Mis advised- FURIOUS

Courtmill

Okay I need advice, and I need it fast.

My partner and I are buying a new build Persimmon home on their own shared equity scheme. From day 1, we were given the following break down.

Mortgage would be for 114,000 plus fees, with a £6000 deposit. Persimmons own 20% loan would be 5 years interest free. We spent ages figuring out how we pay back their bit, and that's all fine.

We have basically sat and looked through every document we've received with a fine tooth comb, and it came to our attention that on our KFI and our record of mortgage suitabilty, the total loan amount including fees was infact £112999 on the suitability record, and £112500 + £744 fees on the KFI.

This instantly set off alarm bells and I called our IFA to ask why the amount was lower. In short he said because we have to put down £7500 deposit... not £6000.

Now this was news to me and my partner. BIG NEWS. Right from the start, everytime we've spoken to the IFA, Persimmon etc, it's always been discussed as an 80/20 split with a £6k deposit.

I had very strong words with the IFA and asked WHY we had been working under this false apprehension all along- and he said he didn't know how we got that information! I do!!! I'm staring at the document he sent us in the first instance, the hymn sheet we've been working from that says our mortgage would be £114000 plus fees on an 4.89% fixed rate for 2 years.

In short, my partner and I can ONLY just afford to put down the extra £1500... but I am utterly convinced we've been screwed over here. I'm trying to get in touch with Persimmon and with our solicitors to check the information they have.

I am 100% sure that we have been mis advised and mis led and I need to know what we should do.

Can anyone point me in the right direction?! I'm going to nail whoever is responsible to the wall one way or another! We may be FTBuyers, but we are not STUPID


:mad:

beecher2

I can understand you being upset, but this just means you borrow less than you otherwise would - you can afford to do so, so I don't get why you seem to feel ripped off. Threatening to nail someone to the wall definitely isn't the way to deal with the stress of buying a house.

dunstonh

I'm an IFA, not a mortgage adviser. So, I may be a bit out of date (hopefully a mortgage adviser will come along and confirm things). However, it was not uncommon for an initial illustration to be issued during the enquiry stage to be a guide for you based on limited information. When you then wish to proceed formally, the figures can change as deals change or you may decide to add fees to the mortgage rather than pay them up front etc. So, the KFI issued at the application stage is the key document.

What sort of gap was there between the initial KFI isused and the one linked to your application?

Who is the lender and what is their minimum deposit requirement?

Did the initial illustration include fees being added to the mortgage or paid up front?

Cannon_Fodder

What's the full asking price ? £150k?

£7.5k is 5%...£112.5k is 75% = 80%.

http://www.persimmonhomes.com/promotions/national-promotions/homebuy-direct.aspx
http://view.atdmt.com/action/p7aplc_HomeBuypdf_4

Example on page 2, clearly shows £10k deposit, which is 5% of the £200k full price...


Example of HomeBuy Direct home ownership £ %

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT]Open market price of new home [/FONT][/FONT]

£200,000

100

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT]HomeBuy Direct buyer affordable mortgage @ 65% [/FONT][/FONT]

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT]£130,000 [/FONT][/FONT]

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT]65 [/FONT][/FONT]

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT]HomeBuy Direct buyer pays 5% deposit [/FONT][/FONT]

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT]£10,000 [/FONT][/FONT]

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT]5 [/FONT][/FONT]

HomeBuy Direct buyer total contribution

£140,000

70

Agency and housebuilder assistance 30%equity loan

[FONT=UHDSA D+ Daxline OT,Daxline OT][FONT=UHDSA D+ Daxline OT,Daxline OT](via two equity loans at 15% each) [/FONT][/FONT]

£60,000

30

Maybe you are going for a slightly different flavour of scheme, which wants 5% of the mortgagable amount. (80% is £120k, 5% of that is £6k.) Have you a scheme name ?

Courtmill

There was a gap of about 3 weeks between the initial illustration, and the KFI relating to the actual mortgage. As yet we still have not had a formal offer... everything is still going through.

