Advice Needed Urgently - swapping a fixed mortgage

prince1

I aploogize now for the lengthy mail!

My partner and I are buying a house, we had our offer excepted on the basis that the bank had given us a mortgage in principal.

We curently have a five year fixed deal on the flat we live in along with two other properties which we rent out. All properties are on a fixed 5.17 rate.

We have just been told by the bank that they will not accept our mortgage because the two rented properties are not on buy-to-let deals (they are on homeowners) and that the only way they will process the mortgage (we are asking to borrow a further £106,000) is if we change these properties onto a buy-to let rate of approx. 7% but we still have to pay the redemtion charge. Surely they can't make us pay for their mistake?

When we took the mortgages out in January 2007 we asked for the best available rate to us and the bank said we could put the properties ALL on the same rate of 5.17. Obviously we can't live in 3 different houses but they still said it would be ok. A little later our mortgage advisor said he had made a mistake but he was going to keep quiet about it.

So basically, we are unable to get a mortgage unless we swap the houses to a higher interest rate AND pay the redemtion fee on both.

We can't afford to do this and I certainly don't see how the bank can blackmail us like this - are they allowed to?

Anyway if we go elsewhere for a mortage they will then try to hit us with the redemption fee on the flat which we are selling as well so we are in a 'catch 22' situation.

I would like to know if the bank can really make us pay for their mistake, we also have to act quickly because we are due to move in less than 6 weeks - they also know thas and I think they are trying to back us into a corner so we pay for their wrong doing.

We have sufficient funds to keep up with the mortgage we are asking for and they will give it to us but only on the grounds above.

I would really appreciate your view on this.

pcwilkins

When you applied for the three mortgages did you apply for each separately (i.e. separate application form) and if so what did you write on the paperwork about where you would be living?

Peter

prince1

Thanks for such a quick reply!

My partner did a let-to-buy mortgage to get his second property and the same again for the flat we are currently living in. The bank fixed these all on the same rate originally. When the deal was up we went back to the bank and they offered us the rate od 5.17 on all the properties. Our mortgage advisor saw that they had previously all been fixed at the same rate so he rang the HSBC centre to check if he could still give us the rate on all three and he was told it was ok.

The bank were fully aware of which property we were living in and that the others were on a 'let-to-buy)

Any ideas?

Thanks

Lindsey

pcwilkins

A little later our mortgage advisor said he had made a mistake

What was this mistake? Who employed this advisor, the bank or you?

If the mortgages were BTL originally, when did they change to non-BTL?

Peter

matto

Did you tell the bank originally that you'd be letting these properties out?Was the mortgage advisor who admits making a mistake an employee of the bank?Fixed interest rate deals are up significantly since January. There's no way any bank would honour an "in principal" deal agreed then.

UK007BullDog

Let to buy = BTL and the bank is right to refuse you another residential mortgage as you already have 3.

There is no lender out there that will give you a residential right now as you already have the said three unless you can prove that in each property let out is to a very close relative. then you might get away with it but otherwise not.

That mortgage adviser is useless and the lending department as well. All 3 mortgages will show on your credit record and any lender checking will want full details.

Not sure if they can force you now to change the deals but definately can when its time to renew or remortgage.

If everything is as you say you might have a case against the lender. Might even have to put the other properties on a similar BTL deal from at the time they took them on. Not sure if you have rights to any financial redress, but you have already gained by being on a very good rate for some time. You might want to write a letter to the bank/building society to find out what they are going to do about the problem.

Usually you cannot have more than 1 residential, except for a few exceptions but you would not qualify from what you told us so far.

prince1

I mean Let-to-buy, this is when the bank agree to give you a mortgage on the house you will move into whilst allowing you to let the other out - does that make sense?

The mortgage advisor is from the bank and he said that someone in the past had made a mistake (sorry not him!) by putting them all the same and that he wouldn't change it and he signed it off.

What i'm trying to say is that the advisor knew all about the situation but he wasn't bothered about trying to change it.

I have actually just heard from the bank and now they are refusing to give us the mortgage, they are saying that they will keep the houses on the same rate but they will not give us the borrowing and we will have to go elsewhere and pay nearly £6000 in redemption.

prince1

Can you tell me, if we pulled all the houses out and went with another lender should the bank still get away with charging the redemption fees when its their fault anyway? Can we fight this?

UK007BullDog

It sounds very muddled to me, so cannot give advice on this. You might need legal help on this one. Even though it's a let to buy in effect it's a btl. You are letting the old property out to buy a new one to live in. The process is called Let-to-Buy but it is a BTL.

Dont know, you should post in the mortgage forum, you are here in the wrong one. I think they will charge you the money as you are willingly breaking the contract. I would leave the mortgages there. you will not get a rate like this again currently, plus the costs of moving them etc.

Concentrate on finding another lender for your current project and make sure you are fully upfront with them. You also need a broker as I think they will have to ring round quite a number of non-highstreet lenders to get you the best deal and who will ignore the properties you currently have. And then when its time to remortgage do the others as BTL.

eek

Yes they can. The terms of the mortgages include the redemption fees.
Furthermore you are probably in breach of the written terms and conditions of the mortgage. Granted you have verbal confirmation that what you were doing is OK but that is merely worth the paper it is written on.

silvercar

Try a different lender for your new mortgage. We managed to take out a BTL mortgage and a residential mortgage at the same time with 2 different lenders. Our new home mortgage lender (Coventry) wasn't interested in the BTL deal, even though (on paper) we looked to be subsidising it slightly.

Once you have the new mortgage sorted you can then put in a complaint if you feel the redemption penalty has been forced upon you. Presumably you would only redeem the mortgage on your flat and not on the 2 BTLs, so the charge won't be the total you quoted.