urgent - advice please - family home mortgage application - business 'exemption

Midnight_Tboy

Hi all.

For reasons too long, and annoying, to go into, my first mortgage application has failed, with the bank being unwilling to loan a sufficient amount (halved effectively). Basically due to tax credits being in 2 names, rather than 1 name, for a sole mortgage application

I have been found another mortgage by the EA Mortgage Advisor, which is with Skipton, it works out a little bit more but apparently, taking purely my salary into consideration, should offer enough.

It's been agreed in principle, and I have been sent across some documents to sign for the main application.

The first part I've signed, but I'm also asked to sign the 2nd part which is:

DECLARATION FOR EXEMPTION RELATING TO BUSINESSES
I am/We are entering this agreement wholly or predominantly for the purposes of a business carried on by me/us or intended to be carried
out by me/us.
I/We understand that I/we will not have the benefit of the protection and remedies what would be available to me/us under the Consumer
Credit Act 1974 if this agreement were a regulated agreement under that Act.
I/We understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit
Act 1974 in relation to a credit agreement where it determines that the relationship between the creditor and debtor is unfair to the debtor.
I am/We are aware that, if I am/we are in any doubt as to the consequences of the agreement not being regulated by the Consumer Credit
Act 1974 I/we should seek independent legal advice

This mortgage is for our family home, no business use aspects involved

I'm trying to search into this, as it sounds like this is only if planning to use it as a business or buying/selling as part of your business, but concerned where it says about no protection under the consumer credit act?

I searched and found one horror story about some mortgage sharks, taking out loans for more than the value you're after, keeping the extra themselves until you get into debt, not telling you about it and lose the house, with them taking it etc, though I'm sure that in itself was a different circumstance

Can you guys help please, I need to get this form in asap, but a bit concerned by this

If it helps, the first part of the page I signed was just

SIGNATURE AND AUTHORITY TO OBTAIN REFERENCES/INFORMATION AND PROCESS DATA

In case it's simply nothing to worry about and just both parts need signing as normal

amnblog

This suggests that the broker is trying to transact this as a non residential mortgage.

If the lending is purely for business purposes it is not regulated.

Working the rules to avoid work and risk.

It may be that the declaration is in the pack by accident - I cannot see that you need to sign it.

What do other brokers on here think?

Midnight_Tboy

Thanks. It's all very confusing to me

So if this was going to be transacted as a non residential mortgage - what are the implications for me? High chance of application failing? Illegal? Higher potential fees? No protection for interest payments if I was to become long term unemployed etc?

amnblog

If that is there contention it means that are avoiding the responsibility or giving 'advice' and they are are avoiding the law.

Give them the benefit of the doubt, it may be a simple mistake.

Midnight_Tboy

So it is ok to just sign it to get the process started? I've been emailed the docs to sign and scan/return

Could this be as a workaround perhaps to my offer requirements? (which is basically 22k salary, requiring 70k mortgage on a 110k house - tax credits were previously took into consideration on previous application with Nationwide but they rejected because it had my partners name on tax credits form, so offered much much less (52k))

Or would I be better off calling them up to check it

GMS

Have you been given any paperwork relating to the proposed mortgage?

You need to check this carefully to see what it is. If there is any mention of a Buy to Let mortgage then report the broker and find another.

What is the issue with your partner? Trying to use tax credits awarded jointly on a single application is a massive error on the brokers part.

Where is the deposit coming from? Whose money is it?

amnblog

Midnight_Tboy wrote: »

So it is ok to just sign it to get the process started? I've been emailed the docs to sign and scan/return

Could this be as a workaround perhaps to my offer requirements? (which is basically 22k salary, requiring 70k mortgage on a 110k house - tax credits were previously took into consideration on previous application with Nationwide but they rejected because it had my partners name on tax credits form, so offered much much less (52k))

Or would I be better off calling them up to check it

Where did you find this broker? Are they a small or large firm?

Don't sign anything you are unsure about.

Midnight_Tboy

The only documentation I have other than this form to sign, is the new KFI which was emailed. I'll scour through it now to check.

The deposit is 20k from our own money and 20k gifted from parents (letter of gift is in solicitors hands)

With my partner, she does not work, and so was told we would have a better chance of mortgage application if it was down as a sole application. So of course showed and submitted the docs......ie my 22k salary (which before April was just over 21k), our tax credits (totalling about 4k), Child Benefit, and our statements/bills (small credit card debts but always paid off in full each month).

Nationwide then came back (some 4 weeks later), saying that because the tax credits had both mine and partners name on them, they would only accept this if had my partners name removed. I contacted the Tax Credits office, who said this was only possible for my tax credits if we actually seperated and lived seperately, and for Child Benefit, we would have to stop claiming, and then start a new claim, which could take up to 3 months

Midnight_Tboy

The EA is Manners & Harrison, and it's one of their brokers, which are part of Sequence group I believe

amnblog

The wording on this declaration is straight out of section 1.4.8 of the FCA handbook and should not apply in your case.

Google the text and read the FCA handbook for more details.

Midnight_Tboy

so seems I have been given the wrong form them. I best simply call them up and ask for them to check form/send correct one