What is a "drop down date" and/or "drop down rate"

boringoltennis

We have a 90 day mortgage offer from Lloyds TSB Scotland dated 30th April 2008. Our house sale fell through at that point so we were unable to proceed with our purchase. However, we now have new buyers (:j ) so we are hoping that LTSB will honour the offer which is still valid, just. We asked our broker to check and LTSB` verbally agreed to both extend the offer beyond the 90 days and to honour the rate (a tracker at base rate plus 0.23%). This sounded great until we rang the broker today who informed us that TSB are trying to back peddle. In an email the broker said "What they are looking for now is whether the product had a drop down date or not and since this is quite an older rate they have to check in their older files. If there was a drop down rate on this product then we may have lost the rate".
Does anyone know what this means? What is a 'drop down date/rate"?
Any advice on this or on how to handle the situation would be gratefully received. Cheers, Robin

The_Unready

They don't mean draw down date, do they?

The Unready

boringoltennis

Thanks. I dont think they mean draw down date. I am guessing that it is an internal date relating to the withdrawal of mortgage products.

There has been an update since I posted this thread. Lloyds TSB have told us that the product has been withdrawn so they want us to select one of their current products. :-( I wish that they had just said that to start with! We will now have to pay set up fees and accept early redemption penalties - lack of these (and a low rate) were the reasons that we chose this product in the first place. I may take it up as a formal complaint. The broker wasn't impressed either, as he felt that it made him look silly - one week telling us that LTSB were willing to extend and honour the offer and the next week telling us that were not. I feel like going to a different lender but I'm not sure if I can face the hassle (and delay) of starting a new mortgage application.

inca_2

I've never heard Lloyds use the term drop down only draw down, I don't know about Lloyds but usually it refers to fixed rates as they get the funds in at a certain rate and they need the funds to drawdown by a certain time, not very well explained I know, so apologies for that. They could have them for trackers but I haven't heard of it so I don't know to be honest. Either way it should have been specified to you at the outset if there was a draw down date. Usually it should be on the KFI.

boringoltennis

Thanks. The offer clearly stated that it was valid for 90 days unless the product was withdrawn earlier. For simplicity I did not say in my initial post that this 90 day offer dated 30 April 2008 was already an extension of an original offer in Jan/Feb. The product had already been withdrawn when it was renewed in April, so I was hoping that they might extend it again!

As I still have a valid offer that does last for a few more weeks is there any way that I can start the mortgage before completion? Our buyers are first time buyers waiting for a mortgage decision. The survey has not even been done yet so there is no chance of completing in July.

I have a valid mortgage offer of base rate + 0.23% which I really do not want to give up!!!

Thanks.

inca_2

I didn't realise you'd already had an offer extended, in that case I'm not surprised they won't allow it to be extended again, especially on a product that's pretty low compared to the products on offer now. Complain by all means but I doubt very much that it'll get you anywhere as they haven't really done anything wrong, especially as they've already extended once.

boringoltennis

Thanks inca - I appreciate the situation from their point of view - why give us the deal when they can make more profit out of us!
My complaint is really that they agreed to do it then changed their minds with no explanation. Lloyds took so long dealing with our application earlier in the year that we lost our first buyers, so that is a bit of a sore point too!
Do you know any way in which I could get the mortgage advanced before the current offer runs out (end of July)?
If we need to find another Lloyds product do you think that they would waive any of the fees? They have already made an offer!

boringoltennis

Is it worth threatening to go to another lender? I understand some of the problems with the current market but they are going to make £80,000 profit out of us over the term of the mortgage!

HelpWhereIcan

boringoltennis wrote: »

Is it worth threatening to go to another lender? I understand some of the problems with the current market but they are going to make £80,000 profit out of us over the term of the mortgage!

No, very little point at all. Worth a try but I would not expect a result.

At best, I would think they will offer to waive any admin fees (not arrangement fees) to get you switched over to a new product. This may save you having to pay to have the property re-valued (which C&G are entitled to ask for) which could be a good thing if the valuation comes back lower than 6 months ago.

I am actually surprised that your broker is surprised. It is very unusual for C&G to extend an offer more than once and that kind of rate has not been seen in the market for months.

I have had 3 sales collapse due to delays on new builds meaning that the offers were due to expire, the lender would not renew and had seen a change in their new build policy meaning that the deal available to the customer would worsen significantly and they would need a larger deposit.

Despite being given 2 weeks notice of this, being told that the offer could not be extended at all and that the purchase would become economically unviable for the purchasers, the builder's solicitor still did not get their finger out (I did not know what I was talking about according to them:rolleyes: just a call to the completions team would sort it out:rolleyes: ).

All 3 collapsed as I predicted - something that would not have happened a year ago - I am out of pocket, the customer is out of pocket and the builder has lost the sales. Luckily my customers both used the same solicitor who managed to get the builder to agree that the delays (down to getting correct site plans to the solicitors) were unreasonable and the builder's fault meaning that they did not lose their deposits.

Called a credit crunch and customers (and brokers) have to remember the days when getting an offer extended was a difficult thing, often taking days to get agreed and only after much begging and confirmation in writing from the solicitor that completion was set for only a couple of days after expiry... assuming the broker remembers markets like that.

HelpWhereIcan

To try and be constructive, it may well pay to take one of C&G's current deals - especially if they will not want a revaluation or any more underwriting.

Although (depending on your deposit) their deals are not the best at the mo, they do have their fair weather deals that are trackers that allow you to switch to a fixed rate if things gets tough which could be useful in the current climate.

Having said that, Nationwide offer the same for all their trackers and HSBC have some low deals with no early repayment charges which amounts to the same thing.

You and your broker need to weigh up just whether it will be worth looking to get a better rate bearing in mind the pressure on house prices and lenders' criteria over the last 6 months.

Times like these are when it is important to look at more than the headline rate and options such as being able to switch to a fixed with no charges, the lender's retention policy etc etc can be worth a lot more than a couple of base points on your deal.

By the way, your broker will not thank me, but remember to take into account any deals that may not be available through your broker - including those with C&G.

HelpWhereIcan

boringoltennis wrote: »

As I still have a valid offer that does last for a few more weeks is there any way that I can start the mortgage before completion? Our buyers are first time buyers waiting for a mortgage decision. The survey has not even been done yet so there is no chance of completing in July.

I have a valid mortgage offer of base rate + 0.23% which I really do not want to give up!!!

Thanks.

You may be able to use bridging finance, but you will have to have a word with a broker and bear in mind that, while expensive in the first place, it can be very expensive if your buyers do not complete when expected so very risky.

Basically you would use a first charge bridging lender to remortgage your current property for enough to pay off your current mortgage and give the deposit that C&G require for you to complete on your purchase (assuming your vendors are in a position to move now). Can be sorted very quickly but can be expensive and you need to know exactly what risks you are taking in a very tight credit and property market.

Bridging lenders want to see an exit route and may not be happy that you have not yet exchanged contracts on your sale and your buyers have yet to get an offer.

But theoretically possible depending on figures involved.

An alternative may be to remortgage your current property as a Buy to Let until you have been able to sell it, but again - depends on the figures involved.

It depends on their level of expertise and experience but I would have hoped your broker would have discussed these with you (even if it was just to say why there were no alternatives). Shame it looks like you are having to prompt them to do their job and work out ways for you to go ahead (and them to earn some money).

Good Luck