Compliance issue with Equity Release application

Dekalbkid

We have received an email from our financial advisor late on this Friday afternoon saying there is a compliancy issue with our application and cannot submit the form. We have had our hopes built up and feeling 99.9% sure the application was going to be accepted and now this news. The only thing of is the issue we can think of is that my partner works from home. Our home address is the registered office of the company. We are wondering if this would be the reason why the application cannot be submitted.
Any thoughts please as we are truly losing the will to live with Financial Advisors that give us hopes and then dashed at the last hurdle. On Monday we will hopefully find at what the hiccup is but just wanted to know if any other person has encountered a problem with having an address for a limited company at their home address?

betmunch

Find out what the issue is rather than assume.

Then someone might be able to help

Dekalbkid

All i was asking was has anybody had the issue with the application being non-compliant being due to having a company registered at their home address. My partner only has his office at home, he is a consulting engineer, does not trade in anything so there are no goods or equipment kept at home and no clients visit him at home either - and he has an Experian Credit Score of 999!

dunstonh

and he has an Experian Credit Score of 999!

Which means absolutely diddly squat.

A compliance issue would suggest something the adviser needs to for their own files rather than something that the lender needs.

DandelionPatrol

dunstonh wrote: »

Which means absolutely diddly squat.

A compliance issue would suggest something the adviser needs to for their own files rather than something that the lender needs.

Interesting!

The advisor sends an email on Friday stating compliance issues - which seem to be a problem at the advisor's end - and they don't tell poor OP what the issue is but leave them to stew over the weekend.

I would call them on Monday first thing and hear what the reason is. Then I would probably tear a great strip off them.

amnblog

Very poor approach from this Adviser.

Numerous people register their business at their home address Deka. This is unlikely to be the issue. Probably an internal aministration hitch.

We cannot assess the problem on here, you need to wait to speak to your advisers tomorrow.

When you do, point out the folly in delivering worrying news late Friday by email - they might learn something!

Dekalbkid

So today we talk to our financial adviser. He tells us the the External Compliance Company that vets the applications are unlikely to approve it for the following reasons.

1. The interest rate we will be paying is higher than our current interest only mortgage (we want equity release as our current mortgage is in four parts, one has already come to the end, one finishes in November, one next February and one in five years time so we need to pay off them all in one hit). Our financial adviser has told us to ask the Building Society to defer the first three parts of the mortgage to the end date of the fourth part i.e. 5 years time, but the whole point of having equity release was to allow one of us to retire and still keep the bungalow.

2. Have we considered other options - going back to repayment - we couldn't afford the repayments which would be well over £1000 per month.

3. Downsizing - we live in a two bedroom semi-detached bungalow in a nice rural location which we have got just as we like it and is the sort of place most people downsize to!

He has told us to contact other equity release lenders but surely the same compliance issues will occur with them?

Are we being fed a line?

betmunch

I'm not qualified in Equity Release but it doesn't sound right to me.

1. Theres no requirement of the current mortgage to be extended so how else do they expect you to pay, interest rate is largely irrelevant here. What does he expect to happen if the current lender says no?

2. He's the advisor, if a repayment mortgage was more suitable for you, he should have considered it before proceeding with an equity release product

3. This is something you should have considered yourself, there's no reason why you can't prefer an equity release mortgage over a smaller residence though.

I'd be keen to see what the other advisors think, especially someone with the relevant qualifications to arrange this type of Mortgage, but for me it seems wrong

Thrugelmir

we have got just as we like it

Sounds as if you've not thought it through properly. If you are immediately applying for equity release.

dunstonh

1. The interest rate we will be paying is higher than our current interest only mortgage (we want equity release as our current mortgage is in four parts, one has already come to the end, one finishes in November, one next February and one in five years time so we need to pay off them all in one hit). Our financial adviser has told us to ask the Building Society to defer the first three parts of the mortgage to the end date of the fourth part i.e. 5 years time, but the whole point of having equity release was to allow one of us to retire and still keep the bungalow.

Lenders are quite flexible is you have a good payment history and will often extend interest only mortgages if they are aware of what you are doing and they feel it is viable.

If the existing lender says no to extending, it makes the equity release more viable. If they lender says yes to extending, then you defer the equity release until later.

2. Have we considered other options - going back to repayment - we couldn't afford the repayments which would be well over £1000 per month.

A decent affordability assessment (incoming vs outgoings) should be able to verify that.

3. Downsizing - we live in a two bedroom semi-detached bungalow in a nice rural location which we have got just as we like it and is the sort of place most people downsize to!

Which again, decent documentation would cover off.

He has told us to contact other equity release lenders but surely the same compliance issues will occur with them?

That bit doesnt make sense. The external compliance company does not impact on the lender. Only the adviser. It would suggest that the adviser belongs to a network (as a directly authorised adviser is only required to consider guidance from any external compliance company they use. Whereas a network member has to do what the network says).

I have been a network member for over a decade but I am currently in the process of going directly authorised. One of the main reasons is that the networks have become scared of riskier transactions and can close a perfectly viable recommendation down as they do not feel it is worth the risk. They often do this by making the adviser jump through more hoops than are needed. If the adviser jumps through those hoops, they will often allow it. However, many advisers may just give up and not bother.

magpiecottage

I'm guessing that this is not an external compliance company but a network which is digging its heels in.

Why are you looking for equity release?