Mortgage Provider Goes Bust

Generali

DAK what happens if your mortgage lender goes bust between exchange and completion?

Does your money have client money protection or similar (ie is already set aside for you) or are you up a certain creek without an important flat bladed instrument?

Just interested. I am not buying at the mo with or without a mortgage.

Generali

Anyone know?

homer_j_3

I honestly do not know as until earlier this month, it was unheard of lenders going bust and technically they weren't bust, they just couldnt get funding for any new business but thats not really the point we are discussing.

Usually completion and exchange take place the same day so the money will be with your solicitor. This will negate this happening.

If it was to happen, I would check with your solcitor the legalities of it all. You may have to put a claim in with their administraters for your costs, there may be a claim that you can put in with your broker if they recommended you this lender etc.

You should insure yourself for certain things at the exchange stage but lenders going bust is not one. Maybe thats going to be tesco's new venture!

Sorry if that doesnt answer your question but hopefully someone will be able to give you a better response later.

Generali

Thanks homer_j. This is just a matter of interest.

Clearly, if you exchange and complete at the same time this isn't an issue. Often that isn't how it works though. To reduce risk, I'd want to exchange ASAP and then complete when I actually wanted to move. I'd hope that between those dates, client money protection would be applied to the mortgage money.

I've asked the FSA for advice. Let's see what they say.

homer_j_3

in my time working in an estate agents, i would def say that the majority of completions do exchange the same day. A new build may be the exception.

You will have to realise that the other sides dolicitors may not be happy with long delays as much as your solicitors may not.

Could I ask why you are so interested in this particular part of the process, it seems a bit random (but a good question)

payless

??
I would say less than 10% of cases exchange and complete on the same day

homer_j_3

was just my perception of my time there - I am not saying that its the norm everywhere and maybe it was the EA appointed sols that made it happen this way.