Can I appeal nationwide decline...

Gingaling

Hi, 
Looking for some advice re a recent nationwide mortgage decline and wondering if it’s worth appealing.
Looking to port existing NW mortgage onto new property and complete let to buy to assist with deposit. Our current place has a tenant lined up etc so no
problem re rental income voids etc
however, I own another property with my sister which up until aug 2019 was tenanted. My sister then moved back here & into the property...and she & her husband have paid the mortgage & all costs ever since - all evidenced via bank statements. This was due to be relativity short term (they own their own property & we have no intention of trying to swerve mortgage regulations etc, purely done for convenience to provide an immediate home for her family) but covid hit and they are still there, with plans to move in the new year, at which point the property will be sold. There is no AST in place as we own the property jointly. 
Nationwide mortgage has been declined as instead of assessing if I have sufficient income to afford the mortgage with my
sister, they deduct the value of the mortgage on this property (£270k) from the balance they are able to lend my husband and me. I’m a bit baffled by this approach as have never seen it used before. Broker has now submitted a new application with Santander who assess it based on affordability and all looks fine. 

I’ve run the broker affordability calculator at Nationwide as though there is an AST with my sister in place with rental income mirroring the value of the mortgage payment & it passes easily. I now can’t help but think I should have drafted some kind of agreement like this, but seems crazy that this would mean my sister covers the mortgage and then we’d both be liable to pay tax on the ‘rental income’. 

Our current mortgage is with nationwide and we’re having to pay a £22k ERC to move if they won’t support the new mortgage request. The application was done via a broker but I’d like to deal with them directly if I can now. 

can anyone offer any advice on the situation, potential Solution or likelihood of
successful appeal if an agreement is drawn up between my sister, her husband and I?
If required, further details:
Mortgage requested £880k
80% LTV
let to buy for £645k already agreed with another lender. 
Joint income with husband c£260k (made up of salary, commission, bonus, rental income)
1 dependent child
Share of rental income previously received
from house with sister = £9k pa & mortgage payments are currently £485pcm
Many thanks

Thrugelmir

Are you releasing cash from your existing property to fund the deposit on the Let To Buy? 

K_S

@gingaling Based on what I understood from you post, in your place I wouldn't spend any time or effort on an appeal. Their policy is what it is and with large lenders there's rarely space for them to vary it to the degree that you need to happen. I always see this with porting, clients assume that you can port in almost all circumstances but it ends up that lenders have significantly different policies with regard to porting and it's not always straightforward.

Nationwide's intermediary criteria for porting is pretty clear - products can only be ported on home mover applications. Where a let to buy comes into the picture, Nationwide will consider it where the LTB mortgage is with TMW (Nationwide's BTL lending arm). I'm assuming that's the option your broker checked out.

I had the exact same scenario with a client of mine looking to do the same as yourself. I went to the lender to ask about it and they said I can help with the porting only if the current property will be sold. If not the customer needs to approach the lender directly. They did and the lender just told them, sorry can't do it. They then tried to do a CTL which the lender rejected, as a CTL is only permitted if there is an intention to return to the property. Eventually they decided to sell the current property as the ERC without porting would scupper their plans.

Hope it all works out as best as it can, all the best.

K_S

@Gingaling I don't know enough to say that the broker messed up. For large loans lenders sometimes do have the discretion to follow slightly different policies so I would expect that your broker talked to NW first about the acceptability of the scenario before going ahead with the application and at least got an acknowledgement that it would be considered. Given that we're talking of potentially saving 22k on ERC, a 50/50 outcome is sometimes worth a shot.

kingstreet

Whereas many lenders will accept a rental income estimate letter; Nationwide requires evidence of three months rent payments before it will ignore the let property in the background so you would need to demonstrate ability to afford both mortgages from your income before the purchase mortgage would be approved when the property is not yet let.

[Deleted User]

The other guys have given you good information but just to confirm where their info is coming from:
This is all from their criteria pages:

 the client will own two or more mortgaged properties on completion and will be treated as a Second Property application, even if the property being purchased or remortgaged will be your client’s main residence. 
and
We'll consider the outstanding balance of any mortgages that are continuing, unless there is a simultaneous TMW Let to Buy application submitted for the existing residential, or they are let (for 3 months)

This would mean they will not ignore the let to buy application as it is not with TMW and your affordability figure shown will need to over both the mortgage on your existing home being turned to LTB, and the mortgage on your sisters house.

Good luck with the Santander one. They should be able to ignore the Let to Buy application regardless of who is doing the ltb but they will take your sisters mortgage payment as a monthly commitment (plus a small amount each month for upkeep).  I was curious so I checked with them on their livechat.   
Has your broker submitted the case to santander with sisters mortgage payment as a commitment?  Or are they trying to ignore it?