Santander nightmare, do I have another option?

juleszoemay_2

Hi there

This is a little complicated, but I will try to explain.

My husband and I owned house A with a Santander Mortgage of £171k outstanding, the mortgage has and ERC of £5100.

We wanted to move to a new build, and one day went to look at what was available, were shown a house with a great plot and a fab outlook that would have been perfect, but we didnt have our house even on the market, and they wouldnt do a part ex, as the values werent far enough apart. We approached my father to see if he would be able to lend us the money to buy House B, without selling House A (on the basis we would then sell House A and pay him back)

I spoke to Santander about the situation and they advised me that with the figures I gave them over the phone we should be able to still borrow up to £204k, and that if we redeemed our old mortgage and took a new one within 3 months we would get the ERC back. Perfect..... with this in mind we offered on the house, and got a great deal £40k off the asking price on the proviso we completed in 2 weeks. Which we duly did using my fathers money, but the house is in my and my husbands name.

In the meantime House A has an offer on it, which we accept. I then speak to Santander to see what I need to do re moving the mortgage to the House B when House A completes. They then tell me we wont get the ERC back as we already own the house..... I go through the complaints proceedure and they listen to phone calls and decide I was misinformed and say they will stand by what I was told and bend the underwriting rules on this occassion. All very stressful!

SO I go through the process (started 4 weeks ago and they're still asking for more and more information) of a new mortgage application, we want to borrow £189k on a house worth £320k, so the LTV is pretty low. I earn £36k and am employed, my husband is slightly different, as he was a sole trader 2009 & 2010 net profit 61k and 82k respectively, with huge tax bills the view was taken in 2010 to move to a Ltd company, he takes £6k salary and £12k directors loan drawdown (as he sold the business to the Ltd company for £50k ish) Because the directors loan is not 'dividends' they will not take those figures into account. They initially said they thought we wouldnt be able to borrow what we need, or even what we already owe on house A, which seems ridiculous, as we have always paid on time, no defaults, no CCJ's nothing at all.

I have spent HOURS on the phone and email to them every few days they ask for more and more things, letters from my father saying he has no interest in the house, completion statements showing we paid for the house and dont have a mortgage on it, books from 2008 (even though this is completely irrelevant because if he earned £1 million they wouldnt take this into account. It just seems to me that they just want to tick boxes and nobody is applying any common sense to the situation at all.

Im losing the will to live with this, and House A will be completing shortly so I need to sort this out and get my dad paid back, but I dont know if I have any alternative? We technically own house B outright and only completed on the 29 June, I think some lenders wont let you 'remortgage' if you only just bought it, even though there is good reason for us doing what we did.

Can anyone help?

Thanks in advance

J

juleszoemay_2

Note - Ive also sold my car to get rid of a £300 monthly payment to a loan, to help the 'affordability' even though I could afford it easily!!

juleszoemay_2

Santander havent said no, but they're being so difficult I assume they'll ask for a kidney to be signed over to them soon!

Lavendyr

But when you say "directors loan" this sounds as though he would need to pay it back to the company at some stage, so this is probably why they won't treat it as earnings - as technically it isn't!

Edit: above post snuck in before me and wanted to add I agree 100% with what's said there.

Trollfever

Looks like your father will be locked into your property deals until the end of 2012 at least. Any new mortgage lender will probably be applying the six months ownersip rule.

juleszoemay_2

When my husband was a sole trader he had tax bills of 25-30k which really were ridiculous. He uses a reputable chartered accountant and pays corporation tax of course, the business was sold for 50k but that's for all the kit/stock etc so not physically cash in the bank. I don't totally understand it but when the 50k is repaid to him over a period of years he will then take dividends. I don't fully understand it but we have been advised it is legal and he is owed the money from the business, the fact the business doesn't have £50k in the bank to pay him now is the only reason it's being done like this. There's an element of goodwill too, that I don't understand!

I realise they'll only take his £6k that isn't the issue, I really wanted to know if any other lender would let us remortgage a house we've just bought?

Btw, I do and have always paid tax and never ever been on any benefits so please don't judge me I was only asking for advice

Dave_Ham

Hi there,

I was reading your post thinking that this is achievable and then spotted the completion date.

Whilst I would a decent broker getting you a mortgage, I do not think you will get around the 6 month rule.

Assuming if you went with another lender, Santander will not charge you the ERC???

juleszoemay_2

Hi Dave

If we dont go with Santander we have to pay the ERC, but this isnt an issue. Rather not, but if we have to.....

Thanks

J

Dave_Ham

Then outside the 6 months, engage a broker and this is achievable..

Santander are a pain in the ... at the moment and many brokers have stopped using them...

juleszoemay_2

Thanks Dave, so I should pay off mortgage on house A, take the hit for the ERC and get a new mortgage in a few months?

Dave_Ham

It depends, this is one option. Personally £5k is a kick in, dependent upon your Father I would get consent to let out from Santander and then buy the new house and pay back Dad 75%.

Either give him equivalent value stake in the rental property, or await fixed term to finish and then sell with no ERC..

Obviously I do not know what stage you are at with buyer.

Its hard giving practical solutions from a few posts on a forum so would always advice you seek specific, regulated advice.

Good luck