Turned down for additional borrowing

Jamesp31_2

Hi, I would appreciate some advice here.  We have had our nationwide mortgage for a year now.  We have been wanting to build an extension and when I enquired last year, they told me to wait until I had had the mortgage for 6 months, and that I would need planning permission in place and builders quotes.  Fast forward to now, all that is now in place and after doing research using mortgage comparison sites, I had a rough idea of how much we could potentially afford.  These are the details:

Current value of house £290000
Current mortgage balance £145000
Additional borrowing amount £115000  
LTV 89%
Combined annual salary for myself and my partner £54000
Only current debt is credit card of £7k

After crunching the numbers the woman on phone said the most they'd lend me is £18700.  This seems an incredibly low amount to offer, especially for structural alterations.  My query is, could this be a mistake, or is it likely that they really wont lend more?  I had assumed that lending for home improvements were generally more accepted as it can increase market value.  This leaves me with hardly any options to proceed with the works we wanted to carry out.  What I dont understand is when using comparison sites and entering all my details as if I were simply remortgaging and wanting to add the £115k additional borrowing, I am getting loads of results from mortgage companies.  

What am I missing?

housebuyer143

Based on that salary you would be looking at roughly 4.5x your income, so total borrowing about £230k but then the credit card debt will reduce that further. The LTV will also make them more apprehensive, so it's probably not an error. 

You might get more from another lender but then you will incur ERCs. Honestly though I'm not sure you will find a lender willing to lend you over 5x your income at the moment. 

The mortgage comparison sites are very generic and would not give accurate borrowing amounts from nationwide. Have you put your figures into their affordability calculator?

Jamesp31_2

housebuyer143 said:

Based on that salary you would be looking at roughly 4.5x your income, so total borrowing about £230k but then the credit card debt will reduce that further. The LTV will also make them more apprehensive, so it's probably not an error. 

You might get more from another lender but then you will incur ERCs. Honestly though I'm not sure you will find a lender willing to lend you over 5x your income at the moment. 

The mortgage comparison sites are very generic and would not give accurate borrowing amounts from nationwide. Have you put your figures into their affordability calculator?

Thank you for your reply.  Having looked at their affordability calculator, that says it could lend me up to £156400, so something just doesnt seem right.  She double checked with me her figures shed keyed in, but I am still not convinced .......

housebuyer143

Jamesp31_2 said:

housebuyer143 said:

Based on that salary you would be looking at roughly 4.5x your income, so total borrowing about £230k but then the credit card debt will reduce that further. The LTV will also make them more apprehensive, so it's probably not an error. 

You might get more from another lender but then you will incur ERCs. Honestly though I'm not sure you will find a lender willing to lend you over 5x your income at the moment. 

The mortgage comparison sites are very generic and would not give accurate borrowing amounts from nationwide. Have you put your figures into their affordability calculator?

Thank you for your reply.  Having looked at their affordability calculator, that says it could lend me up to £156400, so something just doesnt seem right.  She double checked with me her figures shed keyed in, but I am still not convinced .......

If you spoke to someone at nationwide then I would trust what they say. They have no reason to lie. Unfortunately you are just trying to borrow too much. 

Jamesp31_2

Any advice on funding the work, we have literally spent thousands on architects plans, planning permission, building control application, I never thought for a minute they'd offer such a low amount, that wouldn't even build a porch!   We have done the sums and could afford up to an extra £600 a month

housebuyer143

Have you looked at second charge loans? Might be much higher borrowing costs though than the mortgage would be. 

Jamesp31_2

no wouldnt have a clue where to start, I will google it.  Thanks for your help :-)

IAMIAM

Someone borrowing 115k is a lot. This is the problem with banks. You have to practically sell the property, buy it back from yourself at 90% LTV and then bank the difference. Asking them to lend you the equivalent directly is a nightmare. As what kitchen, new car, bathroom or extension costs 115k

Jamesp31_2

Its a 2 story side extension adding an ensuite 4th bedroom, downstairs utility and WC, and the conversion of existing conservatory into a single story kitchen extension, thats costs of the works.  Appreciate we would have to scale back the plans, as its the 4th bedroom we desperately need, this alone would be 60-65% of the estimated cost.  

Back to the drawing board ;-(

RedFraggle

Can you go into the loft for the 4th bedroom?

theoretica

Worth calculating the costs of simply remortgaging with one of the companies who do seem prepared to lend you the full 260k.

Any chance of paying off the full credit card before applying?