Remortgage Madness - Computer Says No

[bostocksarse]

Namechanged for this - hoping for some ideas of how to move forwards.

Own home with ex husband. There is a court order in place, which Santander have, stating that house will be sold in summer 2018 when youngest DC finishes full time ed. Equity (200k min) will be split 75/25 in my favour. Mortgage is around £130k and property valued at £350k - £380k.

XDH and I each earn approx the same - combined income £70k.

I need to make some home improvements before we sell, and for reasons that might out me ( but are not relevant at all I promise) it would be far better to do some of this as soon as possible. In particular, I need to get a new porch built and have some extreme gardening done, new garage door, that kind of thing. I asked Santander for £7k for home improvements. XH and I spent ages on the phone telling them all our finances.

We have had a mortgage (various homes) with them since 1996 and have never missed a payment. Both have excellent credit records, which Santander have just confirmed to me today.

They have come back today and said no. The additional repayment amount of around £30 per month cannot be authorised because "If interest rates went up by 6% you would have affordability issues."

Am I alone in thinking this is bonkers? My interest rate is fixed until we have to sell anyway so it cannot go up by 6%!!! The chap I spoke to was adamant nothing could be done and assured me all mortgage applications are now assessed this way, even if you have a shiteload of equity and a great payment record etc.

I have sent a sternly worded email to the CEO, but in the event he is not moved to tears, how else can XH and I get this money in the short term, but with a low repayment amount?I cannot see how else it can be done!!

Thanks kind mumsnetters.

I guess the new lending would not be at your old rate but at the SVR which could go up at any time in theory, so normal affordability criteria apply. LTV and payment history are far less important than they used to be for lending. We asked our lender about extending ours recently (it is a tracker) and were told we couldn't extend it on the same rate.

Oh yes, I understand the new lending would be at SVR, no problem with that, but if the £30 per month increased by 6% it's pretty negligible!!

I am just so shocked tbh, it never occurred to me they would turn us down!! The total amount lent would only be twice our combined salaries and the bloody house is being sold in 30 months anyway!!

Agree with whoknows about the SVR and the interest rate point might not be the only factor - given you were only planning on paying £30 a month for £7k then the loan is over longer than the court order specifies the whole amount will be repaid which might have baffled the computer too.

I wouldn't hold much hope for them overturning the decision though.

You might be able to get a 0% credit card rate for a good proportion of the money required for the duration needed- I think there are 2 to 3 year introductory terms around just now but that's not without its risks.

Yes bear the repayment period on paper is longer than when we will actually sell the house. We won't own it outright then. We will sell ( I can't bloody wait!) and then I will buy a nice little flat with a small mortgage not from santander now

Thanks so much for the idea of getting a credit card. The only problem with that is how to split the cost between myself and XH. With the mortgage it was perfect as although I make all the repayments ( which is fine, I get the benefit of living in improved property) the loan amount would be added to mortgage and allocated between us as per the original order. Any other way, I will have to get a solicitor to draw up something saying when house is sold XH will have 25% less £7k as that is what I have spent on home improvements. I am not sure xh will agree to this. I hope this makes sense.

I will wait and see if they see sense but if not I will look at getting one of those interest free credit cards. Thanks

I guess if they are talking about 6% more of the £7k over the theoretical term of the mortgage that is a big difference in affordability, although you are still only looking at around twice your combined income. You'd need to check about early repayment penalties too. I guess you have rent for your DH plus two lots of living expenses and that's where it looks bad, outweighing the credit history and LTV, reposession is not really to be considered as an option nowadays. I agree that juggling interest free credit cards may be the way to go, it's unfortunate that the criteria don't cope with unusual circumstances such as yours, hope you get something sorted.

Thanks mistletoe . XH lives rent free with his GF in her owned outright house, but obviously he does have living expenses like everyone else.

I really appreciate the posts, I am obviously such an old gimmer I hadn't realised how much things had changed. In my day banks threw money at people

I would just set up seoarate account to which you both will pay by dd. This in return can be transferred to whomever took credit card to pay the card off. So let say you get 7k in receipts. Some financed from your current account then transfer equivalent from credit card account to which you both start paying as soon as you set it up.
You can also pay your bills and other shopping with that card just make sure you calance your books evey month so that you know how much you paid into this venture from your own account.

A bit if a hassle but by all means doable.

Well, they did used to throw money at people, but look at the mess it got them into!

For £7k get an unsecured loan. Rates are available lower than Santander's SVR at moment.

Tbh I wouldn't even entertain a secured loan for such a small amount. Get an unsecured one and choose the term that suits you.

Also with Santander 100k equity flat out refused any additional lending, they said they used ONS average living cosy for our family size/ages which was at least twice what we actually spend!

The problem with an unsecured loan is the repayments are going to be too high for the OP by the sounds of it.

they probably would not lend you the current mortgage amount under the new rules, so will not consider any additional borrowing.

True the payments will be higher but the total cost should be lower. Also if the ex stumps up for half the repayment there's no need to pay a solicitor to draft anything.

Thanks all, I will look into it all and discuss with XH. I totally agree mistletoe I had friends in the eighties who had seven credit cards maxed out!!!

And yes caroldecker sadly I think that is what they are tactfully trying to tell me, but it seems weird when you set it against our income.

The overall cost will be lower still on a zero percent credit card and the OP specifically mentioned needing a low repayment amount.

If OP and her ex each got £3.5k on a card (£7k on one card is unlikely anyway) and each paid the balance off themselves then there'd be no need for an agreement either.

See a mortgage broker and arrange to remortgage? The bank are probably stressing your rate at about 6.99% and using a model to calculate your expenditure rather than taking your actual figures. On your income you'll easily get a mortgage, possibly at a non-automated building society rather than a large bank.

Those credit cards charge a fee to give you the cash, the 0% terms are short and then there are balance transfer fees when you come to the end of the 0% term, assuming there is another 0% card available to move the debt too.

Spending onto a 0% card could be an option but the future balance transfer fees might wipe out any savings and there's still the risk of not being able to move the debt onto a new deal.

I was thinking of a card that covered the 30months OP needs the funds for.

There's no ideal situation here as borrowing money you can't really afford is never a good idea.

Yes it doesn't really matter if there's a balance left after 30 months as I can easily pay it off out of the equity. It's a very short term issue.

I think I may have to reduce my plans for the house and borrow a smaller amount myself on a card and just pay it back. I don't think XH will go for any of the other options, other than a complete remortgage but it seems such a faff for such a short period.

Unfortunately I am probably going to end up paying for all of the improvements but it has to be done or we won't be able to sell (or will sell at a really deflated price)

I can probably save the rest over the next couple of years and get the remaining bits done just before sale. There are some things that have to be done now though. I know I am probably drip feeding but don't want to out myself. I was burgled and the police said the house was vulnerable due to rotten dilapidated porch,and enormous beech hedge around property which means nobody can see house from road. Garage door also rotten. These are the things I want to do now rather than later, as I feel really scared and vulnerable in my own home.

That's entirely understandable, what a horrible thing to have had happen. Could you just take the porch down and replace it later? Maybe just get a new front door for now. Lop down the beech trees and get the roots out later? I guess you have thought of these things though.