Mortgage shenanigans

Following on from my bold decisiveness when selecting a solicitor, next up to sort was the dreaded mortgage application.

I had already received a few draft mortgage illustrations online, one of which resulted in a basic Decision in Principle (DIP) document being sent to me. This came in useful as after having my offer accepted last week, the estate agent immediately wanted to see proof of funds. This DIP document was accepted for that purpose. But the figures on it needed to be adjusted and I wanted a more solid comparison, so decided to consult my friend again, Mr Google.

Last time I took out a mortgage (back in 2010), I met with a local broker to help find the best deal available. I had a really positive experience and ended up with a stonkingly low rate deal from Barclays. So this time around I thought I’d try the broker approach again – but decided to add a modern twist.

I had read about online-only brokers and soon learnt that Habito and Trussle seemed to be the leaders. Again, after reading many reviews, I decided to give Habito a spin.

I love how technology has removed so much friction from traditional ways of doing things. This was no exception. I filled in a detailed questionnaire, uploaded various documents (such as ID and proof of deposit funds), and was soon having my first (of many, as it turned out) online chats with an expert mortgage advisor.

I had naively thought that I would have no problem securing a mortgage. After all I am debt free, earn a decent salary and have maintained a good credit report. But alas, I was wrong!

Mrs FmC and I maintain separate finances, to a large extent, yet it is me she entrusts the management of her accounts to. I regularly move money between us and sometimes apply for financial products in her name. As most people know, this allows for greater tax efficiency – like making use of her annual ISA allowance in addition to my own. With this in mind, much of the deposit funds were held in her name. Evidence of this was submitted to Habito. But the fact that her name was on the source of funds, and the mortgage application was being completed in my sole name, caused a problem.

The mortgage that had been recommended (at the top of a long list of alternatives) was a Nationwide product. One of the criteria which swayed this was the fact that I had requested no early repayment penalties. I am hoping to repay this loan in less than a year, after all.

My advisor phoned Nationwide before submitting the application for some advice. As he had predicted, they were not keen to lend to me on a sole application. I was advised that other lenders could be approached instead but it was likely I would run into the same issue again.

So I opted to reapply in our joint names. Which added further complications – as they were now interested in my wife’s affairs, including income, pension arrangements and planned retirement age. A credit report was also needed for her which was not something we ever thought about before.

The original term I had applied for was 25 years, which had to come down to 22 based on my expected retirement age. Now that Mrs FmC is a joint applicant, that has further dropped to a 17-year term. Not ideal, but I have calculated that the payments will still be manageable – even if I was stuck with the loan after the initial 2 year discount period ends.

So after 8 working days of backwards and forwards with various people at Habito, our application has finally been submitted to Nationwide. Our fingers are crossed and we hope it gets approved. Our hearts are set on this new property and my initial arrogance about how easy it would be to borrow money has taken a bit of a knock!

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