Nationwide inventing risk factors to make me pay 10's of thousands of pounds more on my mortgage

cre8toruk

hi everyone

1. I felt a bit nervous back in January /February when I first contacted my mortgage broker / advisor regarding my feeling that interest rates were going to be an issue for us with our mortgage deal running out in 2023. (I mean call me clairvoyant if you like!!)
2. We Agreed back then that we would secure a deal early to secure the rate to avoid us falling off a cliff in feb 2023 if interest rates had increased significantly by then
3. We applied via our broker and were advised by them that the nationwide building soc had confirmed that all the affordability checks etc had been met and we had an agreement in principle based on a 12 (later changed to 13) year term @2.69%
4. We were subsequently advised that there was an issue with the affordability checks due to additional undisclosed credit, which upon investigation by the broker and Nationwide turned out to be untrue.
5. We’re now in the position where they seem to have invented some additional mythical "risk factor" which they've singularly failed to explain and this has been introduced which now has the effect of reducing the maximum amount of loan they will lend to £30k below what we need to clear the existing mortgage.
6. We’re now being told that to achieve the above amount we need to extend the term of the loan to from13 to 17years i.e. another 5 years more than our current term

The problem I have with this is that whilst I can over pay on my repayments even if I pay the difference between my current payment and the new lower amount this would only have the affect of reducing the term by less than 5 years which in 5 years-time only puts the term back to where we are now.

In 5 years-time we should have a term of only 8 years remaining and given my analysis of where interest rates are likely to be at that time I think it would be unlikely that reducing the term by 5 years (in 5 years-time) will be affordable (it never has been in my experience) and as a result it will mean that we will be paying the mortgage for longer than we should (into my retirement years) and of course there’s a financial cost to that of 10’s of thousands of pounds as a result, which I don’t think we should have to pay. is there anything I can do ? I'm faced with the prospect through no fault of my own of having to pay around £95,000 to clear the mortgage 5 years later than I should be having to... 

I feel I'm being robbed and I need to get something sorted help please !

K_S

@cre8toruk I couldn't fully follow the timelines in your post but I don't understand why you would be worse off if you simply went with a term of 17 years (instead of the initial 13) and then overpaid regularly to achieve the same savings as on a shorter term.

The reason for the dip in affordability between when you started the process (early 2022?) and the full application was submitted (it isn't clear when you did this) might simply be due to Nationwide (like a lot of other lenders) having updated it's affordability calculators in the meantime to account for the rampant inflation.

cre8toruk said:

hi everyone

1. I felt a bit nervous back in January /February when I first contacted my mortgage broker / advisor regarding my feeling that interest rates were going to be an issue for us with our mortgage deal running out in 2023. (I mean call me clairvoyant if you like!!)
2. We Agreed back then that we would secure a deal early to secure the rate to avoid us falling off a cliff in feb 2023 if interest rates had increased significantly by then
3. We applied via our broker and were advised by them that the nationwide building soc had confirmed that all the affordability checks etc had been met and we had an agreement in principle based on a 12 (later changed to 13) year term @2.69%
4. We were subsequently advised that there was an issue with the affordability checks due to additional undisclosed credit, which upon investigation by the broker and Nationwide turned out to be untrue.
5. We’re now in the position where they seem to have invented some additional mythical "risk factor" which they've singularly failed to explain and this has been introduced which now has the effect of reducing the maximum amount of loan they will lend to £30k below what we need to clear the existing mortgage.
6. We’re now being told that to achieve the above amount we need to extend the term of the loan to from13 to 17years i.e. another 5 years more than our current term

The problem I have with this is that whilst I can over pay on my repayments even if I pay the difference between my current payment and the new lower amount this would only have the affect of reducing the term by less than 5 years which in 5 years-time only puts the term back to where we are now.

