IFA causing us headaches over mortgage

kieron67

Hi, new member here, signed up as I could use some informed adevice about our predicament.

I currently own the house my second wife and I live in, it was bought with my first wife when I had a good credit rating back in the 90's. My first marriage was short, disastrous and left me up to my eyeballs in debt, which i am currently paying to this day. The house is solely in my name.

After deciding to sell the house and moving somewhere new we put this house on the market at the beginning of this month. It received an offer, which we accepted within 10 days. My wife who is taking the mortgage for the new house solely in her name sought advice from an IFA contracted to a high street estate agent. He initially told her she had a MIP/DIP of £120000. We went and put a bid on a house of £173000 based on this DIP and me gifting the proceeds of my house sale to cover the deposit. This offer was accepted one and a half weeks ago. My wife then saw the IFA again to get him to fax the DIP through to the vendor's estate agent, after much humming and haaahing and a days delay this was done but apparently the DIP had dropped to £108000 (more of this later)

We instructed solicitors to handle both my sale and her purchase. My wife received her documents and, struggling with the question about how the deposit was to be paid asked the solicitor for advice. She explained the situation, my bad rating, her good one, mortgage in her name solely, notices of disassociation with regards to finances, me gifting the deposit et al, as we wanted to make sure everything was above board and went smoothly. The solicitor advised that my wife needed to write a letter of full disclosure explaining our situation (common practice apparently) and also a letter stating I was gifting the deposit and had no claim on the property, neither did i expect the gift to be repaid. (Again, common practice apparently) We have done this and handed them to her (or will be doing over the weekend)

My wife then arrived home to documents relating to the DIP. She found that the DIP on monday for £120k and the DIP on Friday that the vendor received for £108k are from different lenders. Perturbed she rang the estate agents to find out what was happening and why the lender had changed. Apparently the IFA is out of the country till Tuesday, but the manageress of the estate agent's (a well known high street chain) knew the basic details. Apparently the £120k DIP failed as although my wife sailed through a credit check (which we knew she would) she failed the affordability check (the same one she was told she passed on the monday) with the 2nd DIP she again passed the credit check and also the affordability check but then the manageress said something (to paraphrase) along the lines of but the advisor had to show you as separated on the application to get it to go through otherwhise the lender would credit check your husband.

This is what perturbs us, we've been honest with everyone along the way,we told the IFA we were married but the mortgage couldn't have my name on it, he was aware we werent separating, yet i have this sinking feeling he's scuppered our application by lying to get the form through. Surely he should have been able to find a mortgage to suit us, not lie to get our facts to fit it. How is this likely to affect our application now as the whole chain is now dependent on us getting the mortgage.

From people's expertise on here does it appear that he's done a number on us to get his commision and is this the sort of thing that can be easily unpicked and corrected, he's had my wife credit checked twice in 4 days which i believe affects her credit rating. If we have to blow him out and try to sort it ourselves what do we need to do and how much damage is he likely to have done?

silvercar

Your major error is seeing an IFA -bet he's not really an IFA- from an estate agent. What you want is a whole of market mortgage broker.

Hopefully, there will only be a soft mark on your wife's credit rating to get a DIP. The real (hard) mark comes when you do the full mortgage application.

These DIPs are not worth the paper they are written on, the actual decision depends on the detailed application which includes of great importance the valuation for the house you want to buy.

The deposit issue should be fine, quite common for a property to be in one partners name just to stop any ex-'s having a claim on the property. If you are putting the property in one persons name then that person does need an income on their own to justify the size of the mortgage they are asking for.

kingstreet

Which lender has an agreement in principle process which doesn't include an affordability check at the same time? That's puzzling.

Senior_Paper_Monitor

Not quite as easy as silvercar indicates I'm afraid ...

Many lenders will not 'separate' spouses credit (probably hence the apparent misrepresentation by the 'ifa')

A deposit gifted (the lender will almost certainly want to see source of deposit dcoumentation) by a third party (even if a family member) who will be resident in the property is a no, no to many lenders.

This case is probably do-able but will need careful consideration and presentation (with complete and honets declaration) to a selected lender - this is probably not one to plonk on the average estate agent's IFA's lap.

This appears to have been horribly mismanaged so far - be very cautious about how you proceed and obtain one to one experienced and qualified advice.

dunstonh

My wife who is taking the mortgage for the new house solely in her name sought advice from an IFA contracted to a high street estate agent.

The majority of IFAs do not do mortgages. They employ mortgage advisers to do mortgages. Its still possible as I know a few that do but none of them are attached to an estate agent. Estate agents mostly use tied agents and have a very poor reputation. So, check the status of your adviser by checking the terms of business you were issued.

From people's expertise on here does it appear that he's done a number on us to get his commision

Independents are fee based. If you are paying the adviser by product commission then you are not working on independent basis.

