Natwest refusing the consider additional borrowing on 0% credit card consolidation

TitchyC

Hi, I'd really appreciate some advise on my situation as Google isnt cutting the mustard on this!

A brief background: We've had our house on the market for a few months now in order to downsize and pay off debts but we've quickly realised this is THE WORST time to sell. 
So rather than dropping the price and losing considerable and unnecessary equity we wanted to look at consolidating the credit card debt and loans into additional borrowing on our current mortgage with Natwest.

Outgoing monthly payments on loans and credit cards are now £1000 per month (i know, dont judge me) but consolidating onto mortgage would add approx £300-400 per month. For us, this would mean that when our new mortgage rate kicks in June, we would have approx £600 per month spare after bills/food rather than £0. This would mean we could ride out a couple more years in this house while we wait for the housing market to improve, before selling and downsizing, when we would be reducing the mortgage considerably.

Today I called Natwest to start the process but was told they simply wouldnt lend to consolidate credit card debt if the cards were still on interest free as they would be increasing interest on the original debt.
The fact is, this is the difference between being able to continue to pay the mortgage or not. And if we stick with waiting for the house to sell, even at a reduced selling price, houses arent selling so we are moving into dangerous financial territory.
Is this a standard thing? To not consolidate on interest free loans? 
Is there any way around this? I'm starting to feel quite panicked about the whole thing now, any advice without judgement will be gratefully received x

Brie

The problem is that you likely appear to not have a sufficient income to support the increased mortgage AND the loans and credit cards.  You say that you will use the extra money to pay everything off but the bank doesn't know for sure that this will actually happen so don't consider it a good risk. 

The only way around this is to reduce the amount of credit you have available.  Have a look at the cards you have and see which you might be able to cut the credit limit on.  

Also suggest that you go on to the debt free board and fill out the statement of accounts that is on one of the top posts.  By taking a good look at all your income and expenditures you might be able to spot a way to make a few cuts.  If you also post a copy of it on the debt board others will add helpful advice to get you through this tough period.  

TitchyC

Brie said:

The problem is that you likely appear to not have a sufficient income to support the increased mortgage AND the loans and credit cards.  You say that you will use the extra money to pay everything off but the bank doesn't know for sure that this will actually happen so don't consider it a good risk. 

The only way around this is to reduce the amount of credit you have available.  Have a look at the cards you have and see which you might be able to cut the credit limit on.  

Also suggest that you go on to the debt free board and fill out the statement of accounts that is on one of the top posts.  By taking a good look at all your income and expenditures you might be able to spot a way to make a few cuts.  If you also post a copy of it on the debt board others will add helpful advice to get you through this tough period.  

Thanks for responding Brie, but no, that doesn't seem to be the case. She said she could have progressed with the application if the cards weren't on interest free agreements. Thats the particular sticking point. The affordability is there. They just don't consolidate on interest free agreements but I cant find any information online about this subject.
Regarding the debt - as a strategy over 3-4 years, moving the payments to the mortgage while we wait out the housing crisis to ease and downsize would mean that the debts would be cleared way quicker than any other way right now. 

I'm just trying to understand is this particular policy is usual, or maybe just something Natwest do, or maybe if there's something else I should be doing/ or asking them. Seems crazy that it's not my choice as to whether I move interest-free debt onto paid interest debt (if that makes sense).

Brie

Ah! OK.  So maybe it's just a Natwest thing?  Though one can kinda see the point of it being better for someone to be on 0% than 5% or whatever.  I wonder what info you could get from other banks without them actually doing a hard search?

Phoenix72

To be honest it would be bonkers to take an interest free unsecured debt and turn into an interest bearing secured loan.

If that's the Natwest policy then you are stuck with it. Thet are right in that it will increase your debt.

How much equity is in the property?

BarelySentientAI

TitchyC said:

Brie said:

The problem is that you likely appear to not have a sufficient income to support the increased mortgage AND the loans and credit cards.  You say that you will use the extra money to pay everything off but the bank doesn't know for sure that this will actually happen so don't consider it a good risk. 

The only way around this is to reduce the amount of credit you have available.  Have a look at the cards you have and see which you might be able to cut the credit limit on.  

Also suggest that you go on to the debt free board and fill out the statement of accounts that is on one of the top posts.  By taking a good look at all your income and expenditures you might be able to spot a way to make a few cuts.  If you also post a copy of it on the debt board others will add helpful advice to get you through this tough period.  

Thanks for responding Brie, but no, that doesn't seem to be the case. She said she could have progressed with the application if the cards weren't on interest free agreements. Thats the particular sticking point. The affordability is there. They just don't consolidate on interest free agreements but I cant find any information online about this subject.
Regarding the debt - as a strategy over 3-4 years, moving the payments to the mortgage while we wait out the housing crisis to ease and downsize would mean that the debts would be cleared way quicker than any other way right now. 

I'm just trying to understand is this particular policy is usual, or maybe just something Natwest do, or maybe if there's something else I should be doing/ or asking them. Seems crazy that it's not my choice as to whether I move interest-free debt onto paid interest debt (if that makes sense).

Well the person who you plan to owe the debt to might think they have some say.

There are a few things around from brokers and other lenders who say they wouldn't normally do debt consolidation like you suggest for anyone on 0% cards or in the last 12 months of loans - and Natwest / RBS specifically say on their websites (as you have since found out) that they will not do it for 0% credit cards / store cards.  Seems to be relatively common.

TitchyC

Phoenix72 said:

To be honest it would be bonkers to take an interest free unsecured debt and turn into an interest bearing secured loan.

If that's the Natwest policy then you are stuck with it. Thet are right in that it will increase your debt.

How much equity is in the property?

Maybe bonkers as a long-term strategy but when it comes to reducing monthly repayments in the short term, it makes perfect sense to my bank account and sanity! 
We own 50% of the property.

Phoenix72

TitchyC said:

Phoenix72 said:

To be honest it would be bonkers to take an interest free unsecured debt and turn into an interest bearing secured loan.

If that's the Natwest policy then you are stuck with it. Thet are right in that it will increase your debt.

How much equity is in the property?

We own 50% of the property.

What does that mean, your mortgage is currently half of the propery value or you jointly own it with someone else?

TitchyC

Phoenix72 said:

TitchyC said:

Phoenix72 said:

To be honest it would be bonkers to take an interest free unsecured debt and turn into an interest bearing secured loan.

If that's the Natwest policy then you are stuck with it. Thet are right in that it will increase your debt.

How much equity is in the property?

We own 50% of the property.

What does that mean, your mortgage is currently half of the propery value or you jointly own it with someone else?

Mortgage is 50% of the property value :-)

Hoenir

TitchyC said:

So rather than dropping the price and losing considerable and unnecessary equity we wanted to look at consolidating the credit card debt and loans into additional borrowing on our current mortgage with Natwest.

By consolidating the debt you are simply going to incur a considerable amount of interest over the remaining term of the mortgage. If interest rates were to rise further. Would simply simply place additional stress on your finances. 

Phoenix72

TitchyC said:

Phoenix72 said:

TitchyC said:

Phoenix72 said:

To be honest it would be bonkers to take an interest free unsecured debt and turn into an interest bearing secured loan.

If that's the Natwest policy then you are stuck with it. Thet are right in that it will increase your debt.

How much equity is in the property?

We own 50% of the property.

What does that mean, your mortgage is currently half of the propery value or you jointly own it with someone else?

Mortgage is 50% of the property value :-)

Have you considered re-mortgaging elsewhere, there may be other lenders who do not have this exclusion.