mortgage refusal

tomhain

We have been refused mortgage with 3 banks. We were approved back in February but the house was taken off market and our mortgage expired. We have not saved as much since agreeing to buy it and so when we applied now (May) we got refused.

Can we apply again in 6 months and will those refusal have any impact on the decision when we apply in November? My partner has moved from part time to full time (same company, working full time since start of May) and will have much higher income when we apply in November, I just worry now that those refusals are going to be a problem.
We are also going to focus heavily on savings for next 6 months, we need 10% deposit as first time buyers but we should easily have 20% by then.

Thanks

coylemj

Being refused for a loan isn't like being refused cover by an insurance company, you can reapply and will be considered afresh so as long as the reasons for the original refusal were purely mortgage related, like they reckoned you couldn't afford to service the loan or didn't have sufficient savings.

If the reason for the refusal was because of a black mark on your credit record, that will take longer to overcome.

Trish56

Did you get a reason why you were declined? . I presume it is due to not keeping up regular savings so once you can show 6 months regular savings and rent paid by bank transfer and you have 10% saved you should have no bother getting a mortgage. Could it be that you borrowed for a car loan since?

In the meantime ensure you have no unpaid direct debits or referral fees on your current account. Don't keep your savings in cash. Pay off your credit card monthly and don't use an overdraft.

coylemj

Trish56 wrote: »

... and don't use an overdraft.

If you have an overdraft facility and use it within the approved limit, there's nothing wrong with that.

Staying permanently in the red or busting through the limit will count against you but if you use an overdraft facility for an occasional dip into the red, it will do no harm at all to your credit rating. BoI told me a long time ago that I was expected to get back into the black at least once per quarter, other they took a dim view.

tomhain

The only thing was our savings, we had mortgage in January and were about to buy a house so decided to pay off debts instead of savings, so I sent 1000 euro each month to my sister in Feb, March and April. In May we resumed our savings of about 800 euro per month. However at the start of April we got a call that our mortgage expired (since we did not go ahead with purchase - that was even before they even took the house off market and we felt they should give us time to look for different house since some banks give 6 months approval, Ulster bank gave us less than 3 months)

Since we didn't save much during the months that I was paying my sister (thinking we are about to close on a house with already approved mortgage) when we applied now it was turned down, even after explaining that we did not save much, but we paid off my sister (in full).

The mortgage we want works out at about 400-450 per month and we save 800 euro per month (apart Feb, March and April) on top of paying rent of 550 and we still got refused. In past year we saved 13,000 euro. There was also a problem with rent since we pay cash, but we do have rent book and contract and every month on 1st we take out 550 euro from our bank account. But Ulster did not accept that and even with our first mortgage they did not, however our savings were good enough to approve mortgage even without considering rent.

Because of the savings problem we were turned down by PTSB, AIB and Ulter Bank. Bank of Ireland did not bother to even respond to call back request (3 of them actually)

Anyway the advisor said if we resume our savings as they were when we applied first time we should be ok with mortgage.

I did not request credit rating report since we did get approved in January so my guess is that our cradit rating should be ok. We both have credit cards (cleared in full every month for last few years) and no other debt at all (no loans or overdrafts)