Mortgage Broker applied for the wrong mortgage

Lauren5454 · 8 February 2019 at 12:48PM

To give a little context -
I am a first time buyer and my dad is acting as guarantor on my mortgage to increase the amount i can borrow. I made sure i was still exempt from Stamp Duty by asking for a joint mortgage sole proprietor mortgage, my broker even confirmed I was still exempt - but it appears this isn't the case.
I am due to meet with my solicitor in 5 days to sign the paperwork and she has just emailed me to say she's only just seen that my father is on the mortgage and he will have to be accepted as a client. She believes I have to pay higher rate - as my dad already owns properties of his own - I don't want to miss out on my exemption and pay about £5,000 extra in legal fees.
Is there anything I can do being so close to exchanging contracts? I don't want to go through with the sale if i have to pay higher rate, but have already paid for searches and deposits etc

I'm worried that as i agreed to the illustration he sent over, there isn't anything I can do

I've found the whole process of buying a house really confusing and neither my broker or solicitor have been much help, I feel very much out of my depth and now out of money...

kingstreet · 8 February 2019 at 1:40PM

Does your offer mention the JBSP situation?

For example, this is the wording from the offer of our latest JBSP case;-

"This mortgage is offered on the basis there will be joint borrowers on the mortgage, but only a sole proprietor of the property. All borrowers/mortgagors are therefore required to receive independent legal advice (‘ILA’) as to their position in the agreement , as the proposed ownership/interest in the property could expose borrowers/mortgagors to financial risk.

Borrowers/mortgagors may seek ILA from the same legal firm acting on the conveyancing transaction of the property. If they wish to do so, the advice must be received from a separate solicitor that is fully independent of the conveyancing transaction.

The solicitor acting on the conveyancing transaction is permitted to give the ILA to the proposed proprietor. It is the responsibility of solicitor acting in the conveyancing transaction to ensure that all aspects of this condition have been met in full and that XXX Bank is legally protected."

kingstreet · 8 February 2019 at 1:41PM

Did the selling agent's memorandum of sale show you as sole purchaser as that is the basis on which the vendor's solicitor should draw up the draft contract?

I can't understand why this is only becoming apparent to your solicitor now. When did you make them aware?

ACG · 8 February 2019 at 6:17PM

Your dad would be on the mortgage of a joint borrower, sole proprietor mortgage. That is why it says "joint borrower".

The bit that you need to check is the sole proprietor. Does the lender you applied to offer this facility? If so, it is usually on all of their products not just one. I would expect that if you are with a lender who offers it, it is easy enough to sort out. If not, then a new lender needs to be found.

Assuming the lender does it, this is just your solicitor being numb.
Assuming the lender does not do it, your broker needs to find a new lender.

Worse case scenario, your searches and things will still be valid. The broker messed up so they will need to pay for a new valuation and the only thing you will lose is a week or 2.

Thrugelmir · 8 February 2019 at 6:56PM

Lauren5454 wrote: »

I am a first time buyer and my dad is acting as guarantor on my mortgage to increase the amount i can borrow. I made sure i was still exempt from Stamp Duty by asking for a joint mortgage sole proprietor mortgage, my broker even confirmed I was still exempt - but it appears this isn't the case.

If your father is named on the mortgage application then he is simply not a guarantor. Was the lender aware of your intentions? Who is your mortgage lender?

Appears to be some miscommunication here between all parties concerned with regards to terminology.

kingstreet · 8 February 2019 at 7:09PM

Thrugelmir wrote: »

If your father is named on the mortgage application then he is simply not a guarantor

That's exactly what a guarantor is.

A mortgage applicant who will not be a purchaser/proprietor of the property.

SDLT_Geek · 9 February 2019 at 7:50AM

The SDLT position on this type of structure is considered here: https://www.taxadvisermagazine.com/article/additional-properties

The key point is to establish that your father is to have no underlying interest in your property. If his role is just to assume liability on the mortgage without having any share in your property, then he is not a "purchaser" for SDLT. Whether the 3% surcharge is due will then depend on your circumstances. It would not matter that your father has another property.

However, any share your father takes in your property, however small, would mean the whole price is liable to the extra 3%.

Thrugelmir · 9 February 2019 at 11:29AM

kingstreet wrote: »

That's exactly what a guarantor is.

A guarantor is in place if the primary applicant defaults and is unable to meet their obligations in full. The father would be joint and severally liable if party to the mortgage. There's a difference. The father is also being used to increase the level of borrowing not just be a guarantor. .

Lauren5454 · 11 February 2019 at 5:01PM

I've gone back and read everything through - there is no mention of my father on the MOS, however my initial email where I asked for a quote from the solicitor mentioned that I have bought a house as a first time buyer and my dad is acting as guarantor, she knew from the very beginning. I also sent my solicitor a copy of the offer as soon it came through, which my fathers name is on - she had this for about 3 weeks before realising he needed to be added as a client.
I have contacted my broker and he has said that the mortgage is definitely a joint ownership, sole proprietor mortgage - the paperwork from the lender (nationwide) just isn't clear in stating that. There was back and forth between both the broker and solicitor on who was in the wrong and if the mortgage needed to be reissued - I believe the majority of this uncertainty has come from that they don't get on and I haven't heard further from either of them despite chasing, I assume they've sorted things?

kingstreet · 11 February 2019 at 5:09PM

...the mortgage is definitely a joint ownership, sole proprietor mortgage...

Do you mean 'joint borrower, sole proprietor?'

AFAIK Nationwide doesn't offer them at this time. I can find nothing in the criteria and there is definitely no way of entering that in the application system.

Verix · 11 February 2019 at 5:59PM

I'm with Kingstreet on this. I've done a few mortgages like this and i've never heard of Nationwide allowing them. I've just spoken to my contact at Nationwide who confirms they don't offer these kinds of deals. I would want to double check with the broker that they are the right lender.