Mortgage want to change to interest only but lender won't agree

mgmental

Hi,

I am currently in the position of selling my property, it has been on the market for 5 weeks.
I wrote to my lender Nationwide and asked if i could change my fixed rate repayment mortgage to interest only and add my 3k arrears to the end of the mortgage term.
They have finally wrote back today and said i cannot because i have less that 150k equity in my property.
I purchased for 98k but only got a mortgage for 82k and now valued at 174k.

They have said also that i cannot add the arrears to the mortgage because it would take more than 12 months to sell my property and they cannot allow the arrears to go on for this much time.

Is there anything i can do, Or do i have to just agree to pay the arrears back at a monthly payment

Would like to hear your comments

thanks

MortgageMamma

The 150k equity rule is standard for nationwide and interest only mortgages

Are the arrears your reason for selling? Whats the circumstances behind the arrears?

MortgageMamma

mgmental

Hi

The arrears are part of reason for selling, and also because husband no self employed and wanting a smaller house

MortgageMamma

Ok so you are downsizing for security and smaller mortgage payments, that is understandable - I am self employed and would reduce my living costs if I could get away with it

will you be taking another mortgage or buying the new property cash?

mgmental

No i am selling the property, paying off some credit cards etc and getting a new mortgage for around 140k which has already been agreed in principal.

Is there anything i can do at moment with nationwide - can i dispute there letter and suggest this is unfair.
They say they can't add arrears to mortgage because it would take near 12 months to sell property.

mgmental

further on from previous e-mails

Could someone advice if it is definately at standard rule that nationwide will not change mortgage to interest only if you have less than 150k equity?

Also can i challenge this- also is the reason they will not add my 3k arrears to mortgage because i also have unsecured debt.

millsy1980

As a rule of thumb lenders do not mind changing mortgages from interest only to repayment because you are reducing the loan amount with you payments. This is not obviously true of an interest only mortgage, therefore they are well within their right to not convert your account unless you take an investment vehicle out like an Endowment/ISA/Pension that you can show is expected to mature to the amount of your mortgage loan.

Your arrears will already be added to your mortgage as they are accruing, they will not clear your arrears by consolidation them onto your mortgage beacause in essence it just hides the fact that you are in trouble. The arrears are there and Nationwide will want to know the full extent of the situation on the account as they will follow a process once it gets to a certain level.