remortgaging with nationwide,turned down coz of existing buy to let

brummiebird443

Hi everybody, this is my first post on the forum, so please be gentle with me!!

we currently have a mortgage of £25k (property value £140k) with the Nationwide (taken out 8 yrs ago) and we're currently looking to borrow an additional £25k to fund a kitchen extension. We went into our local nationwide this morning and we were offered a pitifil £3, 200!!!!!
the reason behind this being that we have an existing £100k buy to let mortgage with Northern Rock on another property. The rent from the other property covers this additional payment but the mortgage adviser said that this made no difference!!!
I'm currently in a state of shock as i dont know what to do. if we went along to another lender and didnt disclose the Buy to let mortgage would we be getting ourselves into heaps of trouble later on?

any suggestions would be gratefully received.

herbiesjp

Other lenders will disregard the BTL in the background as long as it is self financing i.e. rental income covers the mortgage payments

payless

Yes nationwide will only lend 85% when another property is also mortgaged, and income calculator must cover both mortgages added together
although if proveable they will allow some of the rent to be included in their sums
( rarely enough to make up the shortfall)

Whilst NW affodability can be generous , this rule can knock out some otherwise very good cases, suppose their loss as Herbie says some others have a more flexible approach - including even some of the other major high st players, albeit some do require more paperwork/ evidence than they would on a normal "low risk" application

MarkyMarkD

I should bin Nationwide and get the mortgage off a more sensible lender - it doesn't cost anything to look around. Based on wanting only £50k a fee free deal is almost definitely going to be best value - and this sort of situation is where a mortgage intermediary is worthwhile, as they'll know which lenders will do it and which will not, and do the legwork for you at no cost to yourself.

dwsjarcmcd

I would go back to Nationwide and kick up a fuss. That decision seems nuts to me, speak to the manager or put in a formal complaint, which they must respond to within vertain timescales.

brummiebird443

Thanks for all your advice, its made me feel alot better!! i cant get over the fact that they only offered us £3200!!!

I've used some of the comparison websites and so far Northern Rock are coming up as the cheapest. Our Buy to let mortgage is with them as well so hopefully fingers crossed i may actually get a new kitchen yet!!!

Sorry for asking a dumb question but how do Independent financial advisors work? do we have to pay them for using their services or are they paid by the bank/building society whose product we buy?

herbiesjp

I would have though there were better deals than Northern Rock for the re-mortgage of your main residence - but as usual this will depend on your own personal cicumstances

Some will not charge you for the advice and get paid direct by the lender

Some will charge you for the advice and refund the payment from the lender to the client

Some will charge you for the advice AND get paid by the lender

HGLTsuperstar

Why do you want an IFA? The general rule is that a BTL mortgage is covered on rental income of at least 125% of the mortgage value, so your own property mortgage is unrelated to this and should just be linked to your salary. Given the amount of equity in your property, most lenders will be bending over backwards so check the redemption clause on your Nationwide, if there are any, and transfer it elsewhere. But for peace of mind : " if we went along to another lender and didnt disclose the Buy to let mortgage would we be getting ourselves into heaps of trouble later on?
Mention it to the prospective lenders and for added assurance they may give you something in writing to confirm the BTL is not relevant to any deal you come to with them.
The new kitchen is still in sight!

BenL

Maybe i'm wrong but I would have thought Nationwide have the right approach.

Otherwise we'd all go out borrowing the banks money to buy a property to rent out just because the rental income will pay the mortgage.

If you didn't have a tenants the bank would want paying still and their calculations say you can't afford it.

Ben

payless

I agree with you in some ways and hope it does not turn sour, although-

House prices increased as more buyers Buy 2 Let

FTB not afford to buy at inflated market prices, are forced to Rent!

lets hope those with B2L ensure they have something to fall back on to cover any voids

HGLTsuperstar

BenL, I dont think your POV is relevant to this case, the issue is not about borrowing excess to B2L, the issue is about a house with over 100K equity being denied 25K for home imporvement which will bump the vale of the property up even more