Paid mortgage application and valuation fees but house didn't meet lender's criteria

Doozergirl

We've recently gone through the remortgaging process on an unencumbered self build, which proved to be a bit of a nightmare.   Our broker did lots of due diligence before making a formal application, or so I thought.  We provided all bank statements, credit files as well as a ream of paperwork for the house which included the EPC, designs, building control paperwork, self build warranty etc. so they had everything in hand.  As far as I am concerned, it was always made clear that this was a self build house and that it was built from Structural Insulated Panels - I've always been aware that SIPs might be a barrier for some lenders and I considered it carefully when choosing our build route and would have almost certainly mentioned it to the broker in our very first conversation.

Initially, the broker made an application on our behalf with Precision mortgages.  We paid an application fee of £1000 give or take a few pounds.   Once we had been accepted formally, we then paid another £700 for the valuation, which is where the application ended up failing because the surveyor noted that it was a SIPs house and we were then told by the broker that Precision don't lend on SIPs houses that haven't been built by a major developer.    Our building company has been incorporated for 7 years and builds at a much higher level of quality than anything the likes of Persimmon might chuck up and the finish on the house is immaculate, but there we go.  

I'm smarting here because I've paid £1700, withheld nothing, provided every piece of information possible and yet I'm significantly out of pocket.  I've not seen Precision's leaning criteria and was hoping that the broker would place our business with the right lender and that the lender would also want to know how the house was built before taking our money.   

We have ended up on a far better rate with Barclays, but that whole process took another 4 months and was an ordeal it itself so I didn't want to rock the boat at the time, but I can't help feeling that I'm not to blame for this and so shouldn't be paying for someone else's lack of attention to detail.  Should I just be accepting the fact that someone else has made a mistake here or do I have some recourse?   I don't recall seeing any copy of the application form that was submitted for either mortgage and there's nothing in my correspondence.  

MWT

At first glance it would seem you have grounds for a complaint against your broker if you did in fact declare to them that you had used SIP in the construction, as Precision Mortgages do make it clear in their publicly available online criteria guide, that they only accept MMC from a limited list of builders...

This bit doesn't sound like you are 100% certain that you did tell them though...?

Doozergirl said:

As far as I am concerned, it was always made clear that this was a self build house and that it was built from Structural Insulated Panels - I've always been aware that SIPs might be a barrier for some lenders and I considered it carefully when choosing our build route and would have almost certainly mentioned it to the broker in our very first conversation.

Doozergirl

MWT said:

At first glance it would seem you have grounds for a compliant against your broker if you did in fact declare to them that you had used SIP in the construction, as Precision Mortgages do make it clear in their publicly available online criteria guide, that they only accept MMC from a limited list of builders...

This bit doesn't sound like you are 100% certain that you did tell them though...?

Doozergirl said:

As far as I am concerned, it was always made clear that this was a self build house and that it was built from Structural Insulated Panels - I've always been aware that SIPs might be a barrier for some lenders and I considered it carefully when choosing our build route and would have almost certainly mentioned it to the broker in our very first conversation.

I was referring to the initial conversation - as in the opening lines of our story as it's an integral part of it.  As I said, I'm not naive when it comes to what lenders may or may not like, so the story of being self employed self builders with no existing mortgage and a SIPs house is one that I can appreciate sets a challenge.  

I don't recall ever being asked beyond that what it was made of, they didn't take me through the application step by step, I was just called by a different member of staff with a couple of queries, IIRC.  I was asked about a EWS certificate at one point quite far into the process, which I was miffed about being asked considering it's a bungalow.   I did a bit of ranting about what the house was made of at the time, thinking that it was yet another 'inside leg measurement' type question.  At the end of that conversation I just got the impression that he didn't really understand the current wall cladding situation with flats and that it wasn't a direct request from the lender, but that he was double checking something.   He definitely said something along the lies of 'we don't have those kind of buildings in this part of the world', being where he lives.  

MWT

Lets see if the brokers on here have anything to add...

