Re-mortgage shortfall issue - IFA negligence?

MrShrimp_2

I have just re-mortgaged my flat as my girlfriend has just become co-owner.

Here's the deal...

I had an interest only mortgage with C&G taken out through an IFA. It clearly wasn't a competitive or attractive loan but was all that I could afford at the time. It was taken out in April 2006 and my dad was guarantor. It was for £133,000.

In October 2006, I consulted the IFA again with a view to adding my gf on the mortgage and releasing my dad as guarantor. We were not particularly savvy in this regard and we were told it was no big deal and that we would fill out some paperwork and sort it out. We were told it wouldn't cost anything. He put it that we were just "adding a name" and monthly repayments wouldn't change.

In December 2006, we filled out what appeared to us to be a mortgage application but were told that it was just for C&G administration. We asked on several occasions if it was specifically a a new mortgage.

Lo and behold, the paperwork is now complete and it is clearly a new mortgage. We have been charged an admin closing fee of £225 but the repayment fee has been waived.

My solicitors are seeking £531.16 as a shortfall in the redemption monies that required to be paid to C&G. My closing statement shows the balance of the mortgage at £133,531.16.

Can anyone explain why the balance would be greater? (I am assuming it is to do with interest)

Also, do you think that the IFA was negligent in his administration of this? (We are not stupid but you put your trust in a professional.)

thanks for your help

dunstonh

I had an interest only mortgage with C&G taken out through an IFA. It clearly wasn't a competitive or attractive loan but was all that I could afford at the time. It was taken out in April 2006 and my dad was guarantor. It was for £133,000.

Dont see anything wrong with choosing C&G. I have my own mortgage with C&G. Getting a mortgage is not all about getting the cheapest. Perhaps your lending limitations resulted in C&G being the most attractive one that was willing to lend you the money.

Can anyone explain why the balance would be greater? (I am assuming it is to do with interest)

C&G have annual adjustments to the monthly payment. When interest rates rise, the payment remains the same but the extra interest is added to the mortgage. It works in reverse as well when rates drop. As rates have increased a a few times over the year you would expect to see a difference of this amount.

Also, do you think that the IFA was negligent in his administration of this? (We are not stupid but you put your trust in a professional.)

Doesnt sound like it. It does appear the communication between the two of you is very poor though. The fact you ask the questions here suggests that you dont have a good enough working relationship with the adviser.

Rick62

What you have done (or should have done) is a 'Transfer of Equity' and is not 'just adding a name'. It means the debt (ie the mortgage) is being transferred from one person to another and also the part legal owner of the property is being changed.

I can understand C&G asking for a complete application for the new person, and I can understand them charging £225, I would have thought however that they would transfer the existing mortgage rather than start a new one. Are you paying the same rate and terms as before?

The diffrence in the balance is really a timing difference, as the amount goes up and down during the month, as interest is added daily then paid off once in the month. So you have not actually lost this money, although it may have messed about with your cashflow.

It sounds like you have, at the end of the day, got what you intended and no fees you mention sound unreasonable, so I don't think your advisor has been negligent, I do think however he has not demonstrated much competance in advicing you of the process and costs. For this reason, personally, I would not use him in the future, but use someone with a better understanding who explains things more clearly.

While I can't comment on what mortgage you have, I do find that Cheltenham & Gloucester are generally actully quite a good lender.

regularsaver1

A Transfer of Equity is usually carries a fee - and you would be given a new key facts illustrations and mortgage offer

and then solicitors fees

it should have been explained better to you though. if it was done this way?