Remortgage questions

[413x]

Have a mortgage offer (full offer) that is valid until August.

We are on a lower rate and have an ERC to pay so longer into the validity period (August) we go the better. Erc reduces. Longer on lower rate.

However I've just read a clause that concerns me.

Under the lenders right to withdraw :
"At the time we intend to lend you the money, the property's value is materially less than the loan amount."

This should be fine. Prices would have to seriously crash for the house value to be under the loan amount


However

In the supplementary information

The minimum property value shown in 'Main features of the loan' is the lowest the property value can be to proceed on the terms set out in the illustration. If the property value falls to an amount lower than this, please contact us.


Does this mean they could revalue at time of lending.. If prices have fallen and we fall out of the LTV band the mortgage could be withdrawn?


I thought the only thing they may do at time of lending is a second credit check?

Small additional.
I've found by searching there is a property valuation expiry date that exists (its not written in the offer)
I will check with the mortgage advisor about this. Just hoping it matches the offer expiry

 

[Mercenary Keyboard Warrior]

It sounds like its a get out if there is a property crash before you complete.
Its basically linking to LTVs in effect.

Ive got a suspicion my offer letter (not remortgage) for my last move also had something similar. I think its standard wording on a mortgage offer.
IIRC they could also withdraw at any time until completion with written notification without reason.

I wouldn't stress about it too much personally

 

[Bobmunkhouse]

Yep just a get out clause...they want to lend you loads of money as that's how they makes load's of money....

 

[BUDFORCE]

If this is a regulated residential mortgage, which I'm guessing it is unless this is on a BTL property or something else going on?

Residential mortgage offers being regulated are pretty much set in stone on the lender side (obviously you have no obligation to proceed as the potential borrower) but lenders really cannot withdraw a mortgage offer before the expiry date unless there are exceptional circumstances, one of which if they receive detrimental information from some fraud prevention system, which they were not aware of atvtbe time of issuing your mortgage offer, or you inform the lender of some change of circumstances after offer. It has to be something like this.

I'm guessing, but likely the lender did an AVM (automated valuation) on your property prior to offer, I've actually heard some don't even do that anymore.

You may also be able to get your existing offer extended, which provided you didn't get yourself some adverse credit or similar, would be almost a given and depending on the lender it's unlikely you'd actually have to do anything or pay any fee other than literally just putting in a request for an extension.

Just be aware they likely won't want to issue the extension untill maybe 2 - 3 weeks before the offer expires because the lender may run additional searches which cost money, and they won't want to do that months if advance.

I'd ask the lender though about their process for extending offers.

I wouldn't worry about your existing offer being withdrawn, it almost certainly will not happen.

 

[413x]

If this is a regulated residential mortgage, which I'm guessing it is unless this is on a BTL property or something else going on?

Residential mortgage offers being regulated are pretty much set in stone on the lender side (obviously you have no obligation to proceed as the potential borrower) but lenders really cannot withdraw a mortgage offer before the expiry date unless there are exceptional circumstances, one of which if they receive detrimental information from some fraud prevention system, which they were not aware of atvtbe time of issuing your mortgage offer, or you inform the lender of some change of circumstances after offer. It has to be something like this.

I'm guessing, but likely the lender did an AVM (automated valuation) on your property prior to offer, I've actually heard some don't even do that anymore.

You may also be able to get your existing offer extended, which provided you didn't get yourself some adverse credit or similar, would be almost a given and depending on the lender it's unlikely you'd actually have to do anything or pay any fee other than literally just putting in a request for an extension.

Just be aware they likely won't want to issue the extension untill maybe 2 - 3 weeks before the offer expires because the lender may run additional searches which cost money, and they won't want to do that months if advance.

I'd ask the lender though about their process for extending offers.

I wouldn't worry about your existing offer being withdrawn, it almost certainly will not happen.

Yes. Standard residential.

This is great. Really clear.
What I wasn't sure of is whether they can basically go.. Don't fancy this anymore.. Redacted.

I wasn't aware it's almost a 1 way contract (I can pull out but they can't)

Yes aware of the fraud clause.

Wont need to extend. To avoid erc extension would have to be 6 months. Which isn't going to happen.

I wasn't going to, but would applying for a credit card within the 6 months be fine? I have a 2k debt on a credit card at 0 percent and this ends soon. The lender are aware and I don't have to clear it.
Normally I would apply for a new BT card and move it. But unsure as if this is wise between offer and acceptance?

Overall debt would be lower than at offer acceptance. And the maximum loan amount was way over what we are being loaned.

I feel it would be fine. As its not a material change in circumstance.

