Possible remortgage with Nationwide - seeking general advice.

IJM

I'd like to seek some general advice from those who are familiar with Nationwide mortgages and the way they approve them.

Right now I have a Britannia repayment Mortgage whose current value is £90k with 14 years to run. The fixed deal ran out two years ago. I want to get that mortgage onto another fixed deal to take advantage of the current very low interest rates and to provide some security against any potential base rate rises that must surely occur sometime in the next four or five years. My property value is at least £130k and is probably more like £140k. I have identified a Nationwide repayment mortgage product with a rate of 2.69% fixed for the next 4 years. That would save me roughly £90 per month over my current mortgage payments.

The problem is that I do have unsecured debts totalling around £29k. They comprise a £15k outstanding on a 12.3% personal loan from Natwest with 3ys 6mths to run (£445 per month), £3.5k left on an old 6.4% GE Money loan (now with Santander) with 1yr 4mths left (£220 per month) and £10k at 0% on a credit card.

I have been making all payments and have never had any defaults or CCJs. I only occasionally go overdrawn, though only ever at the end of the month just before I get paid and even then only just in the red (<£100) and well within the approved overdraft limit (which is a facility on my Natwest current account that is a hang over from their 'Pink Zone' promotion from many years ago. Remember that?). I finish most months in the black though. I believe my credit score does actually come out as quite good.

I have realised in the past few weeks that I now have room to make a few adjustments and restructure things a bit to free up more income which would enable me to tackle my unsecured debts more rapidly than I am doing now.

I have a number of measures one of which includes claiming back some missold PPIs which if upheld, ought to get me an £8-9k lump sum which would blow a nice chunk off my debts. And another is to restructure that Natwest loan once it drops below £15k to take advantage of a lower interest rate. I might even consider rolling that £3500 from the Santander loan into the remortgage, but I'm reluctant to do that because it's so close to being paid off. But I digress.

I nearly forgot to mention, I earn around £42500 a year, which works out as ~£2700 after tax.

So my question is: from the way Nationwide work, am I likely to have a problem if I try to apply for the above mortgage product? And what, if any, measures can I take to improve my chances?

kingstreet

Run your case through this and see what the output is at the end;-

http://www.nationwide-intermediary.co.uk/calculators/aff_calc

The loan to value is just under 70%, using the £130k value, but those credit commitments are going to impact affordability, even though you only want 2x income.

Are there no Britannia customer retention products available to you?

kingstreet

I ran it myself and it just scraped in at £99,700.

However, this will fall when the shorter term is factored-in. It may be necessary to take the mortgage over a longer term, then overpay voluntarily to repay within the desired period. Nationwide allows upto £500 per month overpayments within a fixed rate period.

IJM

Useful tool. I get £80,800 out of it, with the way my finance is presently structured. It looks like I'd have to restructure my Natwest loan first to reduce my monthly commitments. By doing so, I reduce the Natwest monthly repayments from £445 to £295 on that loan alone (assuming they will let me have the advertised interest rate). That would make my total loan commitments £515. Then the affordability tool reports £107k.

The other way is if I roll that £3500 loan into the mortgage, thus borrowing £93500. That means I'd need a valuation of £133571 or more.

In short, there are a few options, but I'd have to make changes first to score well enough. This is the information I need. I just hope the same offer is still around by the time I've finished mucking around restructuring.

IJM

Incidentally these current debts are the result of my waking up in the middle of the night four years ago when I suddenly realised I was in bother. Back then I had £45k unsecured. It was all caused by my own stupidity.

I took action, cut my costs, restructured most of my credit cards into that Natwest loan and reigned in all my spending. I've managed to keep things tight for the past few years. But now I've realised in the past week or so that I now have enough scope to restructure things to accelerate my repayments and get out of debt quicker.

IJM

Mr Street

Seeing as you mentioned Britannia customer retention products, are you (or anyone else for that matter) able to tell me anything about those. How can I best find out about them? Are they anywhere close to competing with Nationwide's 4yr 2.69% product?

kingstreet

Nope.

You have to ask the lender.

Some lenders publish them on their websites, others don't.

You are looking for "existing borrowers not moving home" or "product transfers" or something vaguely similar.

johnnybebad2000

Try this link

http://www.britannia.co.uk/_site/channels/mortgage/products/5yr-fixed.html

Maybe not as good as 2.69% but if Britannia will switch you onto a deal without underwriting then maybe it is your best option.

kingstreet

This is the page for existing borrowers not moving home.

http://www.britannia.co.uk/_site/channels/mortgage/existing-borrower/index.html

Thrugelmir

IJM wrote: »

The other way is if I roll that £3500 loan into the mortgage, thus borrowing £93500. That means I'd need a valuation of £133571 or more.

Given you overall level of indebtedness this is unlikely. Debt consolidation is not the purpose of mortgage lending.

Depending on your overall position. A secured loan , albeit at a higher rate than a mortgage, may give you the relief you are looking for.

The best way though, remains to be hitting your debts on head on. By scrimping and saving for 6 to 12 months. Really making an impact by reducing them.

IJM

Thrugelmir wrote: »

Given you overall level of indebtedness this is unlikely. Debt consolidation is not the purpose of mortgage lending.

I agree. Rolling that £3500 into the mortgage is not something I want to do. Not least because it's such a small amount that is so close to being paid off anyway.