Natwest re-mortgaged on incorrect LTV & lack of advise from bank

adeelmpk

Experts

I purchased a repossessed property [around 15~ below its market value] in March 2010.

Some mortgage details & timelines are as below before I explain my question.

Lender - Natwest
Application - first time
Date - March 2010
Mortgage period - 2 years fixed
LTV - 85%

When the above deal expired I remortgaged with same lender.

Lender - Natwest
Application - remortgage
Date - April 2012
Mortgage period - 5 years fixed
LTV - 75%


When I remortgaged in April 2012, I made a lump sum payment to bring the LTV down to 75% however due to lack of my expertise I didn't realize that I should revalue my property to lower the LTV and get a better mortgage product [lower APR etc]. As I mentioned above it was a repossessed property and I purchased at a significantly lower rate than its market value. [approx ~15-20% lower than its market value].

My question/frustration is that bank [natwest] also failed to advise/suggest that I should have my property value reassessed at current value before I should take out a renewal mortgage product.

As a result they sold me a mortgage product based on its value back in March 2010. This resulted in me getting a higher interest rate product [based on 75% LTV] and although I have recently resurveyed the property with its correct market worth however I'm locked in a 5 year deal and paying higher APR since mortgage deal renewal. Is there anything I can do ? and if so who/how I should approach this ?

betmunch

First thing to do is check your paperwork, did you have an advised, or non-advised service?
It will be on the IDD, KFI, and remortgage offer.

If you had an advised service, AND you told them you bought at a below market value price, AND you paid for a valuation, then you might have a case for a complaint.

Also, this is just my opinion.

andymd

When we moved to a new deal with Nationwide, they automatically applied their House price index to the purchase price increasing the equity, although they did not provide (nor did we ask for any advice) about the term or valuations (house prices in our area have gone up faster than average)

I'm no expert, but my understanding is that lenders have only been required to provide advice since earlier this year. During our recent application, they advised us about different terms, types of mortgage etc.

If they did provide advice in your case and it was wrong there may be a case to answer, but it sounds like they didn't give any advice (like in my case) because they didn't have to (or weren't asked) How were they supposed to know the value was higher?

adeelmpk

andymd wrote: »

How were they supposed to know the value was higher?

Well that's kinda my question here, when remortgaging HOW does a lender know what is the actual/current value at this point in time considering the last survey was done more than 2 years ago and even at that point they recorded house purchase price and not the actual market worth.

House prices could shift quite a lot in 2 years, how could one lend money based on an outdated figure.

adeelmpk

betmunch wrote: »

First thing to do is check your paperwork, did you have an advised, or non-advised service?
It will be on the IDD, KFI, and remortgage offer.

If you had an advised service, AND you told them you bought at a below market value price, AND you paid for a valuation, then you might have a case for a complaint.

Also, this is just my opinion.

You raise a very valid point, I can't recall what I requested however I will check paperwork tonight.

I guess my next question will be - if you request for a advised service, Is the lender supposed to notify the borrower about the change in price and suggest a valuation should be done [for example,.through a survey etc]

betmunch

adeelmpk wrote: »

You raise a very valid point, I can't recall what I requested however I will check paperwork tonight.

I guess my next question will be - if you request for a advised service, Is the lender supposed to notify the borrower about the change in price and suggest a valuation should be done [for example,.through a survey etc]

No, with a non-advised service you have absolutely no chance of success as you're basically saying I want that one and they either give it to you or they dont.

With an advised sale they give you advice about the best way to proceed, so you would still need to have made the suggestion that the property valuation would be higher then the one their computer worked out, and even then, you would likely have had to pay to prove it.

With regards to whether a valuation was done, it definitely was, however if the lender was paying, which I would expect they were, then the lender can choose to accept a computer val rather than an actual visit.

Basically a non-advised sale I would say no chance of success.

Advised sale, very slim, to no chance of success.

Let us know what the paperwork says.

Cheers

adeelmpk

betmunch wrote: »

No, with a non-advised service you have absolutely no chance of success as you're basically saying I want that one and they either give it to you or they dont.

With an advised sale they give you advice about the best way to proceed, so you would still need to have made the suggestion that the property valuation would be higher then the one their computer worked out, and even then, you would likely have had to pay to prove it.

With regards to whether a valuation was done, it definitely was, however if the lender was paying, which I would expect they were, then the lender can choose to accept a computer val rather than an actual visit.

Basically a non-advised sale I would say no chance of success.

Advised sale, very slim, to no chance of success.

Let us know what the paperwork says.

Cheers

Okay, I'll get back tomorrow.

On another topic is there anything I can do to jump on a better deal, considering that I'm in the middle of a 5 year fixed term.

There is an early repayment charge which comes to a few thousand £££ and make it worthless if I pay that penalty.

betmunch

adeelmpk wrote: »

Okay, I'll get back tomorrow.

On another topic is there anything I can do to jump on a better deal, considering that I'm in the middle of a 5 year fixed term.

There is an early repayment charge which comes to a few thousand £££ and make it worthless if I pay that penalty.

Easy enough to do, just remortgage.

You will need to see and advisor to see if its worthwhile though.

adeelmpk

betmunch wrote: »

Basically a non-advised sale I would say no chance of success.

Advised sale, very slim, to no chance of success.

Let us know what the paperwork says.

Cheers

Ok, managed to dig out some information. The advised and non-advised service rules only came in practice in 2014 so back in 2012 banks were neither providing nor under obligation to provide an advised service. As such the service provided was a non-advised service.

I also gave a call to Natwest and they quickly escalated my concern to the complaints department however the complaint was quickly turned down as they said it was COMPLETELY my responsibility to make them aware that property is valued incorrectly in there systems.

Any other ideas, or its a dead end ?

Thrugelmir

adeelmpk wrote: »

Any other ideas, or its a dead end ?

Dead end. Hindsight is a wonderful human trait.

betmunch

adeelmpk wrote: »

Ok, managed to dig out some information. The advised and non-advised service rules only came in practice in 2014 so back in 2012 banks were neither providing nor under obligation to provide an advised service. As such the service provided was a non-advised service.

I also gave a call to Natwest and they quickly escalated my concern to the complaints department however the complaint was quickly turned down as they said it was COMPLETELY my responsibility to make them aware that property is valued incorrectly in there systems.

Any other ideas, or its a dead end ?

That is exactly my point. This is EXACTLY why the FCA have made sure almost everyone gets an advised service.

NatWest complaints department are right. You took a non-advised service, that means all responsibility is on you to know what you are asking for.

Sorry its not what you want to hear