What would happen if....

y3andy

Hi all,

I am in the process of remortgaging from Halifax to HSBC on a 90% LTV mortgage . When I bought the house in Autumn 2006 I paid £124000 and when I come to remorgage I will owe £97000, so 78% LTV if it was still the same price (I know, I know its going to have gone down in value since then). The valuation is going to be done in the next few weeks and I will be ok for the mortgage if the valuation come back over £108000 but my question is...

If the valuation comes back under £108000 (over 90% ltv) what would happen to my booking fee which I have just paid. Do they come back to me and say I have to find some way to reduce the outstanding amount further (I am already overpaying so this won't be likely) to get under 90% or what happens?

Have had a look on here but nobody else seems to have asked this question.

Many thanks

Vincenzo

I am also remortgaging to HSBC (lifetime tracker). The terms and conditions state the booking fee is non-returnable, even if THEY decide to withdraw the mortgage offer!

I cannot imagine that is a fair contract term though! Especially as they have taken the fee before carrying out the mortgage valuation!

happybroker

if you can't get the mortgage balance down then circumstances beyond the control of HSBC (and you obviously) mean you will be outside of their criteria. They will have already done the owrk to get you to this point in good faith which is why you won't get the fee back.

I am researching heavily on house values for my clients prior to them parting with any fees just because of this situation, it's nobody's fault but just another consequence of the current climate I'm afraid

Vincenzo

happybroker wrote: »

if you can't get the mortgage balance down then circumstances beyond the control of HSBC (and you obviously) mean you will be outside of their criteria. They will have already done the owrk to get you to this point in good faith which is why you won't get the fee back.

I am researching heavily on house values for my clients prior to them parting with any fees just because of this situation, it's nobody's fault but just another consequence of the current climate I'm afraid

But why not carry out the valuation prior to issuing the mortgage offer and taking the booking fee?

getmore4less

Vincenzo wrote: »

But why not carry out the valuation prior to issuing the mortgage offer and taking the booking fee?

Was there a valuation fee? What if the rates changed while the valuation was being done?

HelpWhereIcan

Vincenzo wrote: »

But why not carry out the valuation prior to issuing the mortgage offer and taking the booking fee?

The valuation fee pays for the valuation. The surveyors have carried it out so the HSBC still has to pay them for it - even if the result is not what was expected/hoped for.

The booking fee is a slightly less clear situation, but it is intended to reserve the funds for you. protecting you from any changes in their deals between application and offer (answering the question above). The HSBC would argue that they have not been able to lend those funds to someone else straight away so a certain amount of opportunity cost, but ....

Some lenders argue that it also pays for their admin costs in processing the application for you. No obligation on them to refund it, but you may fnd they will do so.

On a more positive note, it may be that a small downvaluation it would pay for you to come up with the shortfall from somewhere (savings, a personal loan etc) rather than lose the fees, pay another set of fees and get a new rate with a new lender that is less competitive.

Vincenzo

getmore4less wrote: »

Was there a valuation fee? What if the rates changed while the valuation was being done?

No valuation fee. According to HSBC (I applied by phone), they were holding the rate for me whilst I was applying (although this could have been another one of their incompetent staff giving out incorrect information).

I would be wlling to risk the rates changing over the course of a week while the valuation was done.

I am not concerned that my property won't value up, I just think this is an unfair contract term. How can they take a booking fee for funds which they have not actually, strictly speaking, decided to lend you yet??