Question on ‘debt consolidation’ with remortgage

GoonerByron

Hi,

Bit of an issue.. Our remortgage is coming up and we have recently spent a reasonable amount getting our kitchen redone. I have paid the builders but put the kitchen on a Buy Now Pay Later loan via Wren/Barclays and have around 8k on 0% credit cards for appliances etc and other bits with the intention of adding it to my mortgage when it was due to renew.

I have applied to Lloyds, who have had their mortgage advisor call and they have said they cannot add any of this to my remortgage because I am not currently paying any interest for it as it is on Buy Now Pay Later and 0% interest cards. Previously when I’ve had building work done, I have simply asked to borrow extra money on the mortgage (Our last 2 remortgages for loft conversion I borrowed 40k and then 20k) and they have put the money in my bank without question.

I was relying on adding this money to my mortgage as it’s for items that are part of the building and I wouldn’t want to find the money to spend out to pay these off separately. I am currently just paying the minimum payments. We have no mortgage affordability issues, perfect credit scores, well within our lending limit and a LTV of under 60%. Any advice? Should I just apply to a different lender and ask for separate home improvement borrowing and say I am paying the cards off monthly? Or not mention the 0% interest rates on the cards?

Thanks

doglover34

Personally Id go with someone else ... we just had our offer with Natwest to remortgage and borrow extra to consolidate the homeowner loan for our kitchen extention. Joint application, no issues, and still at 63% LTV. Offer within 2 weeks. speak to a MA they can search for the best deal for extra borrowing - good luck 

ACG

Try a different lender. Many would be fine with debt consolidation at that LTV. 

GoonerByron

ACG said:

Try a different lender. Many would be fine with debt consolidation at that LTV. 

It’s not the LTV. They are saying they are literally not allowed to move debt from loans/credit cards if it is on 0% or buy now pay later? Because it would then be costing me (mortgage) interest where it wasn’t previously. The first I’ve ever heard of this myself?!

K_S

GoonerByron said:

ACG said:

Try a different lender. Many would be fine with debt consolidation at that LTV. 

It’s not the LTV. They are saying they are literally not allowed to move debt from loans/credit cards if it is on 0% or buy now pay later? Because it would then be costing me (mortgage) interest where it wasn’t previously. The first I’ve ever heard of this myself?!

@goonerbyron Imho, the Lloyds advisor/underwriter is applying a very blinkered compliance approach here - that you are consolidating short-term interest-free unsecured debt to long term interest-charging secured debt and hence they can't advise this. It might just be how their compliance team has told them to treat debt con applications.

I don't know how Lloyds direct apps work so couldn't tell for sure from your post, but have you actually put in the full application and secured the rate or not yet?

If not, then you may want to consider using a broker (the MSE guide here can help you find one including fee-free options https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3) to find the most cost-effective lender that will allow you to do what you need or finding an alternate lender yourself. It should be fairly straightforward.

If you have already secured the rate with Lloyds and it's much better than what you can get elsewhere currently, then in your place I would give it a final shot by making a complaint saying that you don't understand the logic for not allowing you to consolidate it simply based on it being 0% at present. At the same time I would also find an alternate non-Lloyds option as backup.

ACG

GoonerByron said:

ACG said:

Try a different lender. Many would be fine with debt consolidation at that LTV. 

It’s not the LTV. They are saying they are literally not allowed to move debt from loans/credit cards if it is on 0% or buy now pay later? Because it would then be costing me (mortgage) interest where it wasn’t previously. The first I’ve ever heard of this myself?!

I know its not the LTV for Lloyds. I am saying that at that LTV, many lenders would be fine with debt consolidation. 
A lot of lenders do not like debt consol at 75% and above, but you are well under that so should have options assuming everything else fits. 

If I were an underwriter, I would decline you for the username