Are Nationwide being silly?

JA1000

My girlfriend is about to move in with me and is looking to rent out her flat. She enquired about a consent to let but was told they are normally granted but after 6 months the rate will rise by 1.5%, Satander didn't do this on one of my properties.

She also asked to switch to interest only but was clearly told that she didn't have £150k of capital in her property it was not possible, the flat is worth £165k and she has £40k capital.

Does this mean under Nationwide all property worth £150k or less will never get a chance to go interest only and everyone must have £150k Capital?

Has anyone had similar problems with Nationwide?

angelsmomma

Who has valued the flat at £165K?

Do you mean equity is £40k and is this dependant on the value being £165?

madmish00

I have just had a very similar conversation with Nationiwde.

Basically to ensure they are a 'responsible lender' before allowing interest only they must ensure that at the end of the mortgage term you will have the funds to pay off the loan. They say that in order to rely on sale of a property as a means of repaying the loan you must have £150k equity. This is obviously ridiculous if your property is not even worth 150k (mine is 100k max)!

Failing that you must show a savings/endowment and the estimated value of this at maturity to show that it will cover the mortgage at the end of the term.

I found this to be a pain because I had intended to pay the full rental income off the mortgage each month (which would be about £160 more than the repayment amount and £365 more than the interest only amount) but I wanted interest only so that for any months where I didn't have a tenant I would only be required to pay the smaller amount.

In the end I opted to extend my mortgage term instead which brings my monthly repayment down by £75 so that I have less to pay out in any months where I don't have rent coming in.

Edited to add: Additionally you now have to have at least 25% equity in the property to change to interest only. At the figures you have quoted you are £1250 short. And that is assuming that £165k is the banks valuation and not an estate agent!

hcb42

I guess they are being responsible lenders.

JA1000

Responsible? I am not questioning their responsibility if people choose to go interest only then this is their choice, in this situation it is not suitable and actually could prevent us moving in together because of the continual high outlay.

It should be a free choice, they are obviously scared of a proposed mis sale, the difference is they are asking and as a customer we are choosing.

As per the comment above - their model is now effectively elitest because of the large number of properties not even worth this anmount.

Santander despite their dire customer service have made it very easy to make this choice.

Thrugelmir

JA1000 wrote: »

if people choose to go interest only then this is their choice,

Its not a question of choice. "We" are the customer , the lender is a business. The lender sets out the terms on which they will lend money. The customer can either accept the offer or seek an alternative.

You can call the NW any names you like. That won't change the lending objectives and policy as determined by the board.

BoGoF

If Santander are so great then why not remortgage with them?

To say they 'could prevent your from moving in' is rather silly, what's stopping her selling her property?

ViolaLass

JA1000 wrote: »

Responsible? I am not questioning their responsibility if people choose to go interest only then this is their choice,

No, it's the bank's choice. They lent you the money.

JA1000 wrote: »

... actually could prevent us moving in together because of the continual high outlay.

Not their problem. Their problem is "will you pay back your loan?" and nothing else.

Seems harsh but it's the truth.