Information on mortgage application

Diver22

Hi everyone. This my first post ever. I have a difficult dilemma about a mortgage offer.

 First some essential background. The marital home which I used to share with my ex wife cannot be sold because it is required as a home for life for one of our children. The  court in our divorce settlement made an order to this effect and also ordered that I would have no ongoing responsibilities for maintenance, upkeep or running costs or any othe financial commitments towards the house.  However I do retain a half share of the property as legal owner. I have received no equity from the house and my ex wife and child continue to live in the property. This was all worked out amicably with the needs of our child the determining factor. The mortgage on the property is fully paid off.

I am currently renting but in the position of now having received an offer of a mortgage for the purchase of a small property of low value using some savings as a deposit that I have saved since the divorce. Because this will be a second property I will own I will be subject to payment of the stamp duty surcharge. 

The mortgage application was made via a broker who completed and submitted the application without my prior sight of the paperwork. The broker was fully appraised by me of my personal situation on several occasions and of the complicating factor of continuing to own a half share of the marital property whilst being unable to live there and unable to realise any equity from its sale. Between the application being submitted and the mortgage offer I asked the broker four times for sight of the paperwork submitted but only received it together with the mortgage offer which was made within a week of the submission. 

On receipt of the mortgage offer I was also provided with the mortgage application declaration of facts completed by the broker. It is inaccurate in two respects: first it states I am a first time buyer, and second that on completion of the purchase I will not have any legal interest in any other property than the one on which this mortgage will be secured. This has raised a major concern that my offer is based on erroneous facts and could be construed as fraudulent. 

I have raised the concern with broker who advises that my situation is impossible to capture on the application forms used by the building society, and that as I am renting currently it is appropriate because of the way the building society assesses applications to state I am a first time buyer because that is effectively what I am. He also says that declaring that I do still own a half share of a property will also unnecessarily complicate matters by leading the society to believe that I am a home owner seeking a mortgage on a second home when effectively I am not. He also says that the offer I have received is not of a product reserved for first time buyers. 

The problem I now have is that I feel very uncomfortable about the mortgage declaration and am uncertain about whether to be guided by the broker. And to be candid this mortgage offer would solve my current precarious living arrangements and would be devastated if it was withdrawn. I should add I am an older borrower and have arrived at the position of a mortgage offer after being misled by another broker about the amount I could borrow, being Gaza pedi on another property, and getting an offer in principle from another building society but for a purchases with a minimum value beyond what I need or could currently raise the deposit for. 

I hope this is clear. I am just looking for thoughts on whether I should just go with the current situation on the basis of the broker has told me, or whether to clarify the details with the building society. It would be helpful if any brokers reading this could advise whether my offer is likely to be withdrawn and the effect of doing so on any other applications. 

Diver22

Neither of those things are the case. The mortgage on the marital property was paid off just under a year ago. I have a perfect credit report.The adviser has not run the scenario past the lender. His reasoning is that that I am not a second home buyer ie I don’t effectively have another home in the background because it doesn’t generate any financial commitments for me which he says is the reason lenders ask the question nor can I live there or sell it. He is saying that declaring it will simply trigger a default response which is impossible to argue against (computer says no!) that says I must have financial commitments which will impact affordability irrespective of the fact I don’t. He is saying. that his is based on his nearly 30 years in the business. 

K_S

@Diver22

FTB status on the mortgage application - Depends on the specific lender. For example, if you haven't had a mortgage for 3 years, you're an FTB for Nationwide.

Background property - Generally speaking, I would expect a background property to be declared on the application if the question is as framed in your post or if it asks a yes/no question about whether the applicant owns any mortgage-free properties. I don't want to categorically state that there is any issue here as I don't know anything about the case, what the broker has done, which lender it is, etc. Perhaps he has run the background property scenario past the lender and they have told him to fill it in this way, which is also a possibility as lenders will have different ways they approach this.

simon_or

Diver22 said:

Neither of those things are the case. The mortgage on the marital property was paid off just under a year ago. I have a perfect credit report.The adviser has not run the scenario past the lender. His reasoning is that that I am not a second home buyer ie I don’t effectively have another home in the background because it doesn’t generate any financial commitments for me which he says is the reason lenders ask the question nor can I live there or sell it. He is saying that declaring it will simply trigger a default response which is impossible to argue against (computer says no!) that says I must have financial commitments which will impact affordability irrespective of the fact I don’t. He is saying. that his is based on his nearly 30 years in the business. 

It sounds to me like your broker has been economical with the truth to get you the loan amount that you need.

On the plus side, as long as you have been upfront with the details, I guess the risk is all his. I bet he gave all this justification on the phone and not on email.

Diver22

Not sure the risk is all his. That might apply if i hadn’t seen the mortgage declaration. This has really screwed things up for me.

tightauldgit

Personally I would not be happy going forward on the basis of that paperwork when it clearly is not accurate. If what the broker says is true then it should be possible to confirm that with the lender. I have never used a broker for mortgages so i don't know exactly where responsibility would sit if the lender had an issue with the mortgage later on but I would rather not risk it. 

At the very least I think you would want a paper trail from the broker where you raise the issue and they put in writing their reasoning. If they aren't prepared to put it in writing to you then I would say that's a red flag. 

Diver22

Update: the broker has now emailed me to say he is contacting the building society to seek clarification about the issues and the way he has approached them. 

I still would appreciate any views and particularly any thoughts that if this is now derailed whether it would prevent further applications with other lenders being pursued.

simon_or

Diver22 said:

Not sure the risk is all his. That might apply if i hadn’t seen the mortgage declaration. This has really screwed things up for me.

That's a good point.

Personally, I don't think it will impact a further application with another bank but I guess that depends on the details.