Bank will not let me take on the mortgage

macduff_2

Hi, this is a query on behalf of a friend in need. She has recently become divorced and had the house signed over to her but the NATWEST said she is unable to have the mortgage as she cannot afford to pay the monthly payments. She works full time and only pays about £100/ month mortgage. She has also been paying this at the bank for the last 18 months. Why then are they being so ridiculous?

Thrugelmir

Sounds as if the mortgage is interest only at a very low rate. Your friend will need to obtain a mortgage in their own name at current rates. So potentially a greatly increased cost.

MarkyMarkD

The lender is required to calculate affordability at a sensible rate. If the mortgage is a tracker at (say) BBR+1% paying something like 1.5%, that is not a sensible long-term rate and they will calculate affordability on 5% or 6% which would be a lot more than £100 per month. They are also (under new FSA guidance) required to calculate affordability on a repayment basis, even if the mortgage is interest-only.

It would be irresponsible for a lender to release an ex-husband from his obligations to meet the mortgage, if it would leave his ex-wife prone to repossession in a few years' time when interest rates rise.