Additional Borrowing Unreasonable Requirements

miscwires

I have a small interest free mortgage on my house with The Coventry. I wish to borrow an additional sum and have been told that in order to do so my existing mortgage will need to be changed from an interest only to a repayment mortgage (because of the new rules requiring them to insure we can repay the existing mortgage). Whilst this isnt great news the worse news is that they are insisting we make this change to our existing mortgage (and start making higher repayments) before they confirm whether or not they will be prepared to offer us any additional borrowing.

I have said that we are willing to sign an agreement to the changes on our existing mortgage to coincide with additional borrowing being taken out but no way will I do so before they confirm they are willing to lend us additional funds and we have definitely decided to take them.

When I spoke to them they said that we had to make the changes beforehand in order to prove we could pay off our existing mortgage. This just sounds like nonsense to me. What is wrong with us agreeing to it in principle and it then being actioned as and when we receive the additional lending?

Anyone else been in this situation?

Simon_gloster

Sounds normal. If you DO want further lending in your heart if hearts, change to repsynent, once they see it as repayment they'll process the application to AIP.

Should you not want further lending then do nothing at all and all existing will stay the same.

ValHaller

Does not sound right. As you say it is nonsense - unless you have had problems in your payment history.

Effectively, this could be regarded as a remortgage with equity release - and if you do that, you don't go paying on new terms until the mortgage has been approved. It is the norm for the lender to take your ability to pay on faith in your application rather than demanding increased payments upfront.

shortchanged_2

Do you currently have a repayment vehicle in place?

If not the lender probably has the right to push you onto a repayment mortgage.

Thrugelmir

The lender can set whatever rules it wishes. If you want the additional borrowing then you are going to have to swallow your pride.

Demand for funds exceeds supply. So Coventry BS doesn't need your business either.

Simon_gloster

If you do have an acceptable repayment plan in place and can prove this yes by all means they will allow further lending, keeping the existing on interest only. If not as I have found you have to go onto repayment if you want further lending.

Remortgage to another lender and you will face the same issues. Responsible lending are the buzz words here.