Lender won't "port" mortgage due to affordabilty

ShotInTheDark

First time poster so appreciate any help. Thank you.

My wife and I have held a mortgage for 6 years and for the past 4 with the same lender.

We want to move house to be nearer my work (and therefore save money) and have accepted an offer on our property. We have also made an offer on a property near my work that is £2k less than our sale price.

We have a portable mortgage so I was told by our financial advisor that we could move this mortgage over to another property no problem. However, as my wife is not earning at present (she is a full-time Mum now but was earning when we took the mortgage out) we are being told by the lender that we cannot "port" our current mortgage as we do not meet the "affordability" criteria. We have no other debts and have never missed a payment so our credit rating is not a factor. Apparently if I was to apply as a sole applicant with 2 children then I could easily pass the affordability criteria. However, once my wife is added she becomes an additional dependent and therefore the affordability plummets.

The most ridiculous thing is that the move will make our mortgage eminently more affordable. We will be able to become a one car instead of two car family (which, with saving of fuel will save us well over £250/month) and the new house will enable my wife to begin childminding to bring in extra income. Of course, having my wife at home also means thatI am not paying extortionate childcare fees (which I would have to pay if my wife wasn't a stay at home Mum!). To emphasise, my wife could go to work part-time and earn £10k/ annum and childcare could easily cost us £10k+ a year - meaning that financially we are at best level but quite possibly worse off (& the children will certainly be worse off!) - HOWEVER, the lender would happily loan us the money due to there being a second income even though the income makes us worse off overall (hope I haven't lost you!).

This seems so unfair. We already have a mortgage with the company. As far as the lenders are concerned the "risk" should be the same whether in this property or in a new property. In fact, as I stated above, there should be less risk as we will be making those savings. I am so frustrated that we are being judged as numbers on a spreadsheet when someone looking at this as an individual case can obviously see that we will be less risky should we move.

Not sure whether anyone has any advice at all? We have seen a financial advisor and this was his suggestion. At the very least I've at least got some of my frustration out!!!:mad:

leewigan

That's the big trouble with mortgages currently. 95% of lenders work with a "computer says no" mentality and common sense doesn't come into it.
It can be very frustrating but there is no way around it I'm afraid. Even if you can comfortably afford the repayments, if the computer doesn't like it, you're effectively screwed.
The only thing I can suggest is to find a lender that will accomodate you. Unfortunately it will cost you more but if moving house is more beneficial you will save in the long run.

getmore4less

what's the mortgage deal you currently have?
what's the LTV?
what's the income multple?

Thrugelmir

ShotInTheDark wrote: »

I am so frustrated that we are being judged as numbers on a spreadsheet when someone looking at this as an individual case can obviously see that we will be less risky should we move.

The cost of mortgages would soar if every application was dealt with on a case by case basis.

When you've answered the questions posed by GM4L then we can give an honest view.

No disrespect to brokers generally. But is yours being totally frank with you.

DVardysShadow

Wife gets job. Any job. You pay child care for a little while. You get mortgage, move, wife gives up job. Cost, assuming wife's job covers childcare will be small.

ShotInTheDark

JohnnyBravo, if only it were that simple. Here's the thing, if my wife is going to be living in the house they count her as a dependent whether she is on the mortgage or not thus affecting the affordability in the same way.

Getmoreforless, it does get worse, our financial advisor had recommended that we do a product transfer to a fixed rate (we were on SVR and this was not portable) in order to get the better fixed rates available so we now have a 3yr fixed rate with the redemption penalties high as you'd expect. We're at appprox 87% LTV on a mortgage sum of circa £183000 which is just below a 4.5 income multiple. I checked with the FA many times that this was the way forward as it made me nervous but he had been recommended this route by staff at the lender. He was chasing this up for us yesterday but didn't get back to us before the end of the day so I am fearing the worst.

I do have in writing from the FA his recommendation of this approach and he was obviously very aware of our goal of purchasing a new property but his recommendation may well cost us the new home we had hoped for AND leave us with a huge (>£5k) early redemption charge. Not to mention us letting down the rest of the chain which we'd feel awful about. We also did not sign any forms for the product transfer, the FA sent off a form that he said did not require us signing. Is this standard practice?

I'm hoping that we can pursue the FA (well the company) for the early redemption fees should it come to it but would be gutted to lose the house we're going for. If anyone knows if this sounds likely on the facts I've given you then please so let me know.

Thrugelmir

To clarify. Are you looking for a £183k mortgage at a 4.5 times multiple.

Is this on an interest only or repayment basis?

How are you going to fund the cost of moving?

ShotInTheDark

£183,000 repayment at 4.5 multiple. It is what we currently have and we were looking to port. (we were not made aware of any further affordability checks when porting as this would have obviously raised red flags for us as we know our situation has changed from the original uptake of the mortgage).

We have enough savings to just cover the cost of moving.

Thrugelmir

ShotInTheDark wrote: »

£183,000 repayment at 4.5 multiple. It is what we currently have and we were looking to port. (we were not made aware of any further affordability checks when porting as this would have obviously raised red flags for us as we know our situation has changed from the original uptake of the mortgage).

We have enough savings to just cover the cost of moving.

Porting a mortgage is for all and intents a new mortgage application. As the "port" only actually refers to the product terms i.e. interest rate you are on.

Lending criteria has tightened considerably since the financial crash of 2008. So you most likely will fall short of current underwriting criteria. A 4.5 times multiple is very high on a sole income (with dependents). Not withstanding a 87% LTV.

You need to find ways of reducing the amount you need to borrow in order to achieve your dream. Starting by overpaying your current mortgage balance to effect maximum interest savings.

ShotInTheDark

Thanks for your input Thrugelmir. What you are saying is becoming more and more evident.

I certainly feel that we have been given extremely bad advice that may well leave us out of pocket (not to mention losing the ability to purchase the house we wished). There is no mention of any risk involved in the porting of the product and the FA was obviously aware of both of our incomes (or lack of) so I will be fuming if we have moved off of our lower SVR to a fixed product 1.29% higher AND have now been locked in with early redemption fees for 3 yrs. Does it sound like we have cause for redress at all (I will be seeking it anyway but would like others opinions on this).

Leon_W

For what it's worth ShotInTheDark, I agree with you.

If you want to port like for like, the LTV remains the same and the property is suitable security, then where is the problem ?

They have leant you the money and can't now un-lend it whatever your personal circumstances.