Declined porting mortgage whilst we have consent to let

by Readers Question

9:10 AM, 10th August 2016
About 2 years ago

Declined porting mortgage whilst we have consent to let

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Declined porting mortgage whilst we have consent to let

I own a property that I bought on a five year fixed residential mortgage. My circumstances changed and I moved in with my girlfriend and we then had a baby. I got consent to let from the bank who approved it and we’ve happily rented for the past two years whilst tenanting the property.porting

We now want to buy a new property for our expanding family – we enquired with Nationwide about our eligibility to borrow more and were provisionally told we could borrow much more than we wanted. We put the flat up for sale, accepted an offer and found somewhere new to buy knowing we had a product with portability.

NOW the bank is telling us we can’t port the mortgage whilst consent to let is on the property. So our option is to kick our tenants out and risk breaking the chain, have the chain be broken and try to sell again whilst the place is empty, or press ahead and pay the £10k ERC. I don’t understand why the bank would want us to have an empty property and higher risk of defaulting? We are on a very high rate as it is (4.89%) so imagine they would be happy to keep us on this rate.

Should I try and fight this with the bank, as it was pointed out to us we couldn’t borrow more whilst the property was let but we were never told it couldn’t be ported; or should I tell them the property is no longer let with immediate effect (knowing the tenants are leaving in 5 weeks time) to try and keep the chain from falling apart?

Many thanks

Nicola



Comments

Neil Patterson

9:15 AM, 10th August 2016
About 2 years ago

Hi Nicola,

The bank are very likely within their terms and conditions to refuse so they way to play this is be as nice as possible and throw yourself on their mercy explaining as high up as you can go exactly what the situation is.

That includes the tenants moving out in 5 weeks and not now. You obviously have a good credit rating and history so it is never worth putting that into jeopardy by making a false declaration and possibly causing a black mark against you for many years to come.

Next step would be, if you get no further, to instigate the complaints procedure.

matchmade

10:03 AM, 10th August 2016
About 2 years ago

Why not just approach a mortgage broker and see if you can take out a new mortgage with a new provider, perhaps on a better interest rate? You don't mention any penalty for redeeming the Nationwide mortgage, but even if there is, it may still be cost-effective to switch.

If you do only get a slightly better offer from another provider, this could still be leverage to persuade Nationwide to cooperate, as once you tell them you are thinking of switching, they will change their mind in order to keep your business.

Claire Smith

10:46 AM, 10th August 2016
About 2 years ago

The original post says that the early redemption charge is £10K, which is a substantial amount.

Seething Landlord

11:47 AM, 10th August 2016
About 2 years ago

Sorry if I've missed something but why can't removal of the consent to let be synchronised with the transfer of the mortgage to the new property?

John Constant

13:49 PM, 10th August 2016
About 2 years ago

Nicola,
I'm not sure if the figures would work for you, but as you have been renting this property out for some time now, and would in all likelihood be regarded as an experienced landlord, why not formalise this arrangement and put a BTL mortgage on the property to take the place of the Nationwide residential mortgage with CTL? I am sure that Nationwide would accept this situation if the BTL remortgage and the new residential mortgage were synchronised.

Of course, you may need to sell the property to fund the deposit, but if you could make the figures work, you will have an investment property and new residential.

If you need help with the figures, we at HD Consultants, would be happy to help. We have a long-standing business relationship with Property118, and I am sure that Neil would be happy to pass your contact details on to me.

Kate Mellor

20:44 PM, 13th August 2016
About 2 years ago

You mention breaking the chain, have you already agreed a completion date with the rest of the chain?

You are in a tight spot and as a former Estate Agent, these delays do come up all the time and yes sometimes they do cause the chain to collapse. Don't despair yet though.

How long would it take following the tenants leaving for the mortgage to be ported? What is the process and what is the timescale to complete their requirements? Have they already carried out the valuation on your new property, or are you right at offer accepted stage?

Our solicitor quotes 10 days for a remortgage from receipt of mortgage offer if all items requested are provided in a timely manner, I doubt this happens too often, but they are pretty efficient. My point is that you already know when your tenants are leaving, at this point you will be eligible for the porting option and can have your lender poised to carry out their end from the date you advise them that the property is empty. You could easily find out what documentation will be needed by your solicitor and have it all ready to go to speed things up. The secret is to be VERY proactive. Be a pain in the butt to all concerned; your lender; your solicitor and anyone else who is working at your end. Pick up the phone each and every day if necessary to chase the next item/task which is in the works. The squeaky wheel gets the grease.

It will take you longer than 5 weeks to get your tenants out in any of the legal ways unless they agree to move out earlier voluntarily (perhaps with a financial incentive).

If you decide to find a new lender and stump up the 10K ERC then you will certainly have a delay whilst you source the new mortgage, fill in all the forms, provide all the proofs of ID and income etc, pay for a new valuation by the new lender etc (this process can take several weeks). Unless you are thinking of sourcing your new product with Nationwide and have already provided all the necessary documentation to them (?).

From my understanding of the situation, (forgive me if I've made any incorrect assumptions), it seems to me advisable to at least try and negotiate say a 10 week completion, this doesn't seem too unreasonable to me. The sales negotiator should be able to sound things out and advise you. You can then make your decision based on the information available to you. I hope you can work something out with your lender and your chain, all the best with it, it's times like these you wish you had a crystal ball!


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