Can Additional Borrowing be Recalled From Bank Account?

PiesRus · 19 June 2017 at 6:38PM

Good Evening, long time lurker, first time poster.

To keep things quite simple, I need some advice on an additional borrowing situation where I find myself torn on what to do.

I recently applied for additional borrowing for an extension from my current mortgage provider. All credit and affordability checks went through no problem. The funds required were reliant on a satisfactory valuation. To get the money needed I hoped the value of the house had gone up by 10k in the last 5 years and I was taking the LTV from 85% to 90%.

Valuation came back at the exact same price from 5 years ago and the 5% LTV increase wouldn't give me enough funds to complete the extension. I started to look into 95% mortgages to try and see if this was all still feasible when I get an email from the lender saying the full additional borrowing had been approved. All I needed to do was sign the mortgage offer (which I've done), email it back and the funds will be in my account within a few days. Attached to the key facts document was the valuation that confirmed the house value as the same as 5 years ago i.e. not enough to warrant the additional borrowing.

I'm thinking they've made a mistake but am wondering if I keep stum and they transfer the funds, could they ask for it back if they figure this out at some point?

I understand this could potentially leave me in negative equity but the house will certainly be worth more once the extension is complete so should offset this. What should I do?

Thanks in advance.

glosoli · 19 June 2017 at 6:46PM

I am surprised they were able to reillustrate, without the application being an automatic decline if it breached their maximum loan to value criteria. Has the product changed? I wonder if it's a 95% product they have offered you?

No they are not able to re-call the funds, by issuing you with an offer document, and if this was done in error, then they are in a fait accompli situation.

PiesRus · 19 June 2017 at 6:59PM

Hi, thanks for your quick reply.

It's definitely still 90% and the interest rates and monthly payments are the same.

I am expecting this to get picked up but I've signed up to the offer now, are they obliged to go through with it even if they find out, i doubt that tbh. All I'm concerned about is them realising and calling in the whole mortgage at a moments notice.

glosoli · 19 June 2017 at 7:10PM

If you received the actual offer document, with the value from five years ago, but based on the higher borrowing amount, and if the loan to value breached the loan to value for that product, then someone somewhere has made a mess of things. Once offered, if the mistake was theirs and not yours, then I don't see how possibly they could retract their offer. It would be logged as a fait accompli on their systems and your application should proceed. These things are rare but they do happen.

For all they know, you could have committed to the work after receiving the offer, leaving you in a precarious situation should they subsequently withdraw it.

PiesRus · 19 June 2017 at 8:27PM

Hi,

Yes that was one of my reasons for posting as I want to instruct the builder to start works.

I shouldn't think it would be a fault at my end, everything I've provided to them has been 100% accurate from my perspective. Even their computer valuation was the same as what I proposed. It was the surveyor's valuation that was significantly less. Am I obliged to let them know that they've got it wrong?

I think I'm still going to wait until the monies are in my account but your answer looks promising.

clairebeth · 19 June 2017 at 8:54PM

It is valued at the same price, but you have more equity now than you did five years ago...was your original mortgage 85% ltv, or were you assuming you would have 85% ltv.if it was valued at £10k more?

PiesRus · 19 June 2017 at 9:09PM

Original mortgage was 90% LTV and has gone down to 85% LTV through 5 years worth of payments. I need the extra 5% LTV of the value I thought it was worth to afford the new extension. 5% of the original value is not enough. Thus the reason why I started to think about going to 95% LTV with the value of the house not changing.

Hope this makes sense.

glosoli · 19 June 2017 at 9:17PM

Just out of curiosity what was the original balance, the balance now, your additional borrowing amount, and the valuation figure?

PiesRus · 19 June 2017 at 9:26PM

I'm unsure about giving that out atm glosoli. Until those funds clear I'm very paranoid about the lender doing a search on my details and revoking the offer.

Not that they monitor these forums for intel.....................

I really do appreciate your advice, so please don't take this the wrong way. Cheers.

Can Additional Borrowing be Recalled From Bank Account?

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