Can a bank revoke a mortgage based on EWS1 rating

CanarySimon

I have an interest only mortgage with a UK high street bank. I’ve never missed a repayment. When I took out the mortgage, it wasn’t a buy-to-let mortgage as I lived in the property. I have the bank’s authority to rent out the property and now do so. The development has recently had a B2 rating on its EWS1 form due to dangerous cladding and at present there isn’t an agreed approach to replace the cladding. I am considering approaching the bank to ask if they would provide additional lending against the property. However, I am concerned that the bank may revoke the loan and call in the debt, if I tell them about the cladding issue/EWS1 rating.

Any views would be welcome.

Thrugelmir

Revoke the loan on what grounds?  As the mortgage is on an interest only basis and with regards to the EWS1 issues difficult to see the lender agreeing to a release of equity.

If the mortgage is CTL not a BTL. Then you are exposed to the lenders whim in this regard. As the terms are totally at the lenders discretion. 

K_S

@canarysimon They might decline additional borrowing but I struggle to imagine this scenario leading to the lender calling in the loan.

user1977

No, banks can't "revoke" mortgages after completion, assuming you haven't breached any of its terms. They, like you, take on the risk of unexpected things happening to the property or the market after completion. If there's now concern about its mortgageability they'd rather you just carry on making the repayments rather than rock the boat by demanding you try to remortgage it, or repossess it.

CanarySimon

Thrugelmir said:

Revoke the loan on what grounds?  As the mortgage is on an interest only basis and with regards to the EWS1 issues difficult to see the lender agreeing to a release of equity.

If the mortgage is CTL not a BTL. Then you are exposed to the lenders whim in this regard. As the terms are totally at the lenders discretion. 

The CTL was given before I let out the property and long before the EWS1/Cladding issue was identified.  The CTL did not impose any new terms on me and I've always made my payments on time and acted within the terms of the original mortgage.   
I wondered if they could revoke the mortgage on the grounds that the property is now worth £0 due to the cladding issue, despite me always paying and staying within the terms of the mortgage.

MWT

CanarySimon said:

I wondered if they could revoke the mortgage on the grounds that the property is now worth £0 due to the cladding issue, despite me always paying and staying within the terms of the mortgage.

If they really believed the property was £0 value they would be happier allowing you to continue to make the payments rather than trigger a potential repossession of a worthless asset...

... on the flip-side, I'd also say that the chances of them agreeing to increase the loan are slim, to none... and giving them a chance to review their position on the CTL may not be wise if you currently have an unlimited CTL with no penalties or duration...