interest only mortgage - current lender won't give me a new deal and can't remortgage

hoggiebear

Hi

I will give you the full picture of the service I have received from my current mortgage provider (Santander) from when I first took out the mortgage over 4 years ago.

My partner and I applied for a mortgage of £156,000 in October 2005. Santander approved our application within just a few minutes and only asked a couple of questions with regards to income/expenditure. There was no in-depth application process and they in fact offered us a further £35,000 on top of what we requested.

The advisor then proceeded to confirm that once we receive the documentation just sign it and send it back to us with the requested information as highlighted on the covering letter. The application was completed on the Monday and we received the documentation on the Wednesday. The covering letter did not provide details of what documentation we needed to supply and I therefore contacted Santander and an advisor told me that we were not required to provide anything, just sign it and send it back. I was a bit dubious about the way this was being handled but was so caught up in the moving process that I never really questioned it with them at the time.

My solicitor called me the following Monday to confirm he had received the money from Santander. It therefore took only 7 days to get hold of £156,000 without our income and expenditure being checked. The mortgage amount was around 5 times our combined salaries and I was surprised we were even allowed this much and even more surprised that we were offered more than this.

Around 9 months after moving into our new home we had completed various home improvements totalling around £40,000 which we had paid for using loans, credit card etc. We therefore decided that since the debt was due to home improvements it may be worth checking if we could increase our mortgage to cover this amount - seen as we had already been offered more than we originally asked for.

Santander approved our request quickly but this time did check some of our income details. They never questioned where the £40k debt had come from. This meant that they had approved a mortgage of approx 6 times our income.

For a time we were able to comfortably afford the repayments however neither of us have been given a pay rise over the last 4 years, we have had all child benefit removed due to the new pay scales and had to pay for an unexpected funeral for which there was no insurance/life cover. These factors plus the rising cost of living hit us hard.

We therefore called Santander to see if they could give us a better deal etc and they said no. We then enquired as to what our options were with regards to other lenders but by this time the recession had hit and affordability had drastically reduced so remortgaging to another lender was impossible.

As things got tighter we decided that it may be worthwhile changing to an interest only mortgage for the short term until things got a little easier. We contacted Santander who agreed to this without requesting documentation regarding as to how we would repay the capital at the end of the term. In fact they never even questioned this.

Upon the end of our fixed rate deal I contacted them again to see if a new fixed rate was available. They agreed a new deal and then the advisor asked about how we intended to repay the capital at the end of the term. I was not financially savvy with mortgages at the time and I vaguely mentioned that we had shares and some savings but they never asked for proof of these nor did they ask their value. Nothing more was mentioned and we continued with our fixed rate deal on interest only terms.

Our deal is due to end in July 2012 so I contacted Santander in March 2012 to see if I could agree a new deal. I was advised that a 2 year fixed rate at 3.99% was available but that I wouldn't be able to take it up until April 2012 (3 months prior to the current deal ending). I was therefore told to call back.

Well I called them today only to be told that there are no deals available due to the way my mortgage is being run (interest only, high ltv - my house was recently valued at £270,000 and our current outstanding mortgage is £175000!! I can only assume they have reduced the amount of ltv on interest only to 50% in line with other lenders). This meant that they would automatically transfer us to their standard apr which I believe is 4.99%!!

We are still unable to remortgage to another lender and I feel that we have been trapped by Santander and their unethical lending.

I enquired what deals would be available if we go back to a repayment mortgage and they said they would have to do a full affordability check before they could even check if a deal was available. Emmm, I already have the mortgage which I am paying and have never missed a payment so why do they need to check affordability now?!!!!

They don't seem to want to help and are forcing us into a corner which could make us unable to afford the mortgage long term.

Can anyone give me some advice or even their opinion regarding this matter?

DannyboyMidlands

So considering that you have loads of equity why can't you remortgage with another lender?

Or use the shares and savings to bring the LTV down even lower?

Who did the recent valuation?

Dave_Ham

Firstly, I am assuming that this was originally an Alliance & Leicester mortgage or the goto rate would be 4.24% if Santander (Abbey of old)

Ok, whilst morally I am always sympathetic to those who fall on harder times I wish this was worded differently.

It reads that they gave you everything that you asked for and now your situation has changed you are aggrieved about this and almost suggest that anything that happens is their fault.

This may not be the case, but you have to take ownership as the bank did what banks were doing and you got the house you wanted.

In terms of your solutions, whilst Interest Only is wildy not available you can potentially increase your repayment term (depending upon age obviously) to decrease the impact of moving over to repayment..