Lender is Halifax- no idea what minimum deposit is- because it's a shared equity scheme, we have to use certain lenders who have different t&c's.

The asking price is £150,000, and yes 5% is £7500. However right from the start we were told we would be putting down £6000. End of. No discussions about what percentage that was or anything. £6000 works out at 5% of 80% which we are getting a mortgage for.

The scheme is simply Persimmons own shared equity- I think it may be called Helping Hand scheme.

I've spoken to our solicitors, who has advised me to call Persimmon and basically tell them we can't afford the extra £1500 and see what they can do. We can ONLY just afford it and would be in dire financial straights if this goes ahead.

It is clearly a mistake on someone's part- you think you would notify someone that they would be paying £1500 more than originally was discussed. I know the original illustration is not legally binding, and is an example... but if we agreed to go ahead based on those figures- it would be a pretty big surprise to be told- nope you need to find an extra £1500!

Conrad

The KFI will have shown 5% of total price. Systems are incapable of produing illustrations with less than 5%.

I'm wondering if the £1500 is for the Halifax arrangement fee?.

Otherwise the IFA accidentally thought the price was £120000 because 5% of that figure is £6000?

You wont get a misselling claim agreed because you ahven't bought the mortgage yet and you can withdraw. If the IFA is at fault then a complaint to the threat of a complaint to the regulator might impell him to pay you the £1500.
You use the word IFA. Mortgages are much more complex than many an IFA would think, and unless you deal with just mortgages day in day out, mistakes are easy. A dedicated mortgage borker with a few years experience would not make this mistake. Sounds to me like mortgages are only part of what he does?

dunstonh

If the IFA is at fault then a complaint to the threat of a complaint to the regulator might impell him to pay you the £1500.

A couple of hundred maybe would see that work but £1500 is likely to be higher than his PI excess.

You use the word IFA. Mortgages are much more complex than many an IFA would think, and unless you deal with just mortgages day in day out, mistakes are easy. A dedicated mortgage borker with a few years experience would not make this mistake. Sounds to me like mortgages are only part of what he does?

I agree. Most IFAs no longer do mortgages with so many employing or referring to dedicated mortgage advisers. Indeed, I only know two IFAs that still do mortgages (but are about to drop IFA status to be mortgage only). All the other IFAs i know don't do mortgages.

Thrugelmir

There was a gap of about 3 weeks between the initial illustration, and the KFI relating to the actual mortgage. As yet we still have not had a formal offer... everything is still going through.

Has your lender valued the property in line with the purchase price?

Courtmill

Well, put it this way, he has worked with Persimmon for 20 years, doing their mortgages and doing their shared equity stuff. He may not be technically an IFA but he works for a mortgage and financial services company, and we HAD to use him to qualify for Persimmons scheme.

This apparently has not happened before...

Honestly, I know that mortgages are complicated and it isn't all one persons fault- but how can we be given all the wrong information, and then not told about it until we were clever enough to notice?

"Otherwise the IFA accidentally thought the price was £120000 because 5% of that figure is £6000?"

Not possible. The original documentation we have states the value of the property was £150,000. Mortgage amount £114,000 plus fees. It even gives us the breakdown of the monthly repayments, with the interest and how the mortgage decreases over the life of the mortgage. This was all done on the 4.89% fixed rate, at £114000.

How can you get that bit wrong? It is a big difference.

I am awaiting contact with Persimmon (who are impossible to get hold of) to speak to them regarding what figures they had, and see what they can do.

I am 21, and a first time buyer with my partner, and clearly someone is trying to take us "naive young bucks" for a ride...

Courtmill

Thrugelmir

Yes we have had the valuation from Halifax and they have valued the property at exactly the asking price. Conveniently enough... even though initially the asking price was £10k higher...

Trollfever

and we HAD to use him to qualify for Persimmons scheme.

I hope that you are getting legal advice from a solicitor not connected to Persimmon..