Bad Advice From Mortgage Lender Costs Us Thousands

InMyDreams

TrickyDicky101 wrote: »

It sounds to me as if you are saying you have £35k equity in your current property as a result of overpaying this mortgage balance in the past. You now wish to borrow back this £35k to give you £35k cash in your hand (which, please note, will automatically increase your outstanding mortgage balance by £35k - ie it's a zero sum game) AND then borrow an ADDITIONAL £35k on top of this? If I have this right, then you are wishing to extend your mortgage balance above and beyond the original amount you borrowed on this Portman mortgage. I would think it highly unlikely that this would have been a feature of the original mortgage.

I think the OP hasn't overpaid anything yet, but that's my understanding of why he wants to. He thinks that by overpaying by £35K just before he sells, he can somehow turn his £35K cash into £35K cash plus £35K extra borrowing at the original rate.

I'm pretty sure that what the advisor would have been trying to explain to you was that if you overpaid by £35K, you would be able to take this back out to form part of a future deposit and your mortgage would be extended accordingly. You can't overpay then borrow the money straight back AND increase your borrowing just because you have. You also can't pay the money back, pocket the cash when you sell, and then port over a higher amount than what you actually owed on the first property when you sold it.

I expect he didn't understand your questions when you rightly queried your misunderstanding.

kingstreet

What you are doing is taking out a new mortgage on a new property. This is subject to the usual credit and affordability checks and subject to the criteria and loan to value rules which they apply today to all new borrowers.

You are staying with Nationwide, your existing lender. They will allow you to transfer the rate on your existing mortgage with them to your new mortgage. If you are borrowing more, the remaining amount can be taken on whichever of the Nationwide's products are available to you. I don't know of any lender who would simply give you the higher total amount on the existing deal.

It is not clear whether you sought "advice" in the regulatory sense of the word and whether you will have the documentation which goes with it. If you did, you should have a suitability or "reasons why" letter which explains what you were recommended to do and why it was the most suitable advice in your circumstances. In addition, there may be notes written in a "factfind" which confirm the details of your discussions and the adviser's methodology.

I suggest you ask to see such documentation to establish exactly what basis you held your discussions.

Finally, suggesting you pay off a lump sum just before you port a rate to a new mortgage would appear to be highly questionable. It would mean less of the new mortgage would be on the old rate and more on the new, more expensive one. Whether this was advice, or information, it was likely to disadvantage you.

An in-house adviser not knowing that when porting, additional borrowing is only available at a new rate is also poor, in my opinion.