Do I pay mortgage application fee if I pull out of purchase

FirstTimer_3

I am an FTB who has just had a Home Buyer Survey done on a Basement flat in a Victorian conversion property. So far I only have a verbal report from the Surveyor (written report due next week) but he detailed several serious problems.

He suggested he'd probably recommend a retention of £3K or £4K. From reading other threads it appears if the vendors don't want to do the work before completion, I could negotiate a reduction in price, but it still means there'd be a retention on the mortgage for the work required, and I'd have to pay for the works to be done myself. I have committed all my savings to the costs involved in purchasing the property and buying basic items of furniture, so cannot afford to pay any other money out. There is also the issue of living with dirt and chaos whilst repairs are carried out, rather than moving into the pristine flat I thought I would be buying.

My question (finally!) is am I liable to still pay the mortgage application fee if I pull out of the purchase? At what stage am I liable for the application fee: on Completion, or when they send me an offer, or when I sign the offer?
Help!

Doozergirl

You've paid for a valuation survey, that is non-refundable. If there are extra charges, they wouldn't be payable for later. You can rest assured that if they think you owe them money, they'll be taking it when they think it's due.

It used to be that sometimes they wouldn't charge you for a second valuation if you asked nicely but I doubt that happens any more. They don't have the power of discretion like they did.

Cazza

As far as the application fee is concerned, it depends on the lender and product you have chosen. Do you have a copy of your KFI? It should explain it in there!

FirstTimer_3

Thanks Cazza. I've looked at the KFI and what I call "Application Fee" I assume they call "Booking Fee". It says "Booking Fee: this fee is payable immediately when a Product has been selected with a particular interest rate. This fee is refundable only if the application is declined by the Lender".

However, I've applied, and they've done the valuation, but they haven't taken the Booking Fee yet. (Or the valuation fee, funnily enough).

I suppose I was hoping that they wouldn't take the Booking Fee until I agreed to accept an offer, but I suppose that looks unlikely with the wording they've put in the KFI. Ah well!

Does anyone know if I have a leg to stand on re the Booking Fee if they offer me a mortgage with a Retention of a few grand? Do you think I could argue that this is the same as 'declining' the application?!!
I'm thinking not, but would love to hear someone else's view if they've been in a similar situation.

theartfullodger

Life is hard, s**t happens and we end up paying for things we really shouldn't.

Next time try negotiating before you sign: I think I know what they will say ("No").

So, motto "SUMO" (Shut Up, Move On)...

Cheers!

Lodger

Cazza

On the front page of the KFI, does it say the fee is to be added to the loan???

This used to be the trick to getting around the fee, the majority of lenders won't come asking for the fee if you cancel in these curcmstances. This isn't always the case, but worth crossing your fingers. Just call up to cancel and keep quiet about the fee!

If it's only the property you have a problem with though, not the actual buying of any property, you don't need to cancel the application. Just call the lender to tell them you are no longer proceeding with that property, and ask the to put the application on hold until you have found a new one. When you do, all they will need is the new property details and the new survey fee, not a full application. This also means you keep the existing product you have chosen too.

FirstTimer_3

Thanks all.

Looking at the KFI it looks like I'm on the losing side this time round if I don't buy this one or find another, but will know what to look out for next time!