Co-op refused mortgage as house is *next* to a commercial property.

sparkle-space

A couple of months ago we had an offer accepted on a house and applied to the Co-operative Bank for a mortgage. The house is on the very end of the high street in a *very* small rural town and is next door to a chip shop. There is a house and a church on the other side. Really, I can't tell you how small the town is - every other house is next to a commercial property.

The Co-op's FAQ page says:
Is the property located above commercial premises?
These properties are not eligible for a Co-operative mortgage.

So in my first phone call with them this was discussed, the person went to discuss it with her manager and I was told it was fine. We have spent nearly £1000 on surveyor fees and solicitor's only to be told today that they will give us a mortgage but not on this property as it is next to a commercial property and we only have a 15% deposit.

We have been referred to their 'Customer Care' team but is there any way we can appeal or get our money back as they have effectively lied to us? Feeling a bit desperate as we do need that £1000!

Kayalana99

Im not sure about getting your money back but I would advise trying to find out every detail as possible about why they said no and counter argue it that the chip shop has nothing to do with the property you are buying.

You may find that the mortage may hold up...they have a way of putting barriers up but you can usally get round them.

Thrugelmir

Why have you spent money with solicitors prior to obtaining a mortgage?

Fizzymartini

I'm surprised they said it was fine. I had a similar problem but was told that "it's a case-by-case basis" to be determined at valuation - so it was left up to me whether I wanted to risk it and pay for the survey.

sparkle-space

They said that obviously the mortgage was subject to e.g. financial checks, valuation etc. but didn't specifically say that it being next to a chipshop might be a problem at valuation. If so, we would have proceeded with more caution.

We would also have held off on instructing solicitors if there had been any indication that it might be a problem. Hopefully my initial phone call was recorded.

But yes, thanks Kayalana99 we are going to pursue it with them further. They implied that if we had more of a deposit it wouldn't be a problem so we are going to find out how much more of a deposit!

sparkle-space

Just spoken to them again.

Apparently there is no way of appealing as it has been turned down by their underwriters.
They that it was the policy regardless of what it says on the website

And the amount of deposit is not a factor apparently.

So all we can do is hope to get some money back. Very angry!

Dave_the_Ginger_Cat

I would ask them for a call recording record of your first call. I had a similar issue when I explicitly paid a large val fee based on the answer to a very specific question, and the advisor was wrong on a material policy point. It will depend on how explicitly you phrased the question and also how exactly they answered the question.
I got my val fee back, but did create quite a fuss

The other thing to bear in mind is that this is quite a common criteria for lenders - many will not lend next to a fast food outlet - there's generally an increased fire risk (for which you should notify insurers) and they are generally classed as lower marketability. I'd suggest seeing a whole of market broker to help you find a lender if you are set on this property

rpc

Pipunch wrote: »

Above doesn't mean 'next to'. There's false advertisement straight away.

That will be non-binding.

Where the OP might have some mileage is if they have evidence that they asked about being next door to a chippie, the mortgage advisor said "that shouldn't be a problem, it isn't against our policy" and then the underwriters said "that is against our policy and is an automatic 'no'".

It depends a lot on what exactly was said. Even if OP said "commercial premises" to the mortgage advisor, that would give the bank a reasonable excuse as fast food outlets, pubs and so on are a special case.

If the OP was totally upfront and the mortgage advisor was plain old wrong, the OP should have some comeback.

Thrugelmir

Pipunch wrote: »

It states in plain English:

Is the property located above commercial premises?
These properties are not eligible for a Co-operative mortgage.

Above doesn't mean 'next to'. There's false advertisement straight away.

"Next to" could be a distance away. So its not possible to list all possible permutations. Whereas above is categorically clear.

Not possible for a call centre operator to pass any judgement on whether the property would be suitable for a mortgage advance or not. Or whether the applicants would meet the requirements either.