Computer Says No

January 6th, 2014 | Uncategorized | By Graham Wingar

This is a brief story of a client who made a mortgage application that went wrong.I will let the blame lie firmly with the Bank on this one, however, the outcome was only to the detriment of the client.

The clients owned their property outright and wished to borrow £30,000 for an attic conversion. They had a net income of £5,400 per month, of which they put £2,450 per month into savings in order to not have money building up in their current accounts.

The mortgage would have cost them £600 per month, which looking at any lenders criteria, was comfortably affordable based on their incomes, and should have flown through any application process.

So why was this client turned down and told that he could not reapply?

During the online application process the clients had to fill out an income and expenditure sheet, into which they put their two salaries and all of their outgoings. In the outgoings the client put £1,000 into a savings account and £1,450 into investments which they thought would demonstrate their savings culture and surplus income.

To anyone it would seem sensible to disclose your exact situation, however, the online system perceived that as being a necessary financial commitment and assumed that this meant the clients had no money left at the end of the month to cover a £600 mortgage. Obviously this isn’t the case and so the clients called to discuss this with bank staff to explain that the £2,450 saved each month was surplus income but the bank just stated that due to it being an expenditure it meant they could not afford the mortgage.

Obviously this is a case of no common sense being applied and it is not having a go at the bank in question but to online mortgage processes. Understanding these online systems is one of the lesser known ways that advisers add value to a mortgage application. Not only did the clients fail to get the funding they required, they also now have a failed mortgage application. It has been 6 months and the clients are still after clarification that their credit file has not been damaged but there has been no answer yet.

So lesson learned, if you are going to take on the computer, understand how it interprets what information you give it first.


By Graham Wingar