Mortgage Declined by Nationwide - Advice please

Icikle

Hi,

My mother is a long time tenant with our local council and we recently made a joint application for the Right to Buy which was approved. The figures are as follows:

House value: £66,000 (its not upto much :P)
Discounted price: £29,040

We subsequently made a joint mortgage application requesting to borrow £45000 in total, the additional amount being for home improvements. I was led to believe this is still classed as borrowing less than the value as its the value, not the discount price thats used, and that the remaining difference of £21000 between the loan amount and the value would be treated as a deposit.

Together we have an income of just short of £30,000, and our current rent is about £370 a month. The mortgage would be about £280 a month over 16 years.

The removal of rent alone, and replacing it with the mortgage payment would actually be saving us money, and we even provided documentation from our local council of over 15 years of rent history being paid on time.

In addition to this, I have about £500 per month disposable income as evidenced by 12 months bank statements.

One hiccup we had is my mother has different pay each week and they required a reference from her employer for explanation, I know this was supplied but dont know exactly what they said on the reference.

Anyway to cut a long story short, the DIP was referred to the underwriters and we were declined with 3 reasons given.

1: Borrowing extra and above the purchase amount needed - As discussed in branch, the LTV taking into account the value, and not the purchase price, was 70% so I am unaware how this is a problem.

2: Already existing credit agreements - I admit theres a fair few to my name but Im single with no dependents, living with parents and no commitments, I feel theyre being very simplistic here and as evidenced by incomings and outgoings and bank statements, I have remaining dispoable income. I also provided 6 years credit report showing all agreements paid on time and up to date.

3: No personal funds supplied - As with Right to Buy, the difference between amount borrwed and house value is considered the deposit and this was even reiterated to me in the branch discussion, so i dont undertand their position.

Is there an appeals process that anyone is aware of with Nationwide, and can anyone shed any light on if theres anything at all I can do?

thanks,

kingstreet

Some lenders will lend 100% of the discounted purchase price, but will not exceed that as effectively the extra value actually belongs to the council for the next five years, what's known as the pre-emption period.

Nationwide's criteria does say it will permit additional borrowing for home improvements and legal fees. Is it possible the amount requested did not appear reasonable for what you were planning to do? Did you submit detailed estimates?

I can only suggest you use the Nationwide affordability calculator to see if the amount appears realistic. Often if one of the borrowers is older than another, the maximum possible can be lower because of the shorter borrowing term;-

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

No personal funds just means you aren't putting any money in and they may see this as a more risky proposition.

Senior_Paper_Monitor

Outside Nationwide criteria - they only permit £5,000 'home improvement' additional borrowing (and if I remember correctly they will also allow an additional £500 for solicitors costs in theory).

All such applications are referred and have to go to underwriting for review with detailed quotes for the 'home improvements'.

Subject to all the normal waivers (credit rating, debts, affordability etc) there are lenders who may do this if properly packaged.

Thrugelmir

Icikle wrote: »

Is there an appeals process that anyone is aware of with Nationwide, and can anyone shed any light on if theres anything at all I can do?

No appeals process. Lenders can choose their customers that's the nature of the business.

Icikle

Senior_Paper_Monitor wrote: »

Outside Nationwide criteria - they only permit £5,000 'home improvement' additional borrowing (and if I remember correctly they will also allow an additional £500 for solicitors costs in theory).

All such applications are referred and have to go to underwriting for review with detailed quotes for the 'home improvements'.

Subject to all the normal waivers (credit rating, debts, affordability etc) there are lenders who may do this if properly packaged.

They didnt ask for quotes or mention the £5000 limit in branch.

I just feel like its been a massive waste of my time when I could/should have been declined in branch if what you say is true. I even switched my current account to them.