 

[Peerzy]

I wasn't going to, but would applying for a credit card within the 6 months be fine? I have a 2k debt on a credit card at 0 percent and this ends soon. The lender are aware and I don't have to clear it.
Normally I would apply for a new BT card and move it. But unsure as if this is wise between offer and acceptance?

All my previous mortgage offers have stipulated I clear the balance from my credit card(s) prior to completion and funds being released. Each time these were cards that were cleared automatically at the end of each month anyway with a small (<£5k balance) so it wasn't a problem.

Taking out a new line of credit will have an impact, although probably not enough to call off the mortgage. They will see it as you have (for example) £10k of credit on your old card and then a new card with £10k of credit. They'll see this as £20k of available credit rather than you still only using £10k of it. You can always close the first account but this can often take a while (months) to show so you do run a bit of a risk.

 

[BUDFORCE]

I wasn't going to, but would applying for a credit card within the 6 months be fine? I have a 2k debt on a credit card at 0 percent and this ends soon. The lender are aware and I don't have to clear it.
Normally I would apply for a new BT card and move it. But unsure as if this is wise between offer and acceptance?

They wont even know if you are going to complete on your existing offer, the lender wont do any further checks now, unless something is flagged up by the solicitors maybe, but it'll be to do with that specifically. Usually title issues etc, very rarely ever be about your own circumstances.

Almost certainly would not affect you if you wanted to get an extension as well.

99% once the mortgage offer is issued barring maybe a banckruptcy (because the solicitors usually do a search for that) you could go take out a whole ton of loans and debt and not pay it, and the lender will never know about it.

 

[Peerzy]

They wont even know if you are going to complete on your existing offer, the lender wont do any further checks now, unless something is flagged up by the solicitors maybe, but it'll be to do with that specifically. Usually title issues etc, very rarely ever be about your own circumstances.

Almost certainly would not affect you if you wanted to get an extension as well.

99% once the mortgage offer is issued barring maybe a banckruptcy (because the solicitors usually do a search for that) you could go take out a whole ton of loans and debt and not pay it, and the lender will never know about it.

Lenders can (and do) perform checks prior to releasing funds, if there was a significant change or something they weren't aware of there could be cause to halt funds being released (even if only temporarily whilst they gather facts).

 

[413x]

That's my issue with the CC. I don't think it's "significant" but I obviously don't want to do anything to risk it.

 

[BUDFORCE]

Lenders can (and do) perform checks prior to releasing funds, if there was a significant change or something they weren't aware of there could be cause to halt funds being released (even if only temporarily whilst they gather facts).

They don't.

I know what I'm talking about, I've worked for mortgage lenders for 15 odd years underwriting and various audit roles, at 5 different lenders now.

With a regulated mortgage, the lender cannot withdraw the mortgage offer without some exceptional circumstance, literally only something like third party information from a fraud prevention system. Go read the FCA regulations.

Actually don't it's bloody boring.

I've audited approved mortgage applications where the underwrites have missed undisclosed addresses on some document, searched it and found adverse information and there is not a damn thing you can do about it.

Unregulated is different, so BTL mortgages, and some types or bridging finance etc. On those yes it's possible.

The other thing is, it isn't in lenders best interest to do this anyway, despite what you might think lenders are out there to lend......not decline. The lender needs to put in place appropriate checks to satisfy regulators and demonstrate responsible lending. Once they have met that commitment, eg at point of offer, they are not going to continue doing checks to try the catch you out. It would also cause complaints and reputational damage.

In the case of the OP, if the OP applied for an extension to the existing offer, then yes, the lender may do additional checks prior to issuing the extension, and yes, say the OP got himself into some bed debt or missed payments, they could decline the extension.

There is also no process for a lender to do additional checks post offer. I've never seen or heard of such thing at any of the lenders have worked for nor my wider knowledge of the market.

The only thing that could affect the mortgage application post offer would be if the solicitors flagged up an issue after doing their searches prior to completion, but the solicitors are not checking the personal circumstances of the person applying for the mortgage in general, it would be some issue with the title (property related) or possibly if they have concerns over the source of the deposit as solicitors are obligated to do anti money laundering checks on that.

 

[413x]

They don't.

I know what I'm talking about, I've worked for mortgage lenders for 15 odd years underwriting and various audit roles, at 5 different lenders now.

With a regulated mortgage, the lender cannot withdraw the mortgage offer without some exceptional circumstance, literally only something like third party information from a fraud prevention system. Go read the FCA regulations.

Actually don't it's bloody boring.

I've audited approved mortgage applications where the underwrites have missed undisclosed addresses on some document, searched it and found adverse information and there is not a damn thing you can do about it.

