Remortgaged using a broker and ended up with a shortfall

ajp1309

Hi,

I just wondered if anyone one had used a broker and ended up with a slight shortfall when remortgaging? Is this a normal practise?

It was a few hundred but we were not expecting this and was never made aware this could happen.

I did question the broker when applying that they were basing the loan amount on a current statement and what would happen if it changed and was aassured everything would ok.

I’m slightly suprised as we had to pay the broker for his services and then ended up with a shortfall. Luckily we did have cash back with the mortgage which we had hoped to use to cover the brokers fee however this ended up covering the shortfall luckily we had it.

Any advice appreciated. As I wouldn’t want to end up in the same situation again.

Thrugelmir

How did you decide on the amount you wished to remortgage for?

ajp1309

The broker asked for a statement from my mortgage company. Which was correct at the time it was just annoying as I questioned what would happen if the amount changed.

haras_nosirrah

when in the month did you complete?

The balance is smaller at the beginning on the month than towards the end as interest is added through the month. e.g. if someone has a 70k balance and interest for the month is £500 and repayment is £700

beginning of the month the balance is £70k, at the end of the month the balance is £70,500 and at the beginning of the next month once the next payment has been made the balance is £69,800.

In the above example scenario the broker may have calculated your balance to be 70k but if you completed on the 28th of a month it would be £500 higher than that

Thrugelmir

ajp1309 wrote: »

The broker asked for a statement from my mortgage company. Which was correct at the time it was just annoying as I questioned what would happen if the amount changed.

Was due allowance made for mortgage exit fees?

kingstreet

Did the solicitor supply you or the broker with a copy of the redemption statement on which the settlement of the existing mortgage was based?

All a broker can do at the outset is make a best guess of the amount required. The solicitor gets the actual written requirement.

ajp1309

No exit fees but completion was 3 months after applying. Solicitor was done through the mortgage company.

It was just an unexpected shock. I can see on the final statement how it’s happened as the broker based it on the statement at the time instead of what it would of been on completion however I naively expected everything to go through smoothly. I just would of expected to have been informed along the way not the day it was due to be remortgaged.

I just wondered if this was a normal occurrence.

ajp1309

haras_nosirrah wrote: »

when in the month did you complete?

The balance is smaller at the beginning on the month than towards the end as interest is added through the month. e.g. if someone has a 70k balance and interest for the month is £500 and repayment is £700

beginning of the month the balance is £70k, at the end of the month the balance is £70,500 and at the beginning of the next month once the next payment has been made the balance is £69,800.

In the above example scenario the broker may have calculated your balance to be 70k but if you completed on the 28th of a month it would be £500 higher than that

Yes this is basically what happened. Just was unexpected.

kingstreet

When did you make your first payment on your new mortgage relative to the last payment on your previous mortgage?

... and that redemption statement thing?

ajp1309

I don’t rember seeing a redemption statement. Mortgage was based on the statement I had at the time.

I did see a statement in the final paper work provided after completion which showed we owed a higher amount.

I have received a letter today from our old mortgage company saying we are due some money back due to how our payments were made which is a bonus as not as out of pocket as expected.
New mortgage payments started the following month.

I’m not overly worried now as we manage to sort it it’s jut made me very wary for next time as I would of expected all the potential issues to be made aware to me from the outset not a surprise lol.

kingstreet

The solicitor handling the transaction will be the one party with access to the up-to-date redemption figure. If they don't alert the applicant nor the broker there is a shortfall, this can happen.