Cant add anything else to what has already been said above. Apart from the fact that a proper independent mortgage adviser or whole of market mortgage adviser who is not attached to the agent would likely give you are more compliant and experienced adviser.

kieron67

thanks for the replies so far, to answer in order

Silvercar, thanks for that, do i take it from that that he won't have started the full application on that yet, is that not what he does when he does the DIP then. Is that not the start of the full application? Everything else will sail through fine, the value of the house is not a problem as it has already been reduced for sale from nearly £190k. Our concern is we were honest with him in trying to keep my name off the mortgage, we didn't want him to lie about our marital status. My wife was under the impression from the estate agent that the mortgage application had been made before the IFA was going on holiday and was progressing. But it was progressing with his "facts" not the actual facts that we made the solicitor aware of yesterday

Kingstreet, it was the mortgage works, my wife saw the IFA who did the affordability check with her for the mortgage works. When she went back to apply for the dip on Wednesday last week she was told (yesterday) that although she'd passed the credit check she'd failed the affordability check, the same one she'd been pretty much assured she'd passed first time round, when the DIP came through the name listed on there is a company called Aldermore mortgages which is the first time my wife had heard this company mentioned

Senior Paper monitor, I get the point about not separating spouses' credit but surely the IFA should have looked for one that did rather than commit us to lying with the company he settled on? While my credit is not the best on the planet my wife's is spotless, the amount she's applying to borrow is not excessive and she has a very good long term job. I beleve the wage to mortgage ratio is literally just over 4 times (4.08) Is that fairly reasonable? I know before prices went ballistic in the 90's you were limited to 3 times pretty much. Coupled with the fact that she is only applying for 62.5% of the LTV due to the deposit, I would have thought this all counted in her favour.

The sale of my house and the attempted purchase of my wife's new house are being conveyanced by the sam solicitor, she's advised us our position is not extremely unusual as she was (without her going into details) closing on one in pretty much the same position as us. The solicitor is the one who has advised us of the wording of the letters we need to write. A full disclosure of facts from my wife and a letter of intent to gift the deposit from me. She further said that she would be able to satisfy the lender re the source of the deposit due to her acting for us both.

You mention a specialist lender, are you aware of any who lend to people in our situation or how does one go about finding a full specialist mortgage advisor and where would we stand getting our fees back should the worst happen as a lot of fees are in the process of being paid on the basis of false information supplied by the IFA. I mean it may come to nothing and the IFA will know what he's doing and rectify it when he reappears on Tuesday, I'm just preparing myself for worst case scenario as he hasn't inspired confidence from the start

dunstonh, wife has dug what documents she has been given by this guy out from hger file she has received very little, a key fact document and a business card. The key fact doc is simply relating to the dip and tells her who the lended is. The business card has the estate agents logo and address hon, the chaps name and the description mortgage and protection adviser not ifa so there may be some confusion arising there. He told my wife he was independent, contracted to work for the estate agent and searched the whole of the mortgage market. My wife was offered his services by the estate agent as they were made aware of our situation re buying and selling and they knew we'd just accepted an offer on my house. Sorry for any confusion though, it may be he isn't an ifa after all though he gives that impression. Does this change our situation as the advice he has given/actions he has taken remain the same and he did seem to be trying to portray himself as independent (he also has BA (hons) CeMAP after his name if this is of any importance, and it says on the back of his card Touchwood is authorised and regulated by the FSA so if that's the case surely he shouldn't have misrepresented us to get a mortgage purely for the £299 fee he charges

kieron67

sorry, further add to dunstonh, it was my choice of words, my wife is not paying a commision, it is a flat fee of £299 to arrange the mortgage, sorry for any confusion caused there

kieron67

the key facts doc also says that (estate agents name here) will also receive a fee of £480 in cash and benefits if you take out this mortgage

Senior_Paper_Monitor

Kieron, in answer your questions ....

That is exactly my point - the skill of a good mortgage adviser/ifa is only placing the mortgage where an acceptance is highly likely.

Your case is not easy - there is a high liklelihood of initial acceptance and failure later where your relatonship/financial issues come to light. That is why I would expect a good adviser to prepare this case with the selected lender in advance of processing a DIP (you do not want multiple credit checks affecting the situation).

At 4.08 times income you are above what many lenders will consider (neither TMW nor Aldermore are the most generous on multiples - although actually they us affordability models rather than simple multiples). Frankly failing affordability tests on DIP are rather embarrasing - all the opportunities are there to test this portion thoroughly before application.

Hiding your existence/relationship for the purpose of the application is likely to be found out at a later stage and could easily be construed as attempted mortgage fraud in my opinion.

The fact that the adviser/IFA is taking a fee + plus commission is not in any way wrong, he has declared this upfront (and frankly I don't consider £779 less any network fees is commensurate with the amount of time/work probably necessary in getting this case through).

kieron67

Thanks for that Senior, the more I read about it the more I think once the mortgage adviser from the estate agent resurfaces, the more i believe he's going to end up admitting he's screwed up and put through the application falsely (i.e. showing my wife and i as separated) I guess we should have gone to a full market mortgage broker initially, explained what we needed (as we did with this guy) and let an expert sort it out instead of leaving it in the hands of someone who may very well have jeopardised the whole chain by trying to make a mortgage fit. My wife hadn't been overly confident with him from the start, with him missing his own self appointed timetables but carried on as he assured her things were in place. What's annoying is that if he has messed it up he has also initiated two credit checks on her file (one for TNW when she didn't get the DIP and one for Aldemore when she did) He's back on Tuesday, if he says what I think he's gonna say we're going to have a mad scramble to find a suitable mortgage before the completion date that everyone is working towards, as we can't sell our house without a mortgage to purchase our intended property

As an aside, am I allowed to ask for the services of a mortgage adviser on here, is it against the rules? As it appears that several advisers reply on here and seem fairly knowledgeable

magpiecottage

silvercar wrote: »

Your major error is seeing an IFA -bet he's not really an IFA- from an estate agent. What you want is a whole of market mortgage broker.

The error stems from thinking an IFA is a mortgage broker. There are some who are genuinely both and have the resource to do both tasks themselves.

Other true independent advisers will, as DunstonH says, refer clients to a genuine independent mortgage broker.

Either way, the chance of a higher quality of service is greatly increased because they are unable to rely on the fact that an estate agent they are employed by will produce leads for them and their reputation is far more important to them.