Completion how do i deal with this and who is in the wrong

Jammie01

First time on the forum so be nice!
We are due to complete on a new build this Friday, yesterday it became clear via the conveyancing solicitor and financial advisor (FA) that the funding is not correct and is going at best delay the purchase at worse we will not complete. In essence we are getting a buy to let on our current house and have a new mortgage on the new build, some equity has been 'novated to the new property. The FA advised us that we are able to do this (his recommendation) and demonstrated this in writing by novating some equity to the new property from the buy to let and covering this with a buy to let mortgage. Yesterday we discovered that we are short of around £100k on the overall fund, this was not picked up either by the solicitor or financial advisor prior to exchange which has thrown this move in to complete disarray and is causing lot of heartache. The FA is very sorry and is now working on anew deal that means our mortgage costs will go up by £700 provided we sign up to a 5year fixed rate interest only mortgage and have also offered to pay any fees based on us signing a document that this is a full and final amount we can pursue.... what i am asking is, that as a complete novice in this situation, who is in the wrong, how if at all can I get some advice and help for both the solicitors and the FA around their liabilities, i could at the end of this loose a lifetime of savings?

74jax

Where did you think this 100k was coming from?

If equity in your current house, then did you not wonder where the 'invisible' £100k was? 

user1977

It's not clear from your post why there's a £100k discrepancy - can you explain? Were the FA's figures incorrect? Has the solicitor miscalculated the sum required to complete the purchase? Is it the same solicitor dealing with the remortgage and the purchase?

Why would you be "losing a lifetime of savings"?

UnderOffer

100k short is a huge amount - what we’re the figures presented to you? 

Jammie01

The FA’s figures were incorrect, they have admitted to that. But the solicitors should have checked these?

GDB2222

Jammie01 said:

First time on the forum so be nice!
We are due to complete on a new build this Friday, yesterday it became clear via the conveyancing solicitor and financial advisor (FA) that the funding is not correct and is going at best delay the purchase at worse we will not complete. In essence we are getting a buy to let on our current house and have a new mortgage on the new build, some equity has been 'novated to the new property. The FA advised us that we are able to do this (his recommendation) and demonstrated this in writing by novating some equity to the new property from the buy to let and covering this with a buy to let mortgage. Yesterday we discovered that we are short of around £100k on the overall fund, this was not picked up either by the solicitor or financial advisor prior to exchange which has thrown this move in to complete disarray and is causing lot of heartache. The FA is very sorry and is now working on anew deal that means our mortgage costs will go up by £700 provided we sign up to a 5year fixed rate interest only mortgage and have also offered to pay any fees based on us signing a document that this is a full and final amount we can pursue.... what i am asking is, that as a complete novice in this situation, who is in the wrong, how if at all can I get some advice and help for both the solicitors and the FA around their liabilities, i could at the end of this loose a lifetime of savings?

It all seems rather strange to me, as I would have been on top of all the figures. However, if you were not, and you relied on your IFA to arrange all this, you probably can expect his insurers to sort you out. Eventually. 

Liability is not clear, and it depends on precisely what was said/written, by whom, and when. 

Even if liable, the IFA's insurers won't necessarily pick up the tab for the extra £100k, but they should put you in the same position as if you had been correctly advised in the first place. 

In the meantime, you need to mitigate your losses, as best you can. That may mean walking away from the purchase altogether, and forfeiting your deposit.

Or, it may mean that you take out a larger mortgage than you expected to. Crucially, if that's the deal you would have signed up to if properly advised, you can't expect any significant compensation.

It would be reasonable to take advice now from another IFA. That will cost you a fee, but it's a reasonable expense to incur and expect your original IFA to pay for. 

As to the solicitor, it's impossible to say whether they were negligent. They normally enquire about your funding before you exchange contracts, but you have not told us what was said.

user1977

Jammie01 said:

The FA’s figures were incorrect, they have admitted to that. But the solicitors should have checked these?

It's still not clear in what way they were incorrect.

GDB2222

user1977 said:

Jammie01 said:

The FA’s figures were incorrect, they have admitted to that. But the solicitors should have checked these?

It's still not clear in what way they were incorrect.

Maybe, they didn't add up to the total shown? Hopefully, Jammie will enlighten us. 

canaldumidi

Liability will be difficult to apportion without a detailed understanding of the full figures, who calculated them, how they were presented to you, whether you agreed them, and other history, circumstances and evidence.

who is in the wrong, how if at all can I get some advice and help for both the solicitors and the FA around their liabilities, i could at the end of this loose a lifetime of savings?

1) Not nearly enough information. 2) consult and pay unconnected solicitor and FA to review the facts and write a report. 3) perhaps, though it depends what your total lifetime savings are, what action you now take, and what the outcome of any claim is.

I don't wish to sound unsympathetic, but as GDB222 says, it seems strange you did not notice a £100K hole in your finances. £100, yes, but £100K? This may turn out to be a relevant factor in any claim or apportionment of liability.....

NSG666

TJammie01 said:

The FA’s figures were incorrect, they have admitted to that. But the solicitors should have checked these?

Ok but what effect is this going to have on you financially? The interest payments would have been to pay if calculated correctly in the first place and the FA is going to pay the fees associated with applying for the additional £100k?

Jammie01

The way that the numbers were presented to us made sense, we novated money from property A to property B so we could get a residential mortgage on property B and Property A would have a larger BTL mortgage to cover the sum moved. However clearly we were mislead by the IFA, he is the professional!  To be clear we want to move to the new house and currently the IFA is working on a solution, we have till the 20th Oct to get this done so I am sure you appreciate that time is very short to get new mortgages arranged and meet completion. the thought of having to claim for lost money is the last thing we want.