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Legal matters

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Original poster

Incorrect mortgage advice - set to lose dream house!!!

116 replies

KyotoRose · 01/06/2021 21:20

Our mortgage advisor gave us incorrect advice via emails, and now we're set to lose our dream house!!! Is there anything that can be done?

We have a mortgage in principle (90% mortgage), and were planning on using a credit card to pay for our stamp duty and legal fees (as we did a few years ago when we bought a property), but recently found out on the internet that since 2018 this hasn't been allowed. Our mortgage advisor hadn't advised us of this.

I asked the mortgage advisor via email if the stamp duty could be taken from the amount we're borrowing and he said it wouldn't be possible. He wrote (via his work email) that he could change our mortgage to a 95% mortgage, and this would mean that we would then have enough of our own funds for the deposit, stamp duty and legal fees. We were delighted.

However when we tried to book a mortgage appointment today to arrange our mortgage, the advisor we spoke to told us that we couldn't switch to a 95% mortgage, as the amount we would be allowed to borrow would be reduced by 30,000 GBP, meaning we would have not nearly enough money to put toward the house. I told her about the advice we had received, and forwarded her the email. She apparently showed this to her manager, and all that happened is we were offered a quick verbal apology, and told it was 'human error.'

We do not have funds to cover the cost of the stamp duty and legal fees, and cannot save these in time either (the vendors and us were aiming for a completion date in September). We do not have any family or friends who can gift or loan us the money either.

Are the emails we received form the mortgage advisor legally binding? If so, or if not, what can be done?

Surely we don't have to lose out on this house due to the incompetence of the mortgage advisor? In addition, we have already instructed Solicitors to carry out the conveyancing.

Please help. Thank you.

OP posts:

MathsFiend · 01/06/2021 23:06

You haven’t really given us all of the details. However, it sounds as though in principle a 95% mortgage might have worked for you, but when they looked at the affordability assessment, you weren’t able to increase your monthly repayments. Given that the 95% mortgage would have been at a higher interest rate, this effectively meant your borrowing capacity reduced.

If this is the case, and given you planned to pay it by credit card, it does sound as though you are stretching your affordability with this house.

Southwestrunningmum · 01/06/2021 23:07

Not sure if still there OP but agree with a Po around trying Handelsbanken if you have a reasonable size income, they are much more flexible than mainstream leaders.

They will challenge in affordablility etc though

EmmaC78 · 01/06/2021 23:08

@Horehound

Do you have family you could borrow 8k from?

The OP said in her first post that they didn't.

Horehound · 01/06/2021 23:12

Ah I dunno how I missed that
:/

Ok yep they just can't afford it.

Bells3032 · 01/06/2021 23:12

Those saying to reduce the house price should bear in mind that the op seems to be at the top of her loan to value ratio (ltv) which is based on the purchase price not the agreed price. If they reduce the house price by 10k then the bank will only lend up to 90% of the new agreed price so will reduce their offer by 9k leaving the op with only 1k. So unless she gets 80k off she won't end up with the 8k she needs

Joeblack066 · 01/06/2021 23:16

@Lavender201

I don’t really see how the mortgage advisor has caused you to lose the house though. The fact you can’t afford it has caused you to lose the house.

He caused you to get your hopes up, and offer on the house when you weren’t in the financial position to. Which is very disappointing, but not worthy of legal action.

I totally agree with this.

Flowers500 · 01/06/2021 23:27

The thing with mortgage offers is they’re never final until they’re final anyway, and you always have to allow wiggle room. It’s not weird to find your offer lowered a little bit during the process, if you’re literally at breaking point then it’s not affordable to you.

If you’re determined to make it work, can you up your saving for the next few months and look to sell some stuff? At your incomes there must be another 4K in savings possible, and either electronics/Jewelery/furniture that could make up the difference?

Flowers500 · 01/06/2021 23:28

The mortgage broker is only really responsible for telling you how much you can borrow, the rest is up to you. Essentially you didn’t full research the other costs of a purchase as well as the costs of a move

Cakeofdoom · 01/06/2021 23:31

I hope you find a solution but you appear have affordability issues if you have no cash buffer and are considering credit cards to fund the stamp duty. This is financially a very risky situation and one I would be terrified of. Are you living from one month's salary to the next ? It seems extremely precarious. Are there not cheaper houses you could buy that wont force you into short term borrowing to pay fees ?

ChampagneCommunist · 01/06/2021 23:35

@KyotoRose

When we bought our previous property, we put 15,000 GBP on a credit card for the stamp duty and legal fees. No one told us we couldn't afford the property (as nearly everyone on here has said).

It was perfectly legal back then to put all of these costs on a credit card.

No, it wasn't. But there weren't the same rules in place, so a blind eye was turned.

You can't create additional debt to buy a house on top of that debt/expenses that you have already declared

Bumzoo · 01/06/2021 23:42

@Lavender201

I don’t really see how the mortgage advisor has caused you to lose the house though. The fact you can’t afford it has caused you to lose the house.

He caused you to get your hopes up, and offer on the house when you weren’t in the financial position to. Which is very disappointing, but not worthy of legal action.

This is very true

SingtotheCrowd · 01/06/2021 23:43

@cancancan

If it's just £8k and if you are quite far into the process I'd been inclined to reduce your offer on the house by £8k.... you never know they might take it rather then start all over agin with viewings etc!

This would only give them £800 hard cash though.

SingtotheCrowd · 01/06/2021 23:50

@Bluntness100

A £460k house would attract £8k sdlt. A £452k house would attract £7,600 sdlt so this is not a solution

Well no. Becayse she has 460 available . So she would have 7600 available to pay rhe stamp duty.

