I've got a deposit and a decent salary, so why can't I get a mortgage?

By LAURA HOWARD
Updated: 04:58 EST, 1 December 2011

I am a first-time buyer and recently applied for what seemed to be the perfect mortgage from Santander mortgage, with low set-up fees, a free valuation and £250 cash back.

Puzzler: Why can't I get a mortgage even with a decent deposit and salary?

I required approximately £114,000 with a £15,000 deposit to tuck me into the 85% loan to value bracket. My gross salary is £26,000. The bank said no.

We adjusted our figures, managed to achieve an 80% loan to value and tried again. But Santander still said no.

The bank blamed a low credit score credit reference agency Experian returned a rating of 961 which it claimed was better than 70% of the UK.

I have never been bankrupt, I have no CCJs, I have never had long loans (except student loans) and have not defaulted on any loans I have taken. How on earth did I fail to qualify for this? L.E., Norwich

Laura Howard, of This is Money's Ask an Expert Section, replies: As a first-time buyer who has saved a deposit, worked hard to stay out of debt and been responsible enough to build up a good credit score, it is frustrating and disappointing to be turned down for a mortgage.

But the problem here lies with affordability. Santander was given your details and looked into your case. It came back with the following statement: 'As a responsible lender, all our lending decisions are based on affordability and take into account the customer’s overall financial position (including incomings, outgoings and the cost of any dependants) to assess their ability to meet mortgage payments. 

'We’ve investigated Ms E’s query and can confirm that the initial decision in principal request was declined on the basis of affordability. According to the information provided by the customer’s adviser, their monthly expenditure would exceed their incomings and the mortgage was refused on this basis.'

In other words, your salary of £26,000, when your expenses were assessed (even though these might not be debts) was not enough to support the loan you were looking for.

Ray Boulger, senior technical director at John Charcol, and David Hollingworth at London and Country mortgage brokers also both spotted another potential problem. 

Your loan application of £114,000 versus your deposit of £15,000 is actually a loan to value of more than 88%, which meant you were not tucked into the 85% loan to value bracket as you claim. “That in itself may be part of the problem as she may not have even qualified for the mortgage she applied for because the maximum loan to value on that deal was 85%,' says Mr Boulger.

Mr Hollingworth added that borrowing £114,000 on your salary is also relatively high as it would equate to more than four times’ income even before accounting for other outgoings. 

But he offered this note of hope. 'The fact that one lender cannot satisfy the borrowing requirement does not mean that another will not be more forgiving.  It’s really a case of shopping around the whole market to see if another lender might be able to provide the mortgage you need.'