Right of reflection on mortgage????

Mortgage_Moog

After going through my mortgage interview and reviewing the paperwork there is only one thing I don't understand. It says on the last page "You have 7 days after the date of the offer to reflect before committing yourself to taking out this loan".

This doesn't make any sense to me. As I understand it either myself or the seller could change our minds at any time up to exchanging contracts which could be weeks away, well past the 7 day deadline.

How would I be committed to a loan when I ended up not buying the property? Surely they wouldn't just pay the cash into my account for me to repay? Then I'd be a cash buyer!

Senior_Paper_Monitor

Complete nonsense introduced as a result of the recent (21MAR) European Mortgage Credit Directive.

Makes not a jot of difference in the real world (MCD = mortgages complicated deliberately / EMCD - everyone's mortgages complicated deliberately)

ESIS (European Standard Information Sheet) - the new KFI (keyfacts illustration) - is open for the MCD Mnemonic Competition 2016) .........

Senior_Paper_Monitor

I suppose I should play an 'open hand' - all it means is that the lender cannot change their mind in the 7 days preceding offer (and I've never known that happen) unless they discover you are a gunrunner (or other similarly unacceptable person) or lose your job, in which case they will do so on day 8.

Thrugelmir

Mortgage_Moog wrote: »

After going through my mortgage interview and reviewing the paperwork there is only one thing I don't understand. It says on the last page "You have 7 days after the date of the offer to reflect before committing yourself to taking out this loan".

This doesn't make any sense to me. As I understand it either myself or the seller could change our minds at any time up to exchanging contracts which could be weeks away, well past the 7 day deadline.

How would I be committed to a loan when I ended up not buying the property? Surely they wouldn't just pay the cash into my account for me to repay? Then I'd be a cash buyer!

Cooling off period. Like many other financial / contractual arrangements. Time to consider the small print.

Mortgage_Moog

A cooling off period doesn't work with a mortgage though. The buyer or seller can change their mind about buying/selling the place at any time and then the mortgage would just be scrapped, making the 7 day thing pointless.

davidmcn

Thrugelmir wrote: »

Cooling off period. Like many other financial / contractual arrangements. Time to consider the small print.

Presumably inapplicable if the mortgage is advanced within 7 days of the offer date? Or is everyone going to be forced to twiddle their thumbs for a week between offer and completion?

Mortgage_Moog

I did read on another site that it only has to say that because of EU law and in the UK market it means nothing as sales can be dropped by either side.

It would be even more interesting if we leave the EU half way through my move, where would that leave me?

People are replying saying that the bank has 7 days to pull out but it's saying that I have 7 days, not them. It's like saying that even if the purchase falls through I'd be stuck with a mortgage anyway :-/

I did ask the mortgage advisor about this and he said it means nothing.

antrobus

Mortgage_Moog wrote: »

....It would be even more interesting if we leave the EU half way through my move, where would that leave me?...

That's very unlikely. Even if the UK did vote to leave in June, it would be years before we actually did leave, giving you plenty of time to actually complete.

Senior_Paper_Monitor

It is an offer/invitation, not a contract - either party can decide not to proceed with the offer at any time until it becomes a contract (EXCEPT the lender within the first 7 days).

Your broker is correct - in the 'real world' it mean absolutely nothing.

Technically it is not a 'cooling off period' (which applies to a post contract execution period when the contract can be dissolved).

The right to continue within the 'reflection period' is total for the borrower.

In or out of the EU is going to have no impact on this deal

Mortgage_Moog

Thanks for everyone's help. There isn't much info out there on this, in fact this thread came up first on a Google search just 7 minutes after I started it so I hope this helps others that come across this.

nosebag

My lender Halifax told me I could waive that 10-day reflection period by calling them.