£300 fee to be told I couldn't have mortgage

dunstonh

So you believe that all customers should be charged 300 quid to be credit checked on every occasion dunstonh?

That isnt what the £300 is for.

your explanation of the company booking the money doesnt make sense, as why would they book it before the credit check.

It is what it is though. The lenders may have arranged say £200 million on the money markets to get a fixed rate available. Its limited on an application basis so when all the money available has been earmarked for application, they close the offer. If people do not gollow through with the application, the lender is left with a chunk of borrowing which they have not allocated to an individual. In a period of rising interest rates, that isnt really a problem as they can possibly lend it elsewhere. Although they will lose out financially the longer it takes. In a period of falling interest rates they can lose out significantly as they have borrowing negotiated for a fixed rate which is higher than they they now offer. Therefore they lose money on it. That is what the booking fee is for.

The costs of going to the money markets and borrowing the money to lend ot the individual on a fixed rate are what you are mostly paying for.

It is unfortunate that a small minority will find themselves not able to get the mortgage after they apply but it is an avoidable situation most of the time. This hightlights the importance of giving accurate information to get a decision in principle. We dont know what the problem was on this thread as self employment is not a decline reason but the lender would have found out something they were not made aware of prior to application. So whose fault is that?

sinizterguy

Yant1, the £300 was not a guarantee of getting a mortgage. It was a fee for considering the application.

This would have been made adequately clear in the paperwork. If anyone walked into without realising that, then it is their own fault. I am not interested in protecting lazy people who do not understand the terms from themselves.

Or do you think credit reference agencies are just going to roll over and hand the information out for free to the banks? And the times of the employees will be paid for by whom?

[Deleted User]

I dont know as we dont have the whole story, but if it isnt OPs fault ie he had told them everything he could have and they changed their mind later for a reason that they have decided or even changed their lending criteria due to the impending credit crunch. Then i wouldnt be a happy chappy and would be complaining.

A offer should be an offer unless information given was false. If they changed their mind on their terms then they really should be refunding the money whether it cost them or not. Otherwise loan companies could make millions of pounds without even giving out one loan, here you go you can have a 100k loan give us 300. 3 months later, ive found a house may i have my loan? no go away loser!

payless

Think it really falls down to how far they got down the line, and if
1. Products were reserved
2. Lender was told one thing, but facts turned out differently

If neither the case then I'm surprised a fee was charged, even when C&G did charge upfront fees they would still do a AIP for free

dunstonh

Otherwise loan companies could make millions of pounds without even giving out one loan, here you go you can have a 100k loan give us 300.

And who would pay the interest on the money the lender has borrow to offer funds at that rate?

[Deleted User]

So when i take out a credit card with a 6K credit limit the bank must borrow 6K from the markets in order to meet an expected demand, is that the law?

dunstonh

Yant1 wrote: »

So when i take out a credit card with a 6K credit limit the bank must borrow 6K from the markets in order to meet an expected demand, is that the law?

I think we have the root of the problem here. You misunderstand how the borrowing is obtained.

a credit card charges interest at a variable rate. The banks can go to to the money markets daily if they require and borrow money if they wish. They can adjust the credit card interest rate when required.

With a fixed rate mortgage they do not do that and they arrange it on bulk. This means that they only have a finite amount they can lend at that rate. If the lender doesn't issue all or most of that money, they have committed themselves to borrowing that amount at the agreed rate.

This is why there is a booking charge with fixed rate mortgages that isn't present on variable rate mortgages.

sinizterguy

Yant1 wrote: »

I dont know as we dont have the whole story, but if it isnt OPs fault ie he had told them everything he could have and they changed their mind later for a reason that they have decided or even changed their lending criteria due to the impending credit crunch. Then i wouldnt be a happy chappy and would be complaining.

A offer should be an offer unless information given was false. If they changed their mind on their terms then they really should be refunding the money whether it cost them or not. Otherwise loan companies could make millions of pounds without even giving out one loan, here you go you can have a 100k loan give us 300. 3 months later, ive found a house may i have my loan? no go away loser!

The person at the bank was making an informed guess after listening to OPs circumstances.

He feeds the info in, the computers calculate everything based on given info and credit rating and then tell them whether the risk can be taken or not.

So obviously the OP did not give them the full picture or there is something risky on his credit file. Or he was on the border to begin with and following the credit check he landed on the wrong side of the fence. Third more unlikely choice - the guy at the bank was completely inexperienced and did not have a clue what he was talking about.

And it todays climate I doubt the banks would let someone incompetent deal with things like mortgages.

[Deleted User]

dunstonh wrote: »

I think we have the root of the problem here. You misunderstand how the borrowing is obtained.

a credit card charges interest at a variable rate. The banks can go to to the money markets daily if they require and borrow money if they wish. They can adjust the credit card interest rate when required.

With a fixed rate mortgage they do not do that and they arrange it on bulk. This means that they only have a finite amount they can lend at that rate. If the lender doesn't issue all or most of that money, they have committed themselves to borrowing that amount at the agreed rate.

This is why there is a booking charge with fixed rate mortgages that isn't present on variable rate mortgages.

Well then wouldnt it have been wise to have decided the risk before booking the money. Sounds like a boo-boo by C+G.

Moggett

It's probably a case that he told them he was self employed but didn't have the accounts to back it up. The question should have been asked at the AIP stage by C&G whether he could prove his income or not. If that question wasn't asked or the implications of not being able to prove income were not explained then C&G are at fault.
I note that C&G no longer seem to charge non refundable application fees so perhaps they have had many complaints or have decided to 'Treat Customers Fairly'