.

Or you could just not tell them.

gaius c

What bothers me is that the bank should be including for children in their stress tests anyway?
The way this article is worded seems to suggest that the bank were taken completely by surprise at the notion that young couples might actually have children, which is nonsense of course.

What's much more likely is that the bank have publicly committed to lending X amount to young couples but need to come up with "excuses" as to why they were not able to hit those targets, such as "we would have loaned them this amount but due to circumstances outside our control, we had to reduce the loan approval to this amount".

Ritchi

gaius c wrote: »

What bothers me is that the bank should be including for children in their stress tests anyway?
The way this article is worded seems to suggest that the bank were taken completely by surprise at the notion that young couples might actually have children, which is nonsense of course.

What's much more likely is that the bank have publicly committed to lending X amount to young couples but need to come up with "excuses" as to why they were not able to hit those targets, such as "we would have loaned them this amount but due to circumstances outside our control, we had to reduce the loan approval to this amount".

I would assume it would be wrong to make the assumption that all couples will have children, you can only test on your current status, including salary and children.

gaius c

Ritchi wrote: »

I would assume it would be wrong to make the assumption that all couples will have children, you can only test on your current status, including salary and children.

Ah come on. They employ actuaries, who can make reasonable projections as to what percentage of couples do have children and factor that into their calculations. If the banks are dumb enough to believe a couple in blind panic saying they won't be having children, they really do deserve to be liquidated.

Ritchi

gaius c wrote: »

Ah come on. They employ actuaries, who can make reasonable projections as to what percentage of couples do have children and factor that into their calculations. If the banks are dumb enough to believe a couple in blind panic saying they won't be having children, they really do deserve to be liquidated.

Well, I don't know how they calculate. But maybe they do include that already, but that likelyhood then changes when it's confirmed they are having a child from 50%(?) to 100%, so they would have to change they calculations accordingly

D3PO

talk about sensationalist nonsense. Babies cost money, this expense clearly meant they no longer met the financial requirements of the bank to repay the mortgage offer they were requesting.

Id be pissed off if the bank didn't take this into consideration. The indo is becoming more and more of a rag every day.

djimi

Ritchi wrote: »

Well, I don't know how they calculate. But maybe they do include that already, but that likelyhood then changes when it's confirmed they are having a child from 50%(?) to 100%, so they would have to change they calculations accordingly

Id say that the likelyhood of a young married couple having at least one child during the life of a mortage is an awful lot higher than 50% to be fair. Its a very fair assumption to make, and completely understandable if they work it into their stress tests.

Ritchi

djimi wrote: »

Id say that the likelyhood of a young married couple having at least one child during the life of a mortage is an awful lot higher than 50% to be fair. Its a very fair assumption to make, and completely understandable if they work it into their stress tests.

I think you missed the point. I just guessed at 50%, the point is that whatever the figure is, it's less than 100%, so confirmation of a child will change things.

gaius c

Ritchi wrote: »

I think you missed the point. I just guessed at 50%, the point is that whatever the figure is, it's less than 100%, so confirmation of a child will change things.

No. You're missing the point. The bank should allow for the cost in their stress tests as standard. Sure it will mean that couples who choose not to have a kid pay a little more than they should but it's better than trying to guess if they'll have a kid or not.

Ritchi

gaius c wrote: »

No. You're missing the point. The bank should allow for the cost in their stress tests as standard. Sure it will mean that couples who choose not to have a kid pay a little more than they should but it's better than trying to guess if they'll have a kid or not.

You're saying they should stress test for one kid, but not a second or more for every person regardless of age or whether they have any inclination to have children. And should they test for a second kid if you already have one, but not a third? Or how far do they go? I think you're overcomplicating matters(not that it shouldn't be a complicated process).

I think it's fine now, to presumably test for a likelihood of maybe having a kid, but the emphasis should be on the actual facts, if you have no kids, you can afford more than someone who has. If your circumstances change, as they have done in the original story, they should re-evaluate.

gaius c

Are you being deliberately obtuse or do you not understand that statistics can be used to determine risk & costs?

Do you think car insurance premiums should be based on everybody having one non-fatal car crash in their lifetimes and then crank up their premiums if they have a second crash or got killed by their first but fatal crash? No, of course not. Actuaries can assess the probability that a driver in a certain age spectrum will have to claim and they can base premium costing on that.

You can do likewise with mortgages. Look at a couple's age profile and you'll have a good idea of the probability that they will have 1, 2, 3 or more kids with associated costs and can base your lending strategy on that.

Zamboni

Can "Charlie Weston" be put in the subject title of any thread which relates to his articles so that I don't have to read in future.
Life is too precious, to be wasting reading anything written by that fool.

Ritchi

gaius c wrote: »

Are you being deliberately obtuse or do you not understand that statistics can be used to determine risk & costs?

Do you think car insurance premiums should be based on everybody having one non-fatal car crash in their lifetimes and then crank up their premiums if they have a second crash or got killed by their first but fatal crash? No, of course not. Actuaries can assess the probability that a driver in a certain age spectrum will have to claim and they can base premium costing on that.

You can do likewise with mortgages. Look at a couple's age profile and you'll have a good idea of the probability that they will have 1, 2, 3 or more kids with associated costs and can base your lending strategy on that.

Using your analogy, if someone actually has a crash, or multiple ones, then yes there premium should be increased. Of course there is a likelihood of a new drivers chances of having a crash, but once they actually do have one, there premium should increase, as it does. Actuaries deal in probabilities, but they also deal in facts, and facts are deemed more important.

To be honest, I'm not sure why I'm bothering, as it should be fairly obvious as to the difference between having a child and having a chance of having a child, and how they should be treated differently.

carpejugulum

One mortgage expert reported..

Read, we made it up to exaggerate this non-story.

anncoates

What difference dues it make unless your approval is contingent on never ever having kids?

Duckjob

I too would expect that lenders would factor in certain assumptions (such as couple having children) and average them into their lending criteria. In fact they would have to do this because otherwise they would have to ask: "How many children are you going to have?", to which lots of people would just say "no plans to have any" to improve their chances of getting approval.

Whatever about scans, a word of warning about not disclosing a pregnancy:- when arranging life assurance, the woman would be asked medical questions that would force her to disclose her pregnancy (eg. when and where was last appointment with doctor). If life assurance is organised with same lender, chances are that information would be shared back to verify it was disclosed for mortgage. Better to be upfront with full disclosure and save yourself the stress.