Remortgage Question

Starry30

Hi

This is my first post on here, but hoping someone can offer some advice.

We took out our mortgage with RBS 6 years ago and have been with them ever since. In that time we also took out a secured loan on the property and have some credit cards.

Without the loan we have less than 70%LTV on the property, but with the loan we have negative equity.

When renewing our mortgage with RBS they have never seen this as an issue and have always offered us a renewal. I was also told when we took out the mortgage that RBS was one of the few lenders that didn't take other debt into account (I realise this might be different now 6 years later)

So my question is, if we tried to swap to another mortgage lender would we have any chance of getting a good deal, or are we going to be stuck with RBS?

Thanks
Starry30

wodgerdodger

If the secured loan and mortgage takes you into negative equity then yes it will be impossible to remortgage as 100% deals or more are just not around these days.

Your only hope is to try and reduce the secured loan debt by overpaying it if at all possible so that your total secured loans represent 85% or less LTV. Saying that your credit card debts are probably at a higher rate of interest so if you can reduce any debt they should be your first prioriy to reduce or try switching/transferring to a nil transfer card to give you some space to reduce the secured loan.

_Andy_

Is the secured loan also with RBS?

Starry30

Hi _Andy_

No, it's with another lender.

_Andy_

Technically you may be able to move lenders, but what would need to happen is the secured loan provider would need to agree what's called a 'deed of postponement' (DOP) - i.e. they would have to allow you to change mortgage lenders. So possible but not hopeful given the high LTV (in total).

Which lender has the secured loan?

Starry30

The lender is FirstPlus.

I am wondering why RBS have never seen this as an issue when renewing though, or do they not look at the other obligations on a renewal, only on new applications?

luckyfool

Starry30 wrote: »

The lender is FirstPlus.

I am wondering why RBS have never seen this as an issue when renewing though, or do they not look at the other obligations on a renewal, only on new applications?

Starry - why would it matter to them at renewal. They are already on the hook for the mortgage, changing products does not change the risk to them in any way, if anything it should lower the risk. The affordability and underwriting was done at the front end when they took you on as a customer. Believe me if you wanted to borrow more money this would all become an issue. Once you were with them there was nothing they could do about you taking on more debt.

When remortgaging to a new lender then of course affordability and ltv criteria will definitely come into play, and even assuming a new lender sees it as fitting on affordability the likelihood is that First Plus would nix the deal at refuse the Deed of Postponement at completion.