Nationwide - Not given best advice and now stuck with debt

rich_r87

Hi Everyone,
Newbie here and any advice would be appreciated.
Feb 19 - House Value £250k, Mortgage £200k, Savings £40k and wanted to build an extension on our house which was going to cost in the region of £90-£100k.(Leaving me potentially £60k short in funds).

Called Nationwide to ask if i could borrow money up front or if there was any way of going about it that wouldn't involve me having to take out Loans to fund the extension (And high monthly repayments) to which i was told there wasn't and the work needs to be completed and then a valuer would come out and i would go down the additional borrowing route then to clear the debt, the only restriction mentioned to me was that for debt consolidation there was a max 80% LTV which is fine.

Now as of today the extension is finished, we borrowed a £40k Loan in September 19 & then a 2nd £15k loan in November 19 & £5k on credit cards so have total debts of £60k and the house is now valued at £375k. Mortgage Balance is currently £195k and so have around £180k equity in the house.

We are now being declined by Nationwide due to the fact they will not give additional borrowing for debt consolidation of £60k because it is too much and we have also tried Halifax (Who said Debt consolidation is only 10 Years) & Natwest (Who declined us due to recently taking out two loans). - Just to note we have no issues with any of them for Credit Score or affordability, its more of a bank policy due to it being debt consolidation.

I have since spoken through my Broker to a manager at Nationwide who said we have gone about it the complete wrong way and we should have had the Additional Borrowing as Home Improvements based on a projected value where by the valuers come out at various stages of the build and release the additional borrowing in stages and that i should of been given this advice on my initial phone call with Nationwide when checking my best options and not been told the only way to do it was to fund it myself with borrowings.

I have just started a complaint with Nationwide but not sure how far that will get me and so any help would be appreciated on:
1) Do i have a case against Nationwide
2) If the complaint doesn't work the best route i have moving forward

Just to Note: the mortgage Broker is now suggesting the only option may be to get a 2nd charge on the property to consolidate debts but would be more like 3/4% rather than 1.59% on the mortgage which is obviously going to costs us more in interest.

I think I've covered everything. Any help or advice is appreciated.

Regards, Richard

[Deleted User]

No, you don't have any case against them.  Their money, their rules.

Either saving up or trying other lenders would be your route forward.

foxy-stoat

Maybe sell up and buy another property more suited to your needs.
The lenders were correct, you cannot borrow against future value....imagine the complaint, I borrowed £100,000 for an extension and !!!!!! it all away, not I am in negative equity, who do I sue?

rich_r87

foxy-stoat said:

Maybe sell up and buy another property more suited to your needs.
The lenders were correct, you cannot borrow against future value....imagine the complaint, I borrowed £100,000 for an extension and !!!!!! it all away, not I am in negative equity, who do I sue?

So why is the Nationwide mortgage Manager that i spoke to now saying we could of borrowed it as the project was ongoing as Home Improvements through a draw down facility with someone coming out to review the progress of the build in stages and then releasing the funds also in stages? (I haven't once mentioned about borrowing the full amount before the extension was started)

Whats_your_forte

Reading this, seems things were done the only  way possible.

How the Nationwide Manager has said you could have done it......I've never heard of that! That sounds like a self build mortgage which they don't do. Confused as I was, I asked the same question direct to the Nationwide who stated they do no have a policy of visiting properties during an extension build so seems the Nationwide Manager has stirred the hornet's nest for no reason.

Secure loan with no exit fees may be a better option and will drop the payments as required. Then once Nationwide deal expires, jump to someone else.

Else price up the penalty to leave Nationwide/keep the debts VS another lender. Others will do this apart from the names stated

rich_r87

Whats_your_forte said:

Reading this, seems things were done the only  way possible.

How the Nationwide Manager has said you could have done it......I've never heard of that! That sounds like a self build mortgage which they don't do. Confused as I was, I asked the same question direct to the Nationwide who stated they do no have a policy of visiting properties during an extension build so seems the Nationwide Manager has stirred the hornet's nest for no reason.

Secure loan with no exit fees may be a better option and will drop the payments as required. Then once Nationwide deal expires, jump to someone else.

Else price up the penalty to leave Nationwide/keep the debts VS another lender. Others will do this apart from the names stated

Thanks for the genuine and helpful response, unlike the others!
What you have said is exactly what the broker i'm dealing with is suggesting, she is currently trying other lenders such as 'Accord' but although she is fairly confident of a few other lenders (She mentioned Venetian) the rates are slowly getting worse to the point the 2nd charge is more favorable.

My only argument regarding the first part of your comment was i called Nationwide yesterday and spoke to a Mortgage representative to ask if the drawn down method was in fact an option which she confirmed it was and in turn led me to starting the complaint over the phone as i too was wondering if the Manager that told me about this option initially was incorrect. 

Whats_your_forte

Yes, provincially Bld Socs could be an option.

As for the Nationwide, I have a copy of the chat here with them and they state no drawdown/site visit options. All the Self Builds we do, clients are billed for the site visits and at planned stages during the process before the next release of funds. Never heard of this post crash (and over 5,000 mortgages arranged). Happy to be proved wrong but if the case, it would USP for using the Nationwide and you would think it would be advertised as such. Not too sure if there is confusion in the way they are thinking it should be set up

rich_r87

Whats_your_forte said:

Yes, provincially Bld Socs could be an option.

As for the Nationwide, I have a copy of the chat here with them and they state no drawdown/site visit options. All the Self Builds we do, clients are billed for the site visits and at planned stages during the process before the next release of funds. Never heard of this post crash (and over 5,000 mortgages arranged). Happy to be proved wrong but if the case, it would USP for using the Nationwide and you would think it would be advertised as such. Not too sure if there is confusion in the way they are thinking it should be set up

Okay that's fair enough, thanks again for your help.
I shall certainly come back and message you just to let you know if we do have any success with the complaint/drawn down option.

Whats_your_forte

Please do. Especially this drawdown bit! 

[Deleted User]

foxy-stoat said:

Maybe sell up and buy another property more suited to your needs.
The lenders were correct, you cannot borrow against future value....imagine the complaint, I borrowed £100,000 for an extension and !!!!!! it all away, not I am in negative equity, who do I sue?

This clearly isnt true.  Loads of lenders can lend against a future value. How do you think self builds or renovations get funded? 

Thrugelmir

Deleted_User said:

foxy-stoat said:

Maybe sell up and buy another property more suited to your needs.
The lenders were correct, you cannot borrow against future value....imagine the complaint, I borrowed £100,000 for an extension and !!!!!! it all away, not I am in negative equity, who do I sue?

This clearly isnt true.  Loads of lenders can lend against a future value. How do you think self builds or renovations get funded? 

Not future value. Money gets advanced as the build goes through various stages of completion. Still requires the applicant to have cash in hand. To pay for the builders , architects etc as the work progresses.