In 5 years-time we should have a term of only 8 years remaining and given my analysis of where interest rates are likely to be at that time I think it would be unlikely that reducing the term by 5 years (in 5 years-time) will be affordable (it never has been in my experience) and as a result it will mean that we will be paying the mortgage for longer than we should (into my retirement years) and of course there’s a financial cost to that of 10’s of thousands of pounds as a result, which I don’t think we should have to pay. is there anything I can do ? I'm faced with the prospect through no fault of my own of having to pay around £95,000 to clear the mortgage 5 years later than I should be having to... 

I feel I'm being robbed and I need to get something sorted help please 

[Deleted User]

You might consider submitting a GDPR Data Subject Access request, to see what information they have to base their decision on.

However, it's possible that if this is recent it's due to rising interest rates, predicted to hit at least 6%. That's a huge additional risk factor for everyone. Seems like that may be the case as nobody is offering 2.69% now.

Neilos9

no.  Your certainly not being robbed.
Assuming you pay the same amount monthly for a 12 year term on the 17 - YOU WILL BE IN a semi identical position at the end of the 5 year term....
If you cant afford the mortgage in your future - based on 8 years left.......You can work out for yourself why Nationwide are not comfortable......

cre8toruk

if my term was 13 years and the term is now extended by 5 years if I overpay by 400 a month this only gets me a term reduction of just under 5years so in 5 years time I'll be back to the 12 years I'm currently at.. I would have to overpay b £800 a month to get back to where I should be in 5 years time i.e. 8years

simon_or

You will be in the exact same position whether you take a longer term and overpay or shorten your term.

Are you still getting the 2.69% rate or not? At what stage of the mortgage process are you? That might be the confusion.

As per what my broker told me, all banks have uodated their affordability assumptions multiple times this year due to the high inflation.

Neilos9

If you pay the amount Nationwide want for the 13 years for the term of 17 the mortgage will be completed in 13 years.
If in 5 years Interest rates have gone to 10%  - your first mortgage monthly payment is probably no affordable, however the 2nd is for a longer term so may well be.....

simon_or

This is an important point. If you're really worried about future affordability, then you should be looking at getting the longest term you can, not the shortest. You can still overpay and get the same savings.

Neilos9 said:

If you pay the amount Nationwide want for the 13 years for the term of 17 the mortgage will be completed in 13 years.
If in 5 years Interest rates have gone to 10%  - your first mortgage monthly payment is probably no affordable, however the 2nd is for a longer term so may well be.....

cre8toruk

No I am being robbed ! I can't afford repayments currently on an 8 year term but in 5 years time I will because they would be the same as they are now (give or take)rigolith said:

You might consider submitting a GDPR Data Subject Access request, to see what information they have to base their decision on.

However, it's possible that if this is recent it's due to rising interest rates, predicted to hit at least 6%. That's a huge additional risk factor for everyone. Seems like that may be the case as nobody is offering 2.69% now.

Yes this is precisely my issue... they're moving the agreed goalposts because of the current situation the result of which will cost me £95k more on my mortgage.

cre8toruk

Neilos9 said:

If you pay the amount Nationwide want for the 13 years for the term of 17 the mortgage will be completed in 13 years.
If in 5 years Interest rates have gone to 10%  - your first mortgage monthly payment is probably no affordable, however the 2nd is for a longer term so may well be.....

mnope not true if I pay what they want for 13 years I'll still owe them 4 years of mortgage payments. if interest rates are at 10% in 5 years time Instead of having 8years of payments to make I'll have to do 12.

cre8toruk

Neilos9 said:

no.  Your certainly not being robbed.
Assuming you pay the same amount monthly for a 12 year term on the 17 - YOU WILL BE IN a semi identical position at the end of the 5 year term....
If you cant afford the mortgage in your future - based on 8 years left.......You can work out for yourself why Nationwide are not comfortable......

the reason I try and avoid forums like this I'll be paying 5 years of payments to have not paid off any of the mortgage!! so because nationwide have moved goalposts I already have an agreement on I end up paying £95k more on my mortgage and have to also have it for longer when if I'd just done nothing I could yes probably paid more in the long run due to the increased interest rate on the SVR but would have paid it off sooner.