Intelligent finance reserved cash amount, anyone taken it?

rockrat

If you have an intelligent Finance mortgage, when they first value the home they work out your LTV and multiples of the income etc, and if your mortgage is less than the maximum the would potentially offer, they reserve this remaining amount for one year, and this figure shows on your online account area.

whith all the credit crunch etc etc, i am thinking about taking this reserve amount as i can afford the increase monthly payment, leaving the cash sat in the offset area and looking to see if any potential property bargains arise over the next few years.

but i wondered if anyone had any experience, especially in recent times of obtaining this reserve amount from IF?

ThriftyBeanie

Not specifically done this but I have drawn down on built up reserves of overpayments, in the past. This was about 3 to 4 years ago, so done in a very different climate.

One thing I would seek clarification of before you commit to it, is the rate at which the new borrowing will be charged. IIRC, additional borrowings (even drawdown of built up overpayments) are charged at SVR by IF, regardless of the rate you are on.

lukens

OK, I have just done this, so can answer your question, and it's not a short answer.

First off, I asked to draw down my full built-up loan amount, and was that they couldn't authorise this, as it took my mortgage over the LTV for the property.

This seemed a bit confusing, so I queried this, and was told that when you draw down on your mortgage reserve it is counted as a further advance, and added on to your original loan amount, and not on to your current balance. I was told I would need to talk to sales, and they put me through. Then, to cut a long story (involving being put through to the wrong number, etc...) short, they arranged a call-back for me, in the next 24-48 hours.

Well, what I had been told kept working round in my head, and still didn't make any sense, and I couldn't find anything in the Ts and Cs, so I phoned up again. Unfortunately, I got put through to the same person again, who again tried to convince me that it made sense that the built-up reserve would be added to my original loan amount when I withdrew it.

I said I would understand this if it was a further advance, but this was *not* a further advance. They insisted it was a further advance, so I read them the bit from the Ts and Cs that specifically said that "A further advance does not include any part of the pre-agreed reserve you borrow or the built-up reserve you use", to which they replied "well, but that's just the technical term".

They then gave me a number for the sales team (which actually seemed to just connect me to the same automated system as before), and luckily I got to speak to someone else.

This person confirmed that what I'd previously been told was complete balls, and that the amount you took from your reserve was added on to your current balance, not the original loan amount. They then looked into it further, and it seemed I was not able to withdraw the full amount as the value of my house on the Halifax Price Index had fallen by about 4%, and as my original amount was for 95% LTV I could no longer withdraw the full reserve as this would push it over 95%.

So, we got out our calculators, and did some sums, and tried an amount that should have gone through fine. That also didn't work, so we tried some more numbers until we found one that did.

The advisor I spoke to thought the first amount we tried after doing our calculations should have been fine though, so he raised a technical support request to have it looked into. He suspected it was an issue they had not previously encountered, as this was the first time there had been a falling market where a situation like mine would occur.

So, in the end I withdrew the most it would let me for now. I was told I could get my property re-valued to withdraw the full amount, or that they may just be able to do it, if I spoke to someone higher up, but that the former would mean I had to pay a revaluation fee.


So, things to note are:

- the amount you can withdraw is based on the LTV based on the current Halifax Price Index value for your house.

- there's possibly a bug in the system preventing you withdrawing quite as much as you'd like to.


Also, for anyone thinking of making overpayments, my personal advice would be to instead set up an offset savings jar, and to pay your extra money into that, rather than directly into your mortgage. I think the end result is the same (due to offsetting) but that your money will be easier to access, and won't be affected by market conditions. You should however check for yourselves that there are no other benefits to making overpayments rather than offsetting.

happybroker

section F.3.4.6 "we believe that there has been or is likely to be a material reduction in the value of the property" is straight from the March 2008 terms and conditions booklet for IF.

Generally it's a good idea to draw down the full available faclity on completion and off set immediately in a savings jar. This aslo means that when you do need this cash it's at the product rate rather than the lender's standard variable rate.

Double check which portion of the mortgage the of set will be against, the product rate or svr also.

stressedoutmumof1

Does anyone know whether you can ask them to give you a reserve now? I have had my mortgage with IF for 7 years: House value approx £180'000, outstanding mortgage £110'000. I'm looking to borrow £6500, and wondered if I could do it without re-mortgaging.

Thanks in advance