lending criteria

vix2000

2 years ago I remortgaged from the halifax to yorkshire bs. My home was valued 350000, I earned 27000 and I borrowed 70000 over 7 years.

Due to credit card companies hiking my interest rates I want to raise 25000 from my equity to get rid of my credit card debt. Obviously my initial thought was to go with my current lender so I contacted ybs. They have rejected me before I apply as their new criteria is affordability not income multiples!!!! I now earn 29500 and only owe 50000 on my mortgage so would be borrowing 75000. They have told me I could only borrow 38000 in total with their new criteria.

Will this be the case with all lenders? I find it ludicrous that I have religiously paid my mortgage for 2 years but apparantly can't afford it?

happybroker

It's the term that is causing the issue. Assuming you aren't looking at extending the term a £75k loan over 5 years would be over £1300 per month so to an extent I can see where they are coming from though obviously I don't know your cull circumstances.

vix2000

Yes she said that, but I am paying 944 a month mortgage and 500 credit card payments now, so would be 200 a month better off and my cc debts would be paid off much sooner. Apparantly I could have it over 12 years. Will this be the same with all lenders? I asked for the term to be 6 years originally.

herbiesjp

You should be able to do this so easily.

Are you tied in to YBS?

vix2000

I have to pay about 2500 penalty and 199 early redemption fees.

herbiesjp

Should have asked what rate you are on as well.

You should try and go back to YBS and get this agreed.

However if they still insist they will not do it, the only way forward will be to pay the penalty and find a lender who will.

happybroker

It's unlikely that an adviser, never mind a lender, would be able to justify such a large proportion of your salary going on the monthly mortgage payment but if you take a mortgage that is fairly flexible in allowing overpayments etc you would be able to get the term down that way.

vix2000

Thanks for all the advice.
Herbiesjp - the ybs have point blank said no unless its over 12 years.
happybroker - Yes I did wonder about taking over the longer and making overpayments. She said I could make 10% during the fixed term and then more on the variable term but couldn't tell me how early this would repay my mortgage. Im a bit confused as I am already paying more than this with the cc payments. At present I am on a 3 year fix at 5.59 and as I said before, 2 years in. YBS have a lot lower rates now. To be honest I didn't think I'd have a problem with the LTV so am totally thrown as to what to do now. I have never overpaid my mortgage so don't really understand the implications. Where would I go for the best flexibile mortgage, and how does it work?
The reason for the short term is that I was a victim of the endowment fiasco and originally my mortgage would have been paid off this year. Unfortunately I found that there was a massive shortfall of about 28000, so had to totally remortgage, but I cashed in my 17000 endowment and had an extension built which added about 45000 value to the property.

happybroker

if the extended term doesn't put you off and you feel that you can be disciplined enough to make the over payments then it shouldn't bee to hard to decide I don't think.

There are loads of calulators on the web that can help you with how your overpayments wil affect the term.

I don't mean to pry but where has the credit card debt come from? (doesn't need answering as is really meant to provoke thought) Would the longer term perhaps take a bit of pressure off and allow you to manage things more effectively? I don't know.

If you make sure that the new lending has no restriction on it then you can pay that down as quickly as you like.

vix2000

Just incompetent budgeting really. Three grown up kids to help out, credit been thrown at me very cheaply over the years, always paid the cc bills on the dot and they kept increasing the limit, offering cheap balance transfers etc. but have now hiked the interest rates, and I really want to get rid of the cc debt now. I have always known I have a lot of equity so not really panicked about it until now.
How do I find out who offers lending with no restriction? Should I go through all the bank/ building society websites or would somewhere like money supermarket tell me?

happybroker

i would of thought that the YBS could offer you the extra on a standard variable rate or something that didn't tie you in.

Moneysupermarket will auction your details off to a broker so just watch what info you put in there unless of course you want a broker to ring you.

My point re the cards was more based around the fact that we all happen upon unexpected expenses and all want to get rid of our mortgage (why on earth would you have one if it wasn't required!!) but we have to balance the contractual payment we make to our lender with the afore mentioned unknowns so perhaps a longer term with the ability to over pay when we can and not if we can't may have been a better idea for you at the outset.

My guess is that the mortgage was arranged on a "non advised" basis which would have meant that none of this was discussed with you 2 years ago which is a shame....it could of saved you a little worry I think.

Anyway, I think with this in mind you shoudl be ok....all the best.