The policy came to light after Creditlink broker Ceri Harris appealed a decision to turn down clients with good credit records who wanted to consolidate their debt and was told the loan-to-value was the main reason for withholding permission.
Harris described the borrowers’ credit rating as “A1” at time of the application: “How is it fair to decline consent when a loan is clearly benefiting the customers and putting them in a better cash flow position, which can on occasions prevent them from going into arrears on their main mortgage?
“Some lenders will always grant consent and other lenders may take an individual view. There have been occasions when we have had consent declined and then go back to explain the benefits of the loan. When the lender sees the benefit in detail they have then granted the consent.”
According to the letter from TMW, the cap was designed to reflect a more prudent approach to risk in the years since the financial crisis.
The decision was in accordance with a restriction placed on the property title by the lender at the Land Registry, it added.
A TMW spokeswoman confirmed that the cap was policy and told Mortgage Solutions: “TMW’s criteria for second charges have been in place a number of years, with a maximum LTV of 60%. The rationale for the second charges criteria form part of our commitment to lending responsibly.”
Prestige Finance director Simon Stern said: “We are very disappointed that TMW is still taking this attitude in respect of refusing to give consent to second charge lending. Second charge lending has proven to be responsible and the ideal product for many applicants.
“Every second charge is considered on its merits so why should TMW have a policy that could impact severely on applicants able to borrow for a justifiable reason?”