Nope @Bluntness100.

She has £46k cash as it’s a 90% deposit. She doesn’t have £460k available.

Bumzoo · 01/06/2021 23:50

Honestly the best thing to do would be look for a cheaper house. £8000 is a lot of money if you've not got it.

Curious2021 · 01/06/2021 23:52

This thread makes for quite a scary read! Many people who don’t understand how mortgages work.

I agree OP can’t afford the house - when you’re buying a house you need to think of the whole cost including the stamp duty and remove that amount from your deposit/equity before you make your offer. You don’t just think ‘oh I’ll worry about that later’ (and stick it on a credit card).

Unfortunately at the moment with prices the way they are so many people are having to plough all of their savings/equity into their offer it’s meaning more people need the 90% mortgages they hadn’t planned to need and leaving them short of savings.

honeygirlz · 01/06/2021 23:53

@Flowers500

They agreed to purchase based on the information given to them by the mortgage broker that they could have a 95% mortgage.

Homehaircuts · 01/06/2021 23:56

Crazy amount to put on a credit card on top of 90% mortgage

ChazsBrilliantAttitude · 02/06/2021 00:18

If you have credit cards that have low usage you could put your living expenses on them and save the cash you would normally spend towards the SDLT bill. However, that does potentially put you at affordability risk if they do another credit check.

MagentaDragon · 02/06/2021 00:21

This sounds like you're stretching your budget too far to be secure really, if the budget is so very tight.

But if you want to proceed and are sure it is affordable you can take out a personal loan for the stamp duty/ legal fees so that you have the cash in your account to pay them? Not ideal in term of overall cost but if you're determined to stretch your budget to buy this house it may be the only viable way.

Be very careful to make sure you can genuinely afford this purchase though and live within your means, obviously.

HmmmmmmInteresting · 02/06/2021 00:24

@MagentaDragon

This sounds like you're stretching your budget too far to be secure really, if the budget is so very tight.

Be very careful to make sure you can genuinely afford this purchase though and live within your means, obviously.

Surely you can't take out a loan during a mortgage application?

RedToothBrush · 02/06/2021 00:26

@KyotoRose

When we bought our previous property, we put 15,000 GBP on a credit card for the stamp duty and legal fees. No one told us we couldn't afford the property (as nearly everyone on here has said).

It was perfectly legal back then to put all of these costs on a credit card.

No one told all those people who had northern rock mortgages either...

...the assumption was always that 'well the bank wouldn't lend it to me if I couldn't afford it'.

Then things went tits up. And it was clearly demonstrated in the hardest of ways that many of those people really couldn't afford the mortgage they had.

Learn the lesson here. You can't afford it and you are being really dumb in even thinking you could on credit cards. Even if it was legal back then, it was stupid and bloody reckless.

Why do you think they made it illegal? There may be a reason. Could it be to protect people purchasing houses they can't afford and potentially putting themselves and the entire financial sector at risk?

Honestly when I read a comment to the effect of 'well i wouldn't be lent it, if I couldn't afford it' I do feel like screaming and making it complusory not to leave school until people understand financial planning, compound interest and what a saving account is (and how to open one).

People make a fortune off the back of all the idiots who were lent money they can't afford.

Take some fucking responsibility and wise up to it.

MagentaDragon · 02/06/2021 00:26

@motogogo

The reason you can't put stamp duty on a credit card is if you are already mortgaging to 90% and cannot borrow more on your mortgage you don't meet the affordability criteria. £8k is a lot of money to finance on credit card

Not really. It's possible to borrow many times that on a credit card interest free. It depends on your credit worthiness. But 0% credit cards obviously can be a far cheaper option than a personal loan that is interest bearing.

MagentaDragon · 02/06/2021 00:29

@honeygirlz

I'm going to ask the obvious here sorry- does the stamp duty actually apply to you given the freeze?

The OP said she was hoping to complete in Sept so it won't apply unless it's extended (again).

SingtotheCrowd · 02/06/2021 00:30

@RedToothBrush HMRC stopped letting people put stamp duty on credit cards due to the high fees that HMRC incurred as a result.

There are a lot of posters on here looking down on the OP from their position as secure homeowners, I bet.

The 2018 change should not have come as a surprise to the OP, but that’s not to say that for some people who are good with credit, putting stamp duty on a credit card used to be a sensible decision.

RedToothBrush · 02/06/2021 00:37

I don’t really see how the mortgage advisor has caused you to lose the house though. The fact you can’t afford it has caused you to lose the house.

He caused you to get your hopes up, and offer on the house when you weren’t in the financial position to. Which is very disappointing, but not worthy of legal action.

This with bells on. You have not entered into a legal contract with the mortgage advisor in any way. You've just got advice on what you can afford in % terms and this has been readvised after further information has been given. Banks change the mortgage t&cs they have on offer all the time. In theory there may have been a deal that you could have had the day before, no longer be available the next day. You can't take legal action against a mortgage advisor for that. And this situation is little different. Its just a case of tough shit unfortunately.

If you were to take out a huge credit card bill / or took a loan out after the mortgage application with the intention of paying the stamp duty, wouldn't you be misleading your lender in terms of what your debt/liability v assets were. In which case you could have the mortgage pulled or worse still since this could be classed as deliberately misleading your lender / hiding a debt as potentially fraudulant?

Besides its dumb as fuck either way.

All I can see here is the smell of desparation and someone trying to live beyond their means.

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