Personal mortgage application

Janice23

My daughter made a direct application to NatWest for a mortgage around 3-4 weeks ago. Rate 3.9%.  She had an offer accepted on flat at £330K.  She has £50K deposit and wanted a £280K mortgage.  Natwest have carried out an on-paper valuation at £300K and say that because she made a personal application (rather than through a broker), it was an 'unregulated application' and they are unable to offer a lower mortgage (which would be an acceptable option).  They say that the only option is for her to apply for a different mortgage at 5.7%, which would make the purchase impossible.
We have checked and the online application does not state that it is unregulated, just that you are responsible for choosing the right product.  We would argue that it is the right product, we just need a lower mortgage and would be willing to keep the same loan to value ratio.  She obviously made the application in good faith with the figures available to her.  While we would accept that the value may have changed due to the current crisis, we cannot understand why a lower mortgage is not an option.  Are we missing something?
Any options of what we can do next?  Any advice appreciated.

K_S

@janice23 Just to clarify what they said, it's not due to not using a broker (as NatWest does offer direct advised applications as well), but to do with you opting for an 'execution-only' service which involves no advice.

I can see why they won't modify anything on a non-advised execution-only application, but will they not allow the application to be converted to a with-advice application while keeping the same product? It would probably mean an appointment and a hour long call with an advisor, etc.

If they refuse to do that, perhaps submit a formal complaint, though it's hard to say how long they will take to look at it.

Janice23 said:

My daughter made a direct application to NatWest for a mortgage around 3-4 weeks ago. Rate 3.9%.  She had an offer accepted on flat at £330K.  She has £50K deposit and wanted a £280K mortgage.  Natwest have carried out an on-paper valuation at £300K and say that because she made a personal application (rather than through a broker), it was an 'unregulated application' and they are unable to offer a lower mortgage (which would be an acceptable option).  They say that the only option is for her to apply for a different mortgage at 5.7%, which would make the purchase impossible.
We have checked and the online application does not state that it is unregulated, just that you are responsible for choosing the right product.  We would argue that it is the right product, we just need a lower mortgage and would be willing to keep the same loan to value ratio.  She obviously made the application in good faith with the figures available to her.  While we would accept that the value may have changed due to the current crisis, we cannot understand why a lower mortgage is not an option.  Are we missing something?
Any options of what we can do next?  Any advice appreciated.

housebuyer143

I've not heard of this, either they accepted the application and it was processed or it wasn't, it's strange they sat on it for weeks. 

Are you sure they are not telling her to apply for a new product because the LTV much lower now?  If they down valued the property and she still wants to borrow £280k, it's very likely she doesn't qualify for the original product any longer.

Janice23

housebuyer143 said:

I've not heard of this, either they accepted the application and it was processed or it wasn't, it's strange they sat on it for weeks. 

Are you sure they are not telling her to apply for a new product because the LTV much lower now?  If they down valued the property and she still wants to borrow £280k, it's very likely she doesn't qualify for the original product any longer.

She accepts that she cannot have a £280K mortgage, but wants NATWEST to provide a lower offer.  This would probably require that the vendor accepts a lower price as she doesnt have the additional £25K to meet the shortfall, but it would keep the purchase option open. We know this isnt great for the vendor, but there is no other option other than to pull out entirely

Janice23

K_S said:

@janice23 Just to clarify what they said, it's not due to not using a broker (as NatWest does offer direct advised applications as well), but to do with you opting for an 'execution-only' service which involves no advice.

I can see why they won't modify anything on a non-advised execution-only application, but will they not allow the application to be converted to a with-advice application while keeping the same product? It would probably mean an appointment and a hour long call with an advisor, etc.

If they refuse to do that, perhaps submit a formal complaint, though it's hard to say how long they will take to look at it.

Thank you so much for your advice, that is really helpful. I think I understand their position a little more.  It does seem bizarre that they can reject the application on value, when you had no way of knowing about a market crash at the time of application.  It does seem to penalise those who make their own applications.  Let's hope they will be flexible, but the murmurings suggest not!