Mortgage advisor messed up.

Firsttimebuyer0609

Hi guys,
After a bit of advice. So we got quotes for both a 15% LTV product and a 20% LTV product through our mortgage advisor. We agreed to go for the 15% as there was no real benefits from the 20% product.

The issue has come from our Broker has applied for the wrong product and the lender is unwilling to change as in the 6 weeks the application has taken the rates have gone through the roof.
We have the money to up the deposit so it doesn’t fall through but wanting to know what our options are. This is over a £15000 mistake as applying for a new mortgage isn’t really a option as rates have jumped up substantially.

As it doesn’t really seem right that due to their error we will be out of pocket £15000 when that was money we had put aside for renovations on our first home.

london21

Firsttimebuyer0609 said:

Hi guys,
After a bit of advice. So we got quotes for both a 15% LTV product and a 20% LTV product through our mortgage advisor. We agreed to go for the 15% as there was no real benefits from the 20% product.

The issue has come from our Broker has applied for the wrong product and the lender is unwilling to change as in the 6 weeks the application has taken the rates have gone through the roof.
We have the money to up the deposit so it doesn’t fall through but wanting to know what our options are. This is over a £15000 mistake as applying for a new mortgage isn’t really a option as rates have jumped up substantially.

As it doesn’t really seem right that due to their error we will be out of pocket £15000 when that was money we had put aside for renovations on our first home.

What was the mistake? Have they applied for the 20% LTV instead of the 15%?

When did you find out about the mistake? 

silvercar

If this is a mistake then the obligation is on the broker to put you back in the situation you would have been in had they applied for the correct product.

two ways of doing this that I can think of:

1. Broker finds a mortgage at 15% deposit (I assume you mean the deposit amount rather than LTV) and pays you the difference in mortgage payments between the old rate and new rate for the length of the deal.

2, you keep to the 20% product and the broker pays you the interest cost of borrowing 15k on a secured home loan that you could take out after the mortgage completes, less the difference in repayments you now have.

Obviously, you haven’t lost 15k as your mortgage total will be 15k less, you’ve lost the use of the 15k in the short term. When you come to get a new deal in 2/3/5 years you can correct the mistake.

ACG

The broker has to put you in the position you would have been had the mistake not happened. 

That can mean a multitude of things, but I think the easiest is to apply for an 85% mortgage and whatever the difference is, the broker pays you. Lets assume the difference is £100 per month for 5 years, they may give you £100 a month for 5 years or they might offer you a lower figure as a lump sum. 

There are alternatives though, they may loan you the 5% for the 5 years in order for you to keep the lower rate and then take it back in 5 years time. You still end up in a better position (as you benefit from the 80% mortgage) and the broker is no worse off in the long run. 

K_S

@Firsttimebuyer0609 6 weeks sounds like NatWest? Sorry to hear about the error. These things do happen unfortunately, especially in the past few months when the markets and lenders have been manic to say the least.

Assuming that the fault lies with the broker, they should do their best to put you back in the position you would have been if the the error was not made. As silvercar and ACG say above, there are a lot of different ways to go about it. Plus, if there's a while yet to go for completion, rates (which are already trending downwards slowly) might yet come down to the pre mini-budget levels or thereabouts so perhaps the broker can yet get you an 85% LTV deal which isn't too far off the current deal.

Hopefully you and the broker can reach an agreement that you are happy with. Good luck and hope it gets sorted out!

Firsttimebuyer0609 said:

Hi guys,
After a bit of advice. So we got quotes for both a 15% LTV product and a 20% LTV product through our mortgage advisor. We agreed to go for the 15% as there was no real benefits from the 20% product.

The issue has come from our Broker has applied for the wrong product and the lender is unwilling to change as in the 6 weeks the application has taken the rates have gone through the roof.
We have the money to up the deposit so it doesn’t fall through but wanting to know what our options are. This is over a £15000 mistake as applying for a new mortgage isn’t really a option as rates have jumped up substantially.

As it doesn’t really seem right that due to their error we will be out of pocket £15000 when that was money we had put aside for renovations on our first home.

kingstreet

Just to clarify, the broker applied for an 80% mortgage not an 85% mortgage?

caprikid1

I guess a lot of this will come down to what both parties can prove. 

We wanted the 15% product is fine but can you prove it ? Did they send you the documentation to approve and sign ? Did you check it ?

dunstonh

caprikid1 said:

I guess a lot of this will come down to what both parties can prove. 

We wanted the 15% product is fine but can you prove it ? Did they send you the documentation to approve and sign ? Did you check it ?

Mortgage closure letters should be issued application and the key features illustration as well.   So, the documents showing what product was recommended should be available.