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Julie's commercial / fee question
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payless
Posts: 6,957 Forumite
Julie posted , this but likely got overlooked as on a long thread... any answers ?
http://forums.moneysavingexpert.com/showthread.html?t=183138&page=7
Hello to everyone, i am a complete newbie to all this so please be gentle with me.(not even sure if i am in the right place) phew!!!!! here we go.
On the 10th August i arranged for a company called Five counties finance to visit me at my home address to obtain a commercial loan to buy a business. we were having a few problems due to the nature of the business (bakery being a so called specialised business) he was very confident that he would be able to help us he also gave us a couple of quotes which were fine. He then dropped the bombshell that it would not be cheap to obtain it and asked for a fee of £575.00 up front (£25.00 for his petrol costs drove a new jag) we were at the time quite confident (and very silly) and handed over a chq. we waited the week to find out if we had the loan of £42,000, he came back saying that it was not successful, but could do us a loan with another bank, i said to him can you tell me who it is with he declined saying that i might go forward myself to them, i said no it is just that we had tried with a couple of these banks with no luck, eventually telling me it was royal bank of scotland, i told him not to bother as we had already tried, he said they will do it because he gives them £350,000 worth of business a month. but yet again turned down. he said he can get us a loan with a broker (loan shark) but would cost about £1,300 a month 3% intrest i said no to much money. i rang him next day, to ask him to send money back, he said that he had put it forward to another bank and ring him back in a couple of days, i did that and he came back saying good news you can get your money it is a little bit expensive 3% per month, i said but i already told you that i do not want to go down that rd. I said that i am not going to go through with it so could i have my money back please minus his £25.00 petrol costs, he said what money, it has cost this amount of money to put it to these banks and you were accepted with finance at 3 % month for 12 years on a loan of £42,000 i would have paid back the sum of £187,200 plus a £1,000 valuation fee, plus a £2,000 admin costs (it was very nice of them to say they could add it to the end of the loan how considerate of them????) i do not know if five counties finance ever submitted any of these to the bank as it is only his word i have never had any correspondance from them at all.
I signed an agreement with them this it what it says:
In consideration of five counties finance using its best endeavours to introduce the borrower to a lender and obtain for the borrower a mortgage offer up to the amount of the commercial finance, drawing or other facility (hereinafter known as "the commercial finance") in respect of the premises. The borrower agrees:-
1 hereby to instruct five counties finance to endeavour to secure an introduction to the source of finance in connection with the proposed purchase/re-mortgage of the premises up to the amount of the commercial finance.
2 that five counties finance have full and sole authority to negotiate on behalf of the borrower to try to obtain an advance required from the date of this agreement. thereafter, to terminate our instructions to act for you, three months notice in writing is required.
3 to pay an administration fee (to cover costs and disbursements) of £575
a) to obtain competetive intrest rates to include where applicable (subject to accounts 7 investigation).
(!) moratorium on capital repayment
(!!) fixed rates
(!!!) interest only payments
b) collating the financial information and documentation:
c) preliminary discussions and formal presentations to one or more lenders
Please can you tell me if they are allowed to get away with this, as they can not get us a commercial loan so at present we are £575.00 down is there any thing i can do to get my money back. please advise, sorry it had taken so long, but i feel a lot better now putting it down on paper helps a lot.
thankyou
julie. X
lets put any replies on this thread
http://forums.moneysavingexpert.com/showthread.html?t=183138&page=7
Hello to everyone, i am a complete newbie to all this so please be gentle with me.(not even sure if i am in the right place) phew!!!!! here we go.
