Banks force bor­row­ers off ‘su­percheap’ loans

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Mort­gage bor­row­ers who want to keep cheap tracker deals when they move are be­ing turned down. By Olivia Rudgard

Bor­row­ers are still be­ing blocked from trans­fer­ring low-rate mort­gages to new prop­er­ties by lenders keen to force them on to more ex­pen­sive deals, ex­perts say. Some bor­row­ers with ex­tremely low rates, of­ten on tracker mort­gages se­cured when Bank Rate was much higher, strug­gle to keep their mort­gage when they move house.

One case that Tele­graph Money has seen in­volves a cou­ple, a sur­geon and a mar­ket­ing con­sul­tant – both highly paid pro­fes­sional peo­ple who have a credit rat­ing of 999, the high­est pos­si­ble.

Neville Das­tur, 42, a con­sul­tant vas­cu­lar sur­geon, and his wife, Emma, a 37-year-old mar­ket­ing con­sul­tant, are mov­ing from their home in Guild­ford, Sur­rey, to nearby Farn­ham to be closer to good schools for their two chil­dren.

Their tracker mort­gage is portable for up to 90pc of the value of the prop­erty value. It was taken out 10 years ago at 6.24pc but re­peated Bank Rate cuts mean they now pay just 0.74pc. The fam­ily wanted to add £276,400 to the mort­gage so they could move quickly be­fore the start of the school term and be­fore their old prop­erty was sold.

But when their lender, San­tander, car­ried out an af­ford­abil­ity check, the cou­ple were told that Mrs Das­tur’s in­come would be dis­re­garded be­cause she had only 23 months of div­i­dend re­ceipts from her busi­ness, a month short of the re­quired amount.

Mr Das­tur takes most of his salary from the NHS but, like many doc­tors, also has some self-em­ployed in­come. How­ever, the lender told the cou­ple that this would also be dis­counted. It said this was be­cause he had not pro­vided 24 months of div­i­dend re­ceipts, so he sub­mit­ted these.

They were then told that a car loan meant they had been re­jected, even though it had been paid off in full.

They are con­cerned that their house pur­chase will fall through, and said the im­pact of the up­heaval on their two chil­dren, Eli, four, and Ava, six, had been con­sid­er­able.

“We’ve got to be out of our rented house by Septem­ber 17, so it’s now get­ting re­ally tight,” Mr Das­tur said.

“We were told all along that it would all be OK, we had the agree­ment in prin­ci­ple. I could un­der­stand it if I had a bad credit his­tory, but I don’t.”

One mort­gage bro­ker, Si­mon Collins of John Char­col, said he was baf­fled by the lender’s re­luc­tance to help its client in this case and added that the Das­turs’ low rate could be a fac­tor.

“Why would you want to stop some­one like this from port­ing [trans­fer­ring the mort­gage to a new prop­erty]?” he asked. “You’ve got a 10-year bor­row­ing track record with this client. Why would you be try­ing to turn this down? It must be down to the rate.”

The Das­turs’ ex­tremely low rate is down to the dra­matic fall in Bank Rate since they took out the mort­gage a decade ago. In 2006 Bank Rate was 5pc. It rose to a high of 5.75pc in July 2007 but has been fall­ing con­sis­tently there­after.

This means that any­one who took out a long-term tracker mort­gage at just above Bank Rate, and still has it now, is pay­ing an ex­tremely good rate, much lower than on any mort­gage now avail­able.

Mort­gages were then be­ing sold at as low as 0.09 of a per­cent­age point above Bank Rate for the life of the loan. Some­one who took up this loan would now be pay­ing just 0.34pc on

their mort­gage. The Das­turs pay 0.49 points above Bank Rate.

“These lenders will be los­ing money hand over fist,” said Mr Collins. “We’ve seen a num­ber that would dearly love to get peo­ple off these very low track­ers.”

Mr Das­tur’s mort­gage bro­ker, Martin Gaskell of Gaskells IMA, said he had seen this hap­pen to many of his other clients.

He said it was a “con­stant bat­tle” against lenders, which did not use com­mon sense to make lend­ing de­ci­sions.

“Lenders are be­ing too harsh at the mo­ment and not tak­ing a re­al­is­tic view,” he said. “They’re work­ing from a ‘com­puter says yes or no’ at­ti­tude rather than work­ing off an in­di­vid­ual’s sit­u­a­tion. It’s too strict and get­ting worse all the time.”

In the wake of the fi­nan­cial cri­sis, in­creas­ing reg­u­la­tion has lim­ited lenders’ abil­ity to make some loans. For ex­am­ple, they are al­lowed to ad­vance only 15pc of their loans to buy­ers who bor­row 4.5 times their earn­ings or more.

Mr Gaskell said San­tander was by no means the worst of­fender and praised the work of the bank’s busi­ness de­vel­op­ment man­ager, who he said had been help­ful to the cou­ple’s case.

But he said “the smaller build­ing so­ci­eties are the best – they can take a more sen­si­ble view of things”.

“Some of the banks are worse than oth­ers. HSBC has great rates but won’t lend to any­one. Na­tion­wide can also be dif­fi­cult to deal with.”

The Das­turs have found a buyer for their house, which means they can put more eq­uity into the new prop­erty and take a smaller mort­gage, a pro­posal the lender has ap­proved.

A spokesman for San­tander in­di­cated that the car loan had been be­hind the Das­turs’ prob­lems. The lender also said it sup­ported “port­ing” ap­pli­ca­tions from cus­tomers who wanted to bor­row the same amount or less.

He said: “When re­view­ing Mr Das­tur’s af­ford­abil­ity, un­se­cured debt was high­lighted, which had not been ini­tially de­clared.

“We have taken the ad­di­tional in­for­ma­tion now pro­vided by the cus­tomer into ac­count and have of­fered him a loan of £464,000.”

Neville and Emma Das­tur had a 0.74pc deal but strug­gled to keep their loan

San­tander said a car loan was be­hind its de­ci­sion to block the mort­gage

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