Fraud throws a spanner in the works of our loan application
readers’ inquiries on common mortgage related issues. Q: My partner and I recently applied for a mortgage under my partner’s name. We had our application approved after the credit scoring process but afterwards the lender found a problem due to fraud. It looks as though somebody has obtained my partner’s details and tried applying for something in her name.
We had to complete a form for the bank and they are reviewing it with the board. I just do not understand what this means. If we have passed on the credit score, why should this affect our chance of getting a mortgage? We have applied for my partner’s record from Equifax.
Is there any alternative for us? A: It is vital that you both resolve this at the earliest opportunity, and I’m glad to see that you are taking the right steps. If this issue isn’t addressed, it will affect every application that you make for credit, even for items as basic as, for example, buying a mobile phone on a contract.
Fraudulent transactions often appear on reports compiled for internal bank use, and not available to members of the public. I suspect that this is what you have been asked to clarify with your bank.
Virtually all lenders will use either Equifax or Experian to check credit references, so you are wise to have applied for a copy of your partner’s records. If these prove to be incorrect, you can apply for them to be corrected.
Because this will take some time to correct, my suggestion at the moment would be for you to apply for a mortgage to your current bank, which will hopefully be more sympathetic to your present situation. Q: A friend of mine insists that a mortgage lender has offered her a mortgage that incorporates her existing endowment payout.
Her endowment is due to pay £17,000 in 10 years’ time and she requires £80,000 to purchase her new property. The lender has told her it can offer her an offset mortgage and if she agrees to hand over the full amount of her endowment at the end of its term, they can offset it from the start of his mortgage so she will only have to pay £63,000 from the start. Is this possible? A: I think that there might be a slight misunderstanding here, as I haven’t come across any lender that will agree to offset interest using an endowment policy, instead of cash.
From what I can tell, the lender will have agreed to advance
If this issue isn’t addressed, it will affect every application you make for credit.
£17,000 of the loan on an interest only basis, the capital element of which will be repaid when the endowment matures. The remaining £63,000 will be repaid on a capital and interest basis. Q: We are having trouble finding a mortgage for an older (1950s) wooden house. Do you have any advice? A: The basic rule is that a property is regarded as suitable to mortgage by the lender’s surveyor or valuer, and not the lender. As such, you need to persuade a surveyor that the home will form adequate security for a bank or building society to lend money on.
Basically, the valuer needs to be convinced that, if you were to default on your repayment obligations under the loan, the lender would be able to repossess, and sell the property or asset to realise sufficient funds to discharge the outstanding debt.
With this in mind, you would be wise to talk to a qualified chartered surveyor before approaching a lender, to assess whether the property is mortgageable.
Having said that, you will stand a better chance of obtaining a mortgage if the loan to valuation ratio is lower – ie, that you are contributing a larger deposit – as this places less of a risk on the lender. Q: I have a house which has approximately £45,000 equity in it. I wish to release this to purchase a property from auction to renovate and sell on. The only problem is I have just moved into this property from another area of the country and I am between jobs.
Is there any way I could raise this money without being in a job because I wish to concentrate on the new venture. Any advice would be greatly appreciated. I have £7,000 in a savings account also. A: Most lenders will need to see some form of income from you, to act as proof of your ability to repay the mortgage secured on the property.
This can either take the form of income from a job or from investments.
However, the good news is that, if you are just starting a new job, you can in certain circumstances, sometimes use your job offer or contract of employment as proof of your earning capacity.
Franz Muelthaler is mortgage adviser at Wakefield and Dewsbury-based property specialists Holroyd Miller. www.holroydmiller.co.uk