If this comes at a time that the unsecured debt is consolidated, then the net negative effect will be mitigated further.

Subject to income, credit scoring etc. you could still remortgage over a longer term and reduce your net outgoings. There are other considerations when putting unsecured debt on a secured basis as ultimately things will cost more in the long run.

I hope this helps...

MonkeyMad

I feel a lot better knowing there are others who can see this for what it is. In your other thread you asked for an opinion and you got it. Unfortunately it wasn't the one gushing with sympathy that you were looking for. I know the circumstance from your previous posts and they are not relevant to the initial lending and it is better you know that before wasting your time. Credit in the past was easy to come by, so what? You still had to apply for and spend it which you did. You were even paying it back, only now when time are tough do you have an epiphanic moment and decide they should never have lent to you.

hoggiebear

I was simply trying to give people a full picture of how Santander acted as a mortgage lender in my experience. I was also looking for advice and guidance not lectures and judgement. With regards to people like me causing the recession; I work 2 jobs totalling 60 hours per week and my partner works full time as well. We pay full tax and national insurance and have never missed a payment on any of our bills or credit agreements nor do we intend to. Yes money is tight at the moment but we are doing all we can to keep our heads above water. We do not leach off the government and do not intend to default on our mortgage. I was not looking for sympathy but for advice.

I was under the impression that this site was for people to be able to give others advice not allow people with big ego's the freedom to talk down to people or laugh at their situations.

Don't you think I'm under enough pressure at the moment without people putting me down further.

Dave_Ham

Ok - so is there a reason why you would not remortgage to another lender, assuming that you can get repayment on a sensible term and take some additional monies out?

Some lenders will look at 2nd jobs income at 100%...?

hoggiebear

Thanks Dave Ham - so far you are one of the few people actually giving me options and advice.

I have tried to remortgage to other lenders but both have been declined on affordability only. Our credit history is perfect but we both have car loans outstanding to the total of £6250. For some reason lenders are stating that our LTV is 95% or over. Following this revelation I got RightMove and Delmor estate agents in to value the property and the average valuation was £270,000. Our outstanding mortgage is approx £175,000 so LTV should be no where near 95% never mind over that.

As we have already made 2 mortgage applications I am reluctant to make anymore at present as this will affect our credit file.

POPPYOSCAR

hoggiebear wrote: »

I was simply trying to give people a full picture of how Santander acted as a mortgage lender in my experience. I was also looking for advice and guidance not lectures and judgement. With regards to people like me causing the recession; I work 2 jobs totalling 60 hours per week and my partner works full time as well. We pay full tax and national insurance and have never missed a payment on any of our bills or credit agreements nor do we intend to. Yes money is tight at the moment but we are doing all we can to keep our heads above water. We do not leach off the government and do not intend to default on our mortgage. I was not looking for sympathy but for advice.

I was under the impression that this site was for people to be able to give others advice not allow people with big ego's the freedom to talk down to people or laugh at their situations.

Don't you think I'm under enough pressure at the moment without people putting me down further.

I agree, but your OP makes it look like you are putting all the blame on Santander for letting you borrow so much in the first place, and taking no responsibility for borrowing beyond your means.

Perhaps, if you had worded it differently you would have got a more sympathetic and helpful response.

Dave_Ham

Another credit check (if selected appropriately) will make less of an impact than unmangageable levels of unsecured debt.

95% is either a computerised issue or a computerised valuation. Still strange though, as until valuation the property valuation is determined by the client or broker...

What are your individual incomes broken down into main salary each and then your 2nd job income..

Additionally, what are the approx. loan repayments and credit card repayments on a monthly basis and approx. total balances.

Also approx. how old you are (for privacy reasons I say approx)

I will be able to tell you in theory whether it is achievable, subject to a credit score etc.

I get the criticism levelled and sure you will if you re-read your initial post, which does read poorly.

We are here to help, not just slam the banks for being inept - they do a good enough job at that themselves..

Conrad

I've run some calculations and you seem to fit affordability criteria for a couple of smaller lenders. I'm puzzeld about the valuation thing.

Lenders value according to prices recently achieved (not marketing prices) in your area. Typically a valuer would visit to determine value.

The_J

Had you asked for help without whinging I would gladly have provided it. As it happens Dave Ham has already helped you and he is better than me so why muddy the waters. I commented because I was incredibly frustrated with your attitude and you need to change that if you are to tackle your problems head on.

To be honest, I am not 100% sure you are financially responsible enough to have a mortgage. It seems like it is too complex for you, have you considered renting?