underwriter declined let to buy mortgage

dobymicks

[FONT=&quot]Hi

Just had an application for a let to buy mortgage declined by a senior underwriter.
The reason given was:[/FONT]
[FONT=&quot]“ I can confirm that our senior underwriting have declined this application as the onward residential purchase is of much less value and less desirable than the security.”[/FONT]

[FONT=&quot]Our current house is £620,000 No mortgage.[/FONT]
[FONT=&quot]Borrow on the above: £330,000 let to buy.[/FONT]
[FONT=&quot]New house £432,000 but needs renovating so will be worth £520,00 when done.[/FONT]

[FONT=&quot]Can anyone explain the reasoning behind the underwriters decision?[/FONT]

[FONT=&quot]Thanks[/FONT]

betmunch

They feel you are not going to move into the new place.

This is always a risk with let to buy mortgages

kingstreet

They think you are going to continue to live in the current property you say you are going to let and let the one you say you are going to live in.

There needs to be an increase in value from one to the other, or plausibility suggests you are trying to get a BTL by the back door.

ExpertAdvice

Lenders generally don't like the fact that you would be renting out a more expensive property than the one you would be living in.

You might want to try another lender as every lender has a different criteria and you can only hope that they would view it from a different prospective.

dobymicks

Well, I have had further information from the lender and they have stated they do not think we will move into the new property. So changed lender, applied Friday and got our survey yesterday (Wednesday) and the offer 3 hours later.

kingstreet

So why was it declined, if it wasn't for plausibility?

You've changed lenders, so they obviously didn't change their mind.

dobymicks

The reason given was: [FONT=&quot]"we would be unable to proceed due to the risk that the applicants may not move out of the security property upon completion while the renovations are carried out to the onwards residential property"[/FONT]

HappyMJ

dobymicks wrote: »

The reason given was: [FONT=&quot]"we would be unable to proceed due to the risk that the applicants may not move out of the security property upon completion while the renovations are carried out to the onwards residential property"[/FONT]

So they think you're going to continue to live in the BTL property until you've completed the renovations on the property you are going to move into but you're not actually staying after the mortgage has completed. Isn't that the point of a LTB mortgage? They'd be taking the risk that applicants wouldn't move every with every mortgage completion. Could you have proven alternative accommodation to the satisfaction of the lender? Such as living in a rental house or with family, showing an agreement to set up a tenancy a few days after completion would be evidence that you have every intention of leaving on time.

kingstreet

dobymicks wrote: »

The reason given was: [FONT=&quot]"we would be unable to proceed due to the risk that the applicants may not move out of the security property upon completion while the renovations are carried out to the onwards residential property"[/FONT]

That's a little difference from the opening post.

How did they find out the new property needed renovating?

A LTB is based on you vacating and letting the property on the date completion takes place; not in a few months time after you've done your new kitchen and bathroom.

What exactly did you tell the lender?

dobymicks

The lender originally declined: [FONT=&quot]"the onward residential purchase is of much less value and less desirable than the security.”

On appeal, we wrote a letter stating that the cost and desirability would be similar after we had carried out our improvement plans. [/FONT]

[FONT=&quot]We intended to refurbish while in situ in the new house.

They responded with a new reason to decline, "we would be unable to proceed due to the risk that the applicants may not move out of the security property upon completion while the renovations are carried out to the onwards residential property"[/FONT]

[FONT=&quot]We have banked with this particular lender for over 25 years and have a large investment with them, We feel we have been treated badly enough to vote with our feet.[/FONT]
[FONT=&quot]It took weeks to come to this point and the vend[FONT=&quot]o[/FONT]r nearly placed the house back on the market.[/FONT]

[FONT=&quot]Luckily, we have ended up with quite an improved mortgage rate from the new lender. [/FONT]

Thrugelmir

dobymicks wrote: »

We have banked with this particular lender for over 25 years and have a large investment with them, We feel we have been treated badly enough to vote with our feet.

No bank isn't going to make exceptions against it's internal policies just because a customer thinks that they deserve special treatment. Personally I think you'd be foolish to throw your toys out of the pram over such a matter. Long standing relationships do count for something. Just not in this instance.