Mortgage arrangement fee

grazzzz

My girlfriend recently approached a friend who is an independent mortgage broker after his consultation he applied for a mortgage on her behalf giving her a repayment in principle subject to credit check etc
The checks have been done however after the survey they have valued the property at a lesser figure ( what figure it was originally valued at and by whom we have no idea as we didn't give an initial value. The repayment is now£ 130 a month more than originally quoted so on that basis she can't proceed. He has now asked for £299 consultancy fee which we presumed was only if the mortgage went through
Can he do this
What are our options he's saying she's signed to say she will pay it .
It was never discussed and now the product isn't what was offered on principle we are not happy

pinkteapot

Did she sign a contract?

We signed a fee agreement for our broker, which listed his charges (and yes, the fact that we have to pay his fee on application and it's non-refundable if the mortgage is declined).

The wording of what she signed is what we need to know.

It's not the broker's fault that the lender valued the property at less than your girlfriend had agreed to pay. Did she try renegotiating the price after the valuation was done?

kingstreet

What is set out in the broker's initial disclosure document, or fee agreement?

Is the fee payable on application, on offer, on completion?

Has the cost of the mortgage increased because the product has had to change, or is this a new lender's product to try to get a new valuation?

Is she seeking a reduction in the price of the property, based on the valuation?

Is there any chance she could post the details herself, so we can get a full picture?

grazzzz

kingstreet wrote: »

What is set out in the broker's initial disclosure document, or fee agreement?

Is the fee payable on application, on offer, on completion?

Has the cost of the mortgage increased because the product has had to change, or is this a new lender's product to try to get a new valuation?

Is she seeking a reduction in the price of the property, based on the valuation?

Is there any chance she could post the details herself, so we can get a full picture?

The fee was never mentioned until the mortgage was applied for when it was queried as she didnrt have £299 was told it would come out of the funds we presumed it was on completion
Yes the product has had to change because of the deposit as the property has been valued less than the original valuation however we have asked who originally valued the property at more than £100,000 as we never gave an indication of value however the amount it was originally valued at and by whom to give the original quote has fallen on deaf ears
So it leaves her with an 84000 mortgage with £100,000 valuation at £650 a month instead of £510 a big difference from the original quote and we feel we have been misled by the fee

kingstreet

She should have been provided with an Initial Disclosure Document which set out how the advisor would be remunerated. This should be provided early in the relationship, to give the borrower the opportunity to compare different options.

This is a two/three page document with the "KeyFacts" logo on the top and the words "About Our Mortgage Services." Remuneration is in section 4.

If such a document has not been provided, complain.

"The property has been valued less than the original valuation." You are going to have to clarify what you mean by this. Has the property been value before? When and by whom? For what purpose?

The broker has no control over how a surveyor values a property, so it's not his fault if the value did not match the purchase price. However, on the substantive issue of the fee, there are grounds for complaint if it was not disclosed as required.

Is the purchase no longer proceeding?

ACG

You may not have given a value, but you would have given a purchase price - this would have been the assumed value... effectively it seems your friend agreed a price above the value of the property.

At this point it could be worth renegotiating the purchase price with the vendor although £10k on a property of that value is quite significant so you may struggle - there could be a meeting point somewhere though.

As for the fee, there are 2 ways of looking at this - the broker did the work why should they not be paid for their time as its not their fault the valuation came back below the purchase price. The other is that your friend paid for the advice/mortgage but never received the second part.... either way if your friend signed a document to say they would pay it then they are a little bit stuck.

pinkteapot

When you say "original value", do you mean the asking price? I.e. the price for the house that the estate agent told you?

How much was the house marketed for and what price did your girlfriend agree to pay?

You can't put any stock in an asking price. We're paying almost asking price on ours because it was reasonable. We offered £60k under asking price on another house because we knew that the asking price was totally unrealistic.

kingstreet

I'm now thinking remortgage, folks!