Mortgage broker booked the wrong mortgage the lender.

GrumpyMonkey1959

Hello,

I would be most interested in any comments or suggestions on my situation.

My interest only mortgage is coming to an end next May. My current lender is not interested in any other options and just wants the mortgage redeemed as they don't do interest only anymore and they have the most expensive SVR. 

I contacted a broker I have used before. They told me there was only one lender that would touch me as I wanted a 10 yr interest only mortgage fixed for 2 yrs, but it would take me past state retirement age, but I do pass on income ratio and affordability based on ONS criteria. A couple of weeks later, they tell me the lender has said no,  Based on the garbage you "can't afford to pay less". The lender apparently uses their own criteria based on bank statements. The monthly repayment on the new mortgage was about £200 pcm. My current account is in surplus by about £5000 pounds a month, but neither the lender nor the broker will say what the reason was they rejected the mortgage. What I was told was the underwriter counted my domestic mortgage twice, both as a domestic and a BTL. So what other mistakes did they make?

As a result the original product was withdrawn and the new one offered had a higher interest rate with a 5yr fix with a fee of £999. The broker had applied for the wrong mortgage; Which they have admitted it was their fault.

They are now working out how much they have to pay me to compensate.

A further problem is the new offer is only valid for three months, which may make it difficult to complete before the new mortgage expires. 

So at the moment I'm sort of in limbo.


  

ACG

A 5 year fixed rate may be assessed for affordability differently to a 2-3 year fixed rate. So that may be why you pass the 5 year and not the 2 year fix. If you have gone to a lender who uses actual expenditure rather than ONS I am guessing a little building society, ultimately the broker should have known before applying as they should have gone through your bank statements line by line. So they could have avoided applying for the wrong product, but if you never passed affordability anyway, I do not see the issue there? 

The mortgage offer is valid for 3 months, that is not how long it takes to complete. That is just in 3 months time the offer could be pulled. You can complete before the 3 months is up - assuming solicitors do their bit in time.

I cant work out if you have not quite got the situation correct or if there are bits missing or incorrect terminology as some of what you said does not really make sense (I dont mean that to sound harsh, parts just sound a bit wrong). 

JMA74

you have £5000 of extra surplus income each month and you still failed the affordability assessment for a £200 a month mortgage payment?

Can you not do a repayment mortgage rather than interest only to open you to more lenders?  Or a retirement interest only otherwise? 

MWT

JMA74 said:

you have £5000 of extra surplus income each month and you still failed the affordability assessment for a £200 a month mortgage payment?

I read that as there is a balance of £5,000 left in the account each month, so difficult to interpret anything about income from that... ?

GrumpyMonkey1959

ACG, JMA74.

ACG:
I didn't want a 5yr fix. The broker fully understood I wanted 2yrs as I am selling one of my BTL properties and couldn't guarantee how long that would take to complete the sale. I was looking for a new mortgage as a safety net.

What sounds wrong to you? I have re-read what I wrote earlier and it is correct. 

3 months is tight because I don't want to get locked into another mortgage for 5yrs before the broker has sorted out their compensation. 

It is a small BS which allegedly won't deal directly with applicants. 

JMA74:

The only interest only retirement mortgages I saw had very high rates. A repayment mortgage might have been an option as I only need £75K on a £500k property, but rates hadn't sky rocketed then.

I do have a current account surplus of 5K a month, no other loans or rolling credit card debts. I was surprised they said no, but nobody would tell me why.

ACG

What about if the option was a 5 year fixed rate or nothing? What we sometimes find is that people do not fit affordability on 2 year fixed rates and have to opt for a 5 year fix. Thats due to the way stress testing works behind the scenes. Obviously if the broker has just chosen the wrong product they have to find a way to put it right, but if it was down to affordability then you are no worse off as you do not have to complete on the new 5 year deal. 

What do you mean by a surplus of £5k a month? Do you mean you get paid £6k and you spent £1k or do you mean you get paid £1k, spend £1k but have £5k in the bank account? There is a very big difference.