Woolwich declined mortgage porting

seloc123

Just after some advise from everyone.
Hubby and I took out our mortgage 6 years ago, he was employed full time as was I.
We have since had 2 children so I am now part time employed and he is now self-employed.
I recently inherited some money and as we live in a tiny 2 bed house, want to use it to buy a new house.
Our mortgage with the Woolwich is portable, we have never made a late payment and overpay each month. We are not wanting to borrow anymore money or change the term of the mortgage, we just want to move it to a new property and use the equity in this one plus inheritance money to buy a bigger house. Thus reducing our LTV.
I have phoned the Woolwich and gone through the application and they have declined it based on affordability. They have looked at my husbands last 2 years accounts and instead of taking the average of the 2, they have used the lower figure (he is a builder and last year was not great but the year before that was).
Our mortgage is 125k and they are saying we can only borrow 110k. I have explained that we can afford the mortgage otherwise we wouldn't be able to pay it now, however, they are saying they have to abide to strict rules as applied by the FSA.
I have said that it doesn't make sense that we can stay in this house and pay the mortgage, yet we cannot move it to a bigger house, despite the LTV being 10% less than it is now which is obviously less risk to the bank. All that is changing is the address absolutely nothing else.
They said they can look at increasing the term of the mortgage from 19 to 30 years which I definitely do not want to do as it would mean we would pay more interest, I want the mortgage cleared in 19 years.
Does anyone have any similar experiences or advise they could give me, I don't know whether to or how to appeal the decision and I am at a complete loss as to what to do.
Thank you

kingstreet

What you already have, they are stuck with.

Your circumstances have changed and they would not lend you as much as you need because you can no longer afford it based on current income.

Your option is to look for another lender which might have different criteria for your situation.

Porting is the ability to move the rate from your old mortgage to a new mortgage with the same lender, if you can satisfy the lender's criteria and requirements now. There is no guarantee that they will lend to you again, as you are finding.

Thrugelmir

seloc123 wrote: »

They have looked at my husbands last 2 years accounts and instead of taking the average of the 2, they have used the lower figure (he is a builder and last year was not great but the year before that was).

Seems logical. The income is showing a year on year decline. So worst way scenario is the basis to use.

I have said that it doesn't make sense that we can stay in this house and pay the mortgage, yet we cannot move it to a bigger house, despite the LTV being 10% less than it is now which is obviously less risk to the bank.

The rules are which lenders operate have changed since you originally took the mortgage out. Therefore any new contract has to comply with these.

Use your inheritance to pay down a lump sum off the mortgage, continue to overpay as well. This way your equity will grow quicker. You may have to postpone your plans for a while. You'll get there soon enough.

Annisele

I don't see any point in appealing the decision. Like the others, I can see why [STRIKE]Santander [/STRIKE]Woolwich is reluctant to lend given the declining income.

If you did extend the term to 30 years, would [STRIKE]Santander [/STRIKE]Woolwich allow you to make overpayments without charging you a penalty? If it will, and if you set your own payments to the amount they would have been on a 19 year term, you'd still repay after 19 years.

kingstreet

Annisele wrote: »

I don't see any point in appealing the decision. Like the others, I can see why Santander is reluctant to lend given the declining income.

If you did extend the term to 30 years, would Santander allow you to make overpayments without charging you a penalty? If it will, and if you set your own payments to the amount they would have been on a 19 year term, you'd still repay after 19 years.

Woolwich?

_Andy_

"They said they can look at increasing the term of the mortgage from 19 to 30 years which I definitely do not want to do as it would mean we would pay more interest, I want the mortgage cleared in 19 years."

So just take it over 30 years and overpay

seloc123

Thanks for all of your responses.
We have decided to hang fire, save as much as we can, get our income up and re asses in a year and hopefully be in a better position

hcb42

my response was also going to be take it and overpay..!