Lender Mistake

gfunk01

Hi All,

I wonder if anybody can help at all? My girlfriend and I have applied for our first mortgage and we've gone through the whole process and are now reaching the very end but there is a major problem. Firstly, the lender said they would give us a mortgage with a slightly less than 10% deposit, because we'd luckily applied just before the covid related rule changes. The lender then did a valuation and under valued the house by 10k, which we strongly disagreed with (but that's another story). Therefore we basically had to find an extra 2k (by their calculations) and in my naivety I didn't work it out and played along. We got the extra money, then the underwriters wanted bank statements etc which we provided, and they led us to believe everything was a done deal. Now, the mortgage consultant, has called, without admitting her mistake, and is now saying that the 91% LTV should have been another 8k less than SHE originally said. So instead of us having to find 2k, it should have been 10k. As you can imagine, this is a massive difficulty when we don't have that kind of cash lying around. We just wondered if there is any advice to offer on this? Do we have to play along or can something be done about THEIR mistake?

davidmcn

Well, they're not going to lend more than they want to, so what outcome are you looking for? You can make a complaint if you want but at most that will just get you a token payment to say sorry.

silvercar

Mortgage consultant that works for the lender? Or an independent mortgage broker?

gfunk01

silvercar said:

Mortgage consultant that works for the lender? Or an independent mortgage broker?

They work for the lender directly (probably the biggest lender in the country)

Thrugelmir

Lenders don't perform valuations. Third party surveyors do. 

I'm confused if the property has been down valued and the price reduced. Then the mortgage required likewise reduces. Nor does it require you to find anymore money.  What's missing? 

gfunk01

Thrugelmir said:

Lenders don't perform valuations. Third party surveyors do. 

I'm confused if the property has been down valued and the price reduced. Then the mortgage required likewise reduces. Nor does it require you to find anymore money.  What's missing? 

Yes they probably used a third party, that's not the issue. They would only lend based on their valuation, but the house is still being sold at the original price so we are expected to find the difference. Eg. If a house is being sold at 100k, the agreement with the lender is with a 10% deposit so lending 90k, but the valuation comes in saying the house is only worth 90k, they will then only lend 90% so 81k. You therefore have to ask for the price to be reduced by the seller or find the extra 9k. My point is they made a mistake by saying the LTV ratio came in at 2k lower than the original agreement, so we went to get 2k but then they changed it to 10k so now we're short by another 8k

amnblog

Be careful before looking to buy a property in the current market for £10,000 more than the valuer believes it to be worth.
If you make the decision to do that, expect to fill the gap with cash as the Lender will not contribute to paying over the odds.
Regardless of what was said, the mortgage funds won't come without the deposit.
Get the price reduced, or walk away.

[Deleted User]

Best case I see maybe a £50 apology payment from a complaint.  They aren't going to stick to the original figure given in error.

If you have a mortgage approved at 91% (you said just under 10% deposit) that means you can go up to 95% without changing the product (subject to affordability) so maybe that gives a bit of wiggle room?

So if your property at 100k with a 9% deposit required £9000 but was down valued to £90,000 then they will lend up to 95% of this price £85,500. So the deposit goes to £14,500

Not a lot you can do.  The error in the figures hasn't changed anything. You would still have had to find the full amount but would have been less faff.  Like I said, an inconvenience payment is best you could expect if you complained