Also, I would have expected your broker to have had you provide basic details about the property, and that usually includes something about the construction even if it is just a check-box to confirm it is of 'traditional construction', was there nothing like that in your dealing with them?

ACG

I have just checked Precise (I assume you mean precise) criteria and cant see anything that says yes/no to your build type - but that would lead me to go and ask them if they accept it or not. 

Our factfind asks if it is standard construction - if you answer yes, then I would assume brick/stone/tile/slate. If you answer no, I would get more details. 

I do not use Precise often, but the the £999 fee is a product fee. You do not have the product so I would imagine that should be refunded. The £700 valuation fee I agree with you (from what you have said). If they have not asked the right questions - thats not your fault. If they have asked the right questions but not checked - that is also not your fault. 

I think you need to speak to the broker. Explain what you have here and see what they say. 
Its interesting as I can think of 2 examples where I have made mistakes, I just called the customer up explained I had made a mistake and reassured them I would cover the costs. Assuming what you have said is correct it is almost like they hare happy for you to foot the bill for what appears to be their mistake. 

I know we have had some debates over the years and you do not come across as someone to let things go lightly. I dont think you should start with this. 

Doozergirl

MWT said:

Lets see if the brokers on here have anything to add...

Also, I would have expected your broker to have had you provide basic details about the property, and that usually includes something about the construction even if it is just a check-box to confirm it is of 'traditional construction', was there nothing like that in your dealing with them?

I don't remember that exact question but we would absolutely have told them the correct answer.    There was no form to fill out with the basics- I have all the emails and a Google Folder full of documents I collated.  There is nothing I have from them that describes construction at all.  

Without doubt they knew it was a self build and the issue isn't exactly SIPs, it's that it is a SIPs self build. They knew that we were raising money to pay the invoices to the building company and our accountant provided a letter confirming the invoices due.  

The building warranty was provided before valuation and that is in a small company name.  

MWT

ACG said:

I have just checked Precise (I assume you mean precise) criteria and cant see anything that says yes/no to your build type - but that would lead me to go and ask them if they accept it or not.

Wouldn't this cover it?...

https://www.precisemortgages.co.uk/Criteria/Glossary#ResidentialM

SIP is usually considered to be one of the modern methods of construction I believe..?

ACG

I dont know enough about MMC. Looking at that I would say SIP is not on the list, but I would pick up the phone and ask personally. But that is primarily due to my lack of knowledge I would not be confident I had it right. 

K_S

@doozergirl Given that it was known to be a self-build, based on the limited info in your post, it sounds like the broker did not due the necessary due-diligence on the construction-type before placing the case.

If you're £1,700 out of pocket because of the Precise decline, it's definitely worth speaking to the firm first and then considering a complaint if they're not taking it seriously.

Doozergirl

Thank you for the advice.  

Do I email 'informally' to start, with a brief explanation, asking for a refund and asking for a copy of their complaints procedure within that email?  

I've been looking over all the paperwork that I have and there's no fact find paperwork sent to me either to fill out or to confirm to see if they have the construction method right within that.   SIPs is referred to as a MMC in the building industry and there's no way I'd ever refer to the house as traditional build. 

I've got nothing in writing regarding the product fee, there is only written mention that the valuation fee was refundable upon completion.  I hadn't even considered that the product fee might be refundable if there was no product, even if no mistake had been made.  

ACG

I would not go in asking about the complaints procedure in the first email, but you could do. 

Presumably you have an illustration/kfi/esis document? Section 11 (I think) will confirm who to contact in the event of a complaint. That might be the company directly or it might be a "network", either is fine. But in the first instance I would just go to the broker and just explain how your not happy you are out of pocket due to no fault of your own. 

From what you have said, I would have tried to get the £999 refunded from Precise and then given you the £700 back or if Precise refused to refund the £999 I would have also given you the £999 and then ate noodles for the rest of the month. I think I have had to refund people 2-3 times over the years. I tend to find if you admit fault, apologise and refund they actually stick with you.