This success story feels little lightweight compared to some of our stories, but I think because of the current climate we are in and because it shows how a broker can make a difference, it has made the cut…
One of the applicants is self employed with an income that jumps up and drops down each year, slightly unusual but in the current climate that can worry underwriters.
Self employed applicants at the moment are being assessed quite harshly because nobody is quite sure how corona will affect things.
The other applicants has been in an IVA but it has been discharged for 5 years, so compared to some of our IVA stories, this is quite mild.
What happened?
The customer called up, we talked it all through and because we had placed similar cases many times over, I gave them an indicative rate, told them not to worry and we would be fine.
Because of Covid-19, the lender we had in mind wanted all self employed applications to be sent in for manual review prior to submitting a Decision in Principle or a full application, nothing to worry about, we have done that maybe 5-10 times in the last month and were confident everything would be fine…
Mortgage REFUSED!
The person assessing the self employed applicant, told us that they would not allow us to proceed and refused the case! They were a little concerned that the applicants income relied on the high street and that the high street could be a little rocky over the next 6/12/18 months. It was hard to argue it as nobody knows what the future hold.
I then talked to the customer and whilst on the phone to them, I realised that the applicants income was only slightly needed for affordability so it made little sense to be overly concerned about her income on the basis that even if it dropped by 60%, it would still be passing.
With that in mind, we put together an argument to explain and evidence that:
- Using the lowest of the last 3 years figures and then halving it still passed affordability.
- Using a 5 year fixed rate to help with the stress testing improved affordability further still.
- The companies she worked for were all well established business with a good customer base.
Outcome
We took the view that as the mortgage could predominantly be placed on the other applicants income, it made little sense for the underwriter to be too harsh with the self employed income.
After reviewing the letter we put together explaining in more detail, the underwriter agreed that there were enough valid points to allow us to proceed with the application.
Summary
This case was one where I expected it to fly through without touching the sides, I was very confident we would get it through and yet the underwriter turned us down in the first instance.
We managed to get the decision overturned as we put together a compelling argument. I think the reason for this post is that for most individuals this would not be a straight forward application where as for us it was something we come across regularly and even we were caught out by it.
As an individual would you go back and dispute the outcome? Would you know how to or have the confidence to fight the decision?
It is a good example of where a broker can come in to their own… even if we were a little bit too confident at the outset. The main however is… #MortgageSuccess 🙂