Difficulty setting up mortgage on a house I already own.

[maryanne40]

Was lucky enough to be able to buy a house last summer without a mortgage but did have to take out a personal loan for the stamp duty. Now I want to borrow about 40% of its current valuation to extend and revamp the property and pay off the personal loan.

Having looked at all the options I approached NIB and got loan approval for the sum I wanted. My preference was to draw down the amount of the personal loan immediately and the rest in stages as the builder requested it.

When I visited my solicitor though he explained that the way NIB had worded the loan offer I would have to pay search fees etc twice...the solicitor got on to NIB to ask why they hadn't put the whole loan into one and they explained they could not do this without architect plans, builders estimates and the dog's dinner.

As I am only working with the architect at the moment it will be another couple of months before I will have what NIB say they need. Meanwhile I will keep paying the personal loan as it is not going to cost me 1000 in interest between this and then....BUT.... the whole thing is REALLY bugging me. Why can't they release the funds now? Remember if I had applied for a mortgage on the property when I bought it 6 months ago there would not have been a problem and I would have had the CASH to proceed with my plans in my own time.

I suppose what I really want to know is whether the situation would be the same with any other lender? Or is it just NIB?

 

[PM1234]

So NIB have put some sort of retention on cheque drawdown when LTV is 40%?
Did they ask for a valuation?

Regarding drawdown I don't really understand from your post what it is you wanted? You requested stage payments ie the personal loan first and further drawdown as required? Yet you wanted to drawdown the whole amount together?

 

[maryanne40]

Thank you for replying.

Yes, they did ask for a valuation, recommended a valuer who I used and there is no problem with the LTV. It is 40%.

Neither is there a problem with my salary. I could be approved for more if I wanted it.

The difficulty is that they want to advance the first bit...(the bit I want to pay the personal loan) in one part incurring solicitor's fees etc.

Then they want to release the major amount I want to borrow....(and draw down in stages)... as a separate loan again...incurring another set of fees from solicitor.

This does not cause a MAJOR hassle for me...I can wait to pay the personal loan....but I don't understand their need for all the builders stuff before they can fully sanction the rest of the loan. Surely if I want to use my home as security to buy ANYTHING AT ALL it is not really their business. All they need to concern themselves with is whether they will be repaid.

My question is whether all lenders operate like this or whether another lender would sanction a loan before architect plans, planning permission etc IN ONE so I would only incur ONE set of legal fees. Then I could draw down the amount of the personal loan now and the rest in payments as the builder wants it.

My last point is that had I been short 40% of the value of the house and looked for a mortgage of that amount as I was buying, NIB would not have had a difficulty as the 2 fundamentals....ability to pay and LTV.... were in place then as they STILL are NOW.

 

[maryanne40]

Sorry PM1234 I didn't answer one part of your question.

No I didn't want to draw it all down now....just the amount of the personal loan....about 25% of the 40%...ie 10% of the total loan.

 

[maryanne40]

I'm definitely no properly awake yet. Last bit of message should have read 'about 10% of the value of the property'.