On the 10th August i arranged for a company called Five counties finance to visit me at my home address to obtain a commercial loan to buy a business. we were having a few problems due to the nature of the business (bakery being a so called specialised business) he was very confident that he would be able to help us he also gave us a couple of quotes which were fine. He then dropped the bombshell that it would not be cheap to obtain it and asked for a fee of £575.00 up front (£25.00 for his petrol costs drove a new jag) we were at the time quite confident (and very silly) and handed over a chq. we waited the week to find out if we had the loan of £42,000, he came back saying that it was not successful, but could do us a loan with another bank, i said to him can you tell me who it is with he declined saying that i might go forward myself to them, i said no it is just that we had tried with a couple of these banks with no luck, eventually telling me it was royal bank of scotland, i told him not to bother as we had already tried, he said they will do it because he gives them £350,000 worth of business a month. but yet again turned down. he said he can get us a loan with a broker (loan shark) but would cost about £1,300 a month 3% intrest i said no to much money. i rang him next day, to ask him to send money back, he said that he had put it forward to another bank and ring him back in a couple of days, i did that and he came back saying good news you can get your money it is a little bit expensive 3% per month, i said but i already told you that i do not want to go down that rd. I said that i am not going to go through with it so could i have my money back please minus his £25.00 petrol costs, he said what money, it has cost this amount of money to put it to these banks and you were accepted with finance at 3 % month for 12 years on a loan of £42,000 i would have paid back the sum of £187,200 plus a £1,000 valuation fee, plus a £2,000 admin costs (it was very nice of them to say they could add it to the end of the loan how considerate of them????) i do not know if five counties finance ever submitted any of these to the bank as it is only his word i have never had any correspondance from them at all.
I signed an agreement with them this it what it says:
In consideration of five counties finance using its best endeavours to introduce the borrower to a lender and obtain for the borrower a mortgage offer up to the amount of the commercial finance, drawing or other facility (hereinafter known as "the commercial finance") in respect of the premises. The borrower agrees:-
1 hereby to instruct five counties finance to endeavour to secure an introduction to the source of finance in connection with the proposed purchase/re-mortgage of the premises up to the amount of the commercial finance.
2 that five counties finance have full and sole authority to negotiate on behalf of the borrower to try to obtain an advance required from the date of this agreement. thereafter, to terminate our instructions to act for you, three months notice in writing is required.
3 to pay an administration fee (to cover costs and disbursements) of £575
a) to obtain competetive intrest rates to include where applicable (subject to accounts 7 investigation).
(!) moratorium on capital repayment
(!!) fixed rates
(!!!) interest only payments
b) collating the financial information and documentation:
c) preliminary discussions and formal presentations to one or more lenders
Please can you tell me if they are allowed to get away with this, as they can not get us a commercial loan so at present we are £575.00 down is there any thing i can do to get my money back. please advise, sorry it had taken so long, but i feel a lot better now putting it down on paper helps a lot.
thankyou
julie. X
lets put any replies on this thread
Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
0
Comments
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I'm no great expert, but it seems she signed a commercial contract agreeing to pay £575 in return for Five Counties to 'endeavor to secure finance', not necessarily to succeed nor to get finance at a particular rate. Did they 'endeavor' - yes it sounds like they did, even though the results were not acceptable.
This could happen even with regulated residential mortgages, and is a lesson why anyone should always be very wary of paying any arrangement or broker fees up front.I am a Mortgage Adviser
You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Just a thought - if you could show that he had induced you to enter into the contract and pay the fee with false representations you might have a legal basis. The quotes he gave on the day, were those written? If you can proof he gave you quotes and had claimed he WOULD be able to get a loan as quoted then you could claim misrepresentation.I am a Mortgage Adviser
You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
As Rick62 has posted, it looks like Julie has agreed a contract with Five Counties, which on reading her quoted clauses seems a bit one sided i.e. "sole authority" = exclusive to Five Counties, Why? and "to terminate our instructions to act for you, three months notice in writing is required.", are there penalties if she engages another commercial mortage broker before the 3 months notice? Looking at the T&C's on the web site, which are very, very brief, they imply that they won't do anything for you unless you pay a fee. This is a good indication of their terms of business. Unfortunately for Julie, commercial mortages are not regulated by the FSA, therefore she has no recourse to the FSA if she is dissatisfied. A lesson to be learned from this is to read the terms and conditions of a contract before agreeing to them and if they seem strange/odd/unfair etc. they probably are. A suggestion is to seek a commercial mortgage from a company that also offers regulated mortages. This is because they will have reputation to maintain with clients and the FSA, although your commercial mortgage will still not be regulated. Perhaps Julie should speak to her local Citizens Advice Bureau and Trading Standards to see if other are people are disatisfied with Five Counties and have had recourse.0
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