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Deposit indemnity is this a joke?!

Herbert12
Posts: 5 Forumite
To cut a long story short our solicitor has decided to tell my partner and I 1 week prior to completion that they won't act for us unless we take out an insurance product that covers the sizeable (50k) deposit we are being gifted by our parents.
Apparently this is to protect the lender should either of our parents go bankrupt so there will be no recourse on the property.
Both sets of parents have over 500k assets and no outstanding liabilities.
My mrs works for the FSA and I work in banking and we have never heard of this product.
Nationwide are providing the mortgage and have not specifically asked for this and have just told the solicitor to abide by the usual rules.
We have spoken to countrywide and other solicitors who have said they would not require us to get this cover but we feel we are too near to completion to change firm now.
Happy to provide more info but surely this is wrong?! This must be miss selling? the product is jot appropriate imo. We await the premium... If firms have been practicing this I'm starting a claims company LOL
Apparently this is to protect the lender should either of our parents go bankrupt so there will be no recourse on the property.
Both sets of parents have over 500k assets and no outstanding liabilities.
My mrs works for the FSA and I work in banking and we have never heard of this product.
Nationwide are providing the mortgage and have not specifically asked for this and have just told the solicitor to abide by the usual rules.
We have spoken to countrywide and other solicitors who have said they would not require us to get this cover but we feel we are too near to completion to change firm now.
Happy to provide more info but surely this is wrong?! This must be miss selling? the product is jot appropriate imo. We await the premium... If firms have been practicing this I'm starting a claims company LOL
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Comments
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How much do they want for this insurance? It's called "deed of gift insurance" ... It's about £200 isn't it..Personally I'd pay it and be done with it. If your parents were to go BR the OR could claim the gifted deposit back so it is covering the solicitor. I know it is extremely unlikely that they will but that's just the way things are. Insolvency law allows the OR in a BR case to claim back amounts given away.
Even though it is late you can still change solicitors if you really want to.:footie:Regular savers earn 6% interest (HSBC, First Direct, M&S)
Loans cost 2.9% per year (Nationwide) = FREE money.
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How much do they want for this insurance? It's called "deed of gift insurance" ... It's about £200 isn't it..Personally I'd pay it and be done with it. If your parents were to go BR the OR could claim the gifted deposit back so it is covering the solicitor. I know it is extremely unlikely that they will but that's just the way things are. Insolvency law allows the OR in a BR case to claim back amounts given away.
Even though it is late you can still change solicitors if you really want to.
Thanks for the response, yes if it's £200 ish I can live it but both sides have private companies so just hoping this doesn't lead to a premium whack...
Had to sort 3 years accounts etc.
I just feel that this is miss selling given the circumstances and I'm disgusted with the timing as well as if this had come to light a few weeks ago I'd have changed form. Will certainly be following formal complaint channels regardle0 -
Mis-selling occurs when a product is sold which is inappropriate to the purchaser's needs and on which they would be unable to claim.
The product seems appropriate in the circumstances described.
If unhappy, I echo Happy's suggestion to change solicitors.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Hi there,
Nationwide are quite ambiguous with their instructions to Solicitors and pretty much say we expect you to do the right thing and we will hold you to that.
I would be interested if this is a local Solicitor or the cheapest online, although would assume the latter.
Rather than change solicitors which can be done, although lenders hate a Solicitor change and it is a big fraud indicator when this far advanced; I would tell the solicitor you are unhappy and why and see what they can do on the price.
I have often seen these policies, although they are not usually quite as high as £200
It is not mis-selling though as clearly there is a need and the bank require protection.
All the bestI am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Nationwide are providing the mortgage and have not specifically asked for this and have just told the solicitor to abide by the usual rules.
The solicitor also represents the lender in the transaction. So should the solicitor make the wrong decision then the solicitor themselves would become liable.
£50k deposit is sizable enough to raise concerns.
The costs of assessing and underwriting the gift donors would far exceed that of a one off indemnity premium of £200.
Pretty standard stuff really.0 -
Hi there,
Nationwide are quite ambiguous with their instructions to Solicitors and pretty much say we expect you to do the right thing and we will hold you to that.
I would be interested if this is a local Solicitor or the cheapest online, although would assume the latter.
Rather than change solicitors which can be done, although lenders hate a Solicitor change and it is a big fraud indicator when this far advanced; I would tell the solicitor you are unhappy and why and see what they can do on the price.
I have often seen these policies, although they are not usually quite as high as £200
It is not mis-selling though as clearly there is a need and the bank require protection.
All the best
This is where the plot thickens a little it's a local firm who my partner bought her first property through 2 years ago and wasn't asked to take this product.
Solicitor has been fine up until this issue. Expecting the quote tomorrow.0 -
kingstreet wrote: »Mis-selling occurs when a product is sold which is inappropriate to the purchaser's needs and on which they would be unable to claim.
The product seems appropriate in the circumstances described.
If unhappy, I echo Happy's suggestion to change solicitors.
Ok but there has surely to be an element of common sense, lets say my folks were worth 5mio with no liabilities (I wish!) this product would still be pushed onto me as far as I can tell.
Furthermore I can't find an example of anyone actually claiming on these policies.0 -
Ok but there has surely to be an element of common sense, lets say my folks were worth 5mio with no liabilities (I wish!) this product would still be pushed onto me as far as I can tell.
Furthermore I can't find an example of anyone actually claiming on these policies.
Plenty of financial sense in the request.
You've been gifted £50k. Is £200 that a big an issue?
If it is offer less for the property.0 -
Ok but there has surely to be an element of common sense, lets say my folks were worth 5mio with no liabilities (I wish!) this product would still be pushed onto me as far as I can tell.
Furthermore I can't find an example of anyone actually claiming on these policies.
People with £500m in assets have gone bankrupt soon after before now. If the lender require it then there is nothing you can do. They are lending the money so have to be satisfied prior to releasing the funds.
Paying it will mean no issues in the future should a situation arise. I would rather stump up £200 than have to save 50k.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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