Mortgage agreed and then removed - allowed?

mikekara1

Hi
I got an agreement on a mortgage with Britannia through an intermediary called "share to buy", which allowed me to have a mortgage with a 90% loan to value.

The property I was buying fell through and at the same time Britannia removed the 90% mortgage. I then found another property to buy and emailed Share to Buy and asked if I could still have the 90% mortgage.

I received an email reply confirming I could have the 90% mortgage and then a second email confirming I could have the 90% mortgage subject to a 6 June completion.

I completed a change in property form (which included the purchase price and mortgage value) and Britannia contacted me directly to confirm the details and book the valuation. The valuation was carried out and I have paid for it.

However, Britannia have now contacted me and have said that they have made a mistake and they can only give me a mortgage with an 85% LTV.

Can they remove this mortgage from me at this time? Do the emails represent a written agreement which has to be honoured?

Help greatly appreciated. We have spent over £1000 on the new house and have exchanged on our flat, thinking we could buy with a 90% mortgage.

Thanks

Robert_Sterling_3

I hope that you have got it in writing that they made a mistake. If it is as a result of that written statement that you have spent money to no avail then it looks as if you have a good moral case for compensation. I am not sure whether or not that will give rise to a legal case for compensation.

dunstonh

Can they remove this mortgage from me at this time?

Yes.

Do the emails represent a written agreement which has to be honoured?

No. As T&Cs allow for quick withdrawal of products and release of new ones.

Generally you only really know that the mortgage is agreed and going to be lent once you have the mortgage offer letter (contract). Until then, the agreement is in principle only. Even with the contract issued, it is rare (but has happened) that the mortgage can be withdrawn.

HelpWhereIcan

mikekara1 wrote: »

Can they remove this mortgage from me at this time?

Yes. Even a formal mortgage offer has a clause in that allows the lender to withdraw it, but in the past it was normally only when they suspected something was wrong with the case.

mikekara1 wrote: »

Do the emails represent a written agreement which has to be honoured?

unlikely as it would be argued that the emails referred only to an application and not a mortgage offer. Even formal illustrations tend to have the caveat that they are not formal offers and do not oblige the lender to lend.

It is not unusual for lenders to change their policy regarding things likes Loan to value and, in the current climate, it is not unusual for them to do it at very short notice with seemingly arbitrary but rigid deadlines.

One lender recently advised a change of policy with immediate effect advising that cases currently being underwritten would be underwritten on the new policy and cases that had already offered would have to complete within a month or be re-underwritten under the new policy.

Yes it sucks but that's the credit crunch for you.

mikekara1 wrote: »

Help greatly appreciated. We have spent over £1000 on the new house and have exchanged on our flat, thinking we could buy with a 90% mortgage.

Thanks

Your best chance would be to formally complain looking to reclaim your costs (you cannot force them to lend) under 'Treating Customers Fairly'.

It is an FSA initiative that looks to encourage what it sounds like but cannot force lenders to lend.

No guarantee that it will work and get you your money back but worth a try.

mikekara1

Thank you for your replies. Your replies left me feeling very worried, but Britannia have confirmed that they will honour the original agreement and will lend at 90%. I have signed the final application form this week so it should all go through fine now.

I feel reasonably lucky, given that they didn't have to agree to this, and am very pleased it is going ahead. Thanks again.