Bank did valuation based on value of loan requested, not estimated value?

HWBY

Had a beatdown of a day. 

I received an email from NatWest this afternoon saying "good news, your mortgage application has been approved" - very excited, I told my wife and we hugged, etc. However, upon reading the attached loan offer, the offer was for £231,000 - £49,500 less than the £285,500 we applied for.

The loan offer includes the line:

 An assessment for lending purposes will have been undertaken to provide the property valuation of £280,500.00 assumed in the Mortgage Illustration.

However, in the mortgage illustration we've requested a loan of £285,500 for a house valued at £300,000. This is why I suspect the valuation was done to assess suitable at our requested loan, not provided assumed value.

What's extra confusing is that the loan offered based on this £285,500 valuation is 82% LTV - we applied for 85% LTV and that's what our rate was based on.

We applied for a rate of 5.24% - but this offer is at 5.29%.

Has anyone ever heard of this happening? What could be going on? We received the email late this afternoon, and were on a train, so have only been able to tell our broker about it and nothing else. As you can imagine, this will be a painful weekend!

ACG

If I was to guess, I would say your broker has put in the wrong figures and chosen the wrong product. But that seems a lot to get wrong on the same application. 

It could be that the property was down valued, but then natwest would not normally reduce a loan amount and issue an offer without discussing it with the broker - unless this has changed in the last couple of months.

You need to speak to your broker really as anyone on here (including myself) would be just guessing. 

K_S

@hwby As ACG says, an awful lot has to have happened to get all these issues.

When I submit an application on behalf of a client, it's always for a specific product for which I've shared the illustration with the client. I've never had the lender change the product unilaterally.

If a property is down-valued, again the lender never takes any unilateral decisions. They contact me and ask how the client would like to proceed.

This is purely a guess but this does look like the result of a couple of keying errors by the administrator or case manager that entered the application in the system. With most of the larger volume brokers it's not the broker that keys in an application.

Section 3 of the mortgage illustration that is part of the mortgage offer pdf should have the following 2 lines, what are the numbers on there?

Value of the property assumed to prepare this information sheet: £xxx

Minimum value of the property required to borrow the illustrated amount: £xxx

HWBY

K_S said:

@hwby As ACG says, an awful lot has to have happened to get all these issues.

When I submit an application on behalf of a client, it's always for a specific product for which I've shared the illustration with the client. I've never had the lender change the product unilaterally.

If a property is down-valued, again the lender never takes any unilateral decisions. They contact me and ask how the client would like to proceed.

This is purely a guess but this does look like the result of a couple of keying errors by the administrator or case manager that entered the application in the system. With most of the larger volume brokers it's not the broker that keys in an application.

Section 3 of the mortgage illustration that is part of the mortgage offer pdf should have the following 2 lines, what are the numbers on there?

Value of the property assumed to prepare this information sheet: £xxx

Minimum value of the property required to borrow the illustrated amount: £xxx

Hi K_S,

The figures on the offer are as follows:

Value of the property assumed to prepare this information sheet: £280,500.00

Minimum value of the property required to borrow the illustrated amount: £271,764.71

This differs from the mortgage illustration sent to us by the broker on the date the application was submitted, which is as follows:

Value of the property assumed to prepare this information sheet: £330,000

Minimum value of the property required to borrow the illustrated amount: £330,000

If it is due to someone at the brokerage putting in the wrong figures (we're with L&C), what does that mean for us? Application starts again? Lose the rate? How do we deal with this?

K_S

@hwby Sorry couldn't really say without potentially misleading you as I don't really know anything of the case and what I've said is merely an educated guess.

Your broker will be best placed to discuss next steps or how to salvage the case. It should be fairly straightforward for them to figure out what's happened here. I and a lot of brokers do work on weekends and respond to urgent client queries so it might be worth dropping your broker an email.

HWBY

K_S said:

@hwby Sorry couldn't really say without potentially misleading you as I don't really know anything of the case and what I've said is merely an educated guess.

Your broker will be best placed to discuss next steps or how to salvage the case. It should be fairly straightforward for them to figure out what's happened here. I and a lot of brokers do work on weekends and respond to urgent client queries so it might be worth dropping your broker an email.

No worries, thanks for the responses. We've been emailing our broker, but she just left it at "I've raised this with the bank". I'm just trying to understand and get my head around what this might be. My wife's been in bits today, but I prefer trying to work it all out to distract myself from getting upset!

mi-key

Sounds like either they have mixed up your application with someone elses, or someone has entered the wrong figures at some point. Very strange though!

Polmop

I've had a few issues with L&C.  I've now gone somewhere else 

simon_or

Sounds like a c*ock-up by someone at l&c. On the plus side, you're already at a 5% rate so even if you have to apply with another bank, it shouldn't be too much more expensive.

ACG

If this is a mistake by the broker, they will need to put it right - that means putting their hand in their pocket and paying the difference. If the new rate is a 5 year fixed rate and is costing an extra £10 per month, they will need to pay you £600. 

Speak to L&C, I assume they will be open today? 
See what they say. 

HWBY

Thanks everyone - not got through to our advisor yet but I'm not sure she works over the weekend. I've sent some emails.

This isn't the first issue we've had with L&C. Anyone considering using them - don't!