BTL offer may expire before offer even accepted - did broker jump the gun?

florence4

I'd be grateful for opinions and advice from people who are more experienced than me about how BTL/LTB mortgage applications should proceed... I'm trying to work out (a) whether my broker has acted hastily and put me in a difficult position (which is what I feel) or whether it's my own fault, and (b) what I can do about it.

My current situation is this...

I engaged a broker and applied for a 'let to buy' (LTB) mortgage on the property I currently live in, in order to release some capital for a deposit on the new purchase. I also asked him to arrange a standard resi mortgage for the outstanding balance of new purchase...

My broker has contacted me to say that my LTB offer will expire in the middle of July (3.5 weeks from now), that it will only be possible to extend it for a couple of weeks if that, and that new fees will be payable if I do not complete within that timescale.

The biggest problem is that the LTB mortgage is conditional not only the valuation of my current house (which I knew) but also on a my purchase of a new house (which I did not realise). It is extremely unlikely that the new purchase will go through before the expiry date, because I do not yet actually have an offer accepted on the house I'd like to buy (I am still in negotiations over an extension without BRs), and although I have had an initial convo with my solicitor, I have not yet formally instructed her...

Here is a bit more background that might be relevant too...

I made an offer on another property back in April, but it was not accepted, and it soon became clear that we were not going to be able to agree a price, because the vendor was not serious about moving at that point, so I walked away.

Since then, I have offered on a second property but been gazumped, then found this third property and have been negotiating to resolve issues around unregulated building works. We're making progress but it has taken 3-4 weeks so far - but I didn't realise we were in any hurry...

The broker made the application before the offer on the first house - or indeed any offer - had been accepted. It seems he assumed that first purchase would certainly go through, because his recent email says "These long timescales weren't anticipated, as to all intents and purposes you were buying the property in X"... I have already replied to say that 'to all intents and purposes' is rather an overstatement, since I never had an offer accepted, nor had I instructed my solicitor.

I hadn't really appreciated the difference between an 'agreement in principle' and an 'offer'. I knew mortgage offers could be extended, and hadn't understood that this was not as easy for a LTB as a 'normal' mortgage. I hadn't realised that the max extension period would be 2 weeks (and still can't find that stipulated in the T&C). I hadn't understood that the LTB was dependent on my purchase of another house.

Perhaps I should have understood all this - but for me, the point of engaging and paying a broker was specifically because I found the whole business confusing, so wanted a professional who would know what to do, and could act for me!

The arrangement fee on the LTB mortgage was very high - almost £2.5K - so I am obviously very, very unhappy about the prospect of wasting that and/or having to pay anything more! It would be a real problem for me to have to find that amount again.

2 months ago, it felt like an advantage to have had the broker sort the LTB mortgage so promptly. Now it feels like a really big potential problem!

My main Qs are:

1) Has my broker acted 'properly'? Should he have made the application before I had an offer accepted? Should I be as irritated as I feel now in this position, or am I being unreasonable? and

2) Is there anything I can do now? - Especially to avoid having to pay additional fees, if the new purchase does not go through before the deadline, as I expect.

Thanks in advance.

kingstreet

Why don't you complete the LTB, put the money on one side and carry on looking?

There's nothing to stop you continuing to live in the property for a few months more is there?

The biggest problem is that the LTB mortgage is conditional not only the valuation of my current house (which I knew) but also on a my purchase of a new house (which I did not realise)

Would you please reproduce what EXACTLY your mortgage offer says about this and confirm the lender involved.

florence4

Thanks for your reply, Kingstreet. That's what I thought I would be able to do, but my broker told me the LTB was conditional on the new purchase. When I checked the T&C it does indeed say (under a section headed 'special offer conditions') "This mortgage has been offered on a LTB basis. The applicant's conveyancer is to confirm the simultaneous completion of this mortgage with the purchase of the new main residence".

And the lender is Nationwide/The Mortgage Works.

florence4

Oh and regarding

kingstreet wrote: »

There's nothing to stop you continuing to live in the property for a few months more is there?

The T&C also say ["the applicant [must] vacate the security property on completion of this mortgage".

ACG

Im not sure why anybody would put an application in for a mortgage unless its a foregone conclusion that everything will be going through (possibly buying off friends/family) until an offer has been accepted.... im always reluctant to do even a dip before an offer has been accepted!

I would hate to sit here and say the broker is in the wrong, but it does seem like it. If the app was done after the offer had been accepted and then that sale fell through you could argue its one of those things and your the unlucky one who has to foot the bill but atleast based on your post above (which is only 1 side of the story) it does appear the broker was a little bit trigger happy.

kingstreet

I've just looked at TMW criteria and it does indeed have that stipulation;-

Let to Buy
All first time and experienced landlord applicants who are remortgaging their existing residential property as a Buy to Let must choose from the Let to Buy product range.

Subject to:

Maximum age 90 at loan maturity (75 for first time landlords)

Maximum 75% LTV
Maximum loan size £500,000 (unless otherwise stated)

The applicant(s) must have owned their residential property for at least 6 months (with or without a mortgage) at the time of application

Loan purpose: to remortgage their residential property into a Buy to Let property

Remortgage applications will only be accepted where there is a simultaneous onward purchase of a new residential property, which must be confirmed by the acting solicitor.

I'd say if the broker was aware you may not be able to complete the remortgage and purchase simultaneously, you may have grounds for complaint. I assume the timescale issue is because Nationwide/TMW remortgage offers last only three months, unlike purchase offers which are six?

florence4

Thanks ACG and King (again).

ACG, yes, the app was done before any offer was accepted, and it certainly wasn't a foregone conclusion. In fact, it was done when I was clearly telling the broker that I thought the house was over valued, that I wasn't prepared to raise my offer any further, that I certainly wasn't going to pay AP, and that I was starting to think the vendor wasn't actually serious about selling... I may even be able to prove some of that, if I need to, because I think I said some of it in emails.

King...

kingstreet wrote: »

I'd say if the broker was aware you may not be able to complete the remortgage and purchase simultaneously, you may have grounds for complaint. I assume the timescale issue is because Nationwide/TMW remortgage offers last only three months, unlike purchase offers which are six?

Yes, that's the issue. Which I wasn't aware of at the time, tho I should arguably have been: I did actually read the T&C, but it's so much to take in... Given the above, I'd say the broker ought to have been aware it was definitely a 'possibility' I wouldn't complete the LTB and new mortgage simultaneously...

You both seem to be saying I may have grounds for complaint. How do I go about that, if I need to?

Obviously, I'd sooner at least try to resolve this without complaint. I reckon my first option is to try to resolve negotiations with the vendors and complete by the deadline. And I assume I'd be wise not to let them know about my deadline, because it weakens my otherwise strong negotiating position...?

Then if it becomes obvious that completion isn't going to be possible, I think I will suggest to the broker that he should pay any additional fees, since this was his error. Then complaint becomes a last, not a first, resort... Does that sound reasonable?