Unregulated is different, so BTL mortgages, and some types or bridging finance etc. On those yes it's possible.

The other thing is, it isn't in lenders best interest to do this anyway, despite what you might think lenders are out there to lend......not decline. The lender needs to put in place appropriate checks to satisfy regulators and demonstrate responsible lending. Once they have met that commitment, eg at point of offer, they are not going to continue doing checks to try the catch you out. It would also cause complaints and reputational damage.

In the case of the OP, if the OP applied for an extension to the existing offer, then yes, the lender may do additional checks prior to issuing the extension, and yes, say the OP got himself into some bed debt or missed payments, they could decline the extension.

There is also no process for a lender to do additional checks post offer. I've never seen or heard of such thing at any of the lenders have worked for nor my wider knowledge of the market.

The only thing that could affect the mortgage application post offer would be if the solicitors flagged up an issue after doing their searches prior to completion, but the solicitors are not checking the personal circumstances of the person applying for the mortgage in general, it would be some issue with the title (property related) or possibly if they have concerns over the source of the deposit as solicitors are obligated to do anti money laundering checks on that.

Thanks for your help. Has been useful.

Would expect if I suddenly accured 10k of additional debt there would be issues. But my change is just an additional CC. The debt will actually be lower come mortgage sign.

 

[Skillmister]

They don't.

I know what I'm talking about, I've worked for mortgage lenders for 15 odd years underwriting and various audit roles, at 5 different lenders now.

Interesting because I've had a client whose mortgage offer was pulled at release of fund stage because they bought a load of furniture on credit.

 

[BUDFORCE]

Interesting because I've had a client whose mortgage offer was pulled at release of fund stage because they bought a load of furniture on credit.

If it's a regulated residential mortgage I'd be asking why?

Was an extension requested, or did the client "volunteer" the information to the lender?

How did the lender come about this information after the point of offer?

EDIT: I am guessing if the client didn't volunteer the information, the existing offer was still valid (as in, there would be no usual reason to perform further checks or otherwise find this out) they received third party information, which then caused the lender to do further checks. I am sure what they are telling you is true, but I wouldn't be surprised if its easier just to tell you that and use it as an excuse/fob off, rather then the actual reason/and possible avoids any risk of tipping off.

 

[Peerzy]

Interesting because I've had a client whose mortgage offer was pulled at release of fund stage because they bought a load of furniture on credit.

I'm also aware of someone who had their residential mortgage (FTB) offer pulled after they financed a new BMW (an an extra car) before completion. It was about £25k iirc as either a lease or PCP.

 

[413x]

Sounds like I will be OK. I'd be taking on new credit (and dropping one) but when it comes to finalising the offer the net debt will be lower than when the offer was formalised.

We also had plenty of headroom on affordability.

I will check a little more. Just annoying the CC interest free period ends so soon

 

[413x]

I'm also aware of someone who had their residential mortgage (FTB) offer pulled after they financed a new BMW (an an extra car) before completion. It was about £25k iirc as either a lease or PCP.

This is understandable!

 

[Peerzy]

This is understandable!

How much is on the CC and what sort of limit on the new CC would you be expecting / getting?

As I've said previously, it takes a little while for closed cards to update so in theory they *could* search you and see your old, existing £10k card (now with nothing on it, but £10k of available finance) and a new card with £15k limit and £10k used). To them this would appear as an additional £15k of unsecured finance being available to you, which *could* impact things like affordability. *Could* in both cases as it would be very unlucky, but not impossible. In comparison, an extra £15k of potential unsecured debt appearing could be as bad as £25k of secured finance on a new BMW.....

The chances are very slim, for my last move I had a similar situation where I'd been given an offer and wanted to change something prior to completion. I felt it wasn't worth the risk and actually made the change on completion day, after funds had been deposited.

If your affordability is fine then all of this won't make a difference, it would only be a concern if you were tight on figures.

 

[413x]

It's only 2.5k.

My current credit limit is about 40k across 5 cards with only that 2.5k not paid off in full. 3 are day to day (Amex, amazon, tesco), 1 is zero balance, 1 has my 2.5k debt

So if I got a card with a 5k limit I could close either of my empty cards. The one with the the 2.5k no transfered or the one with the zero balance.

I can't see 2.5k causing an issue if its just 'moved'.
It's annoying the card 0 percent offer expires in June!

The advisor for Lloyd's said I had an A1 credit score (apparently very good).

Affordability is fine
Lloyd's would have lent 310k
Ive only asked for 209k

 

[BUDFORCE]

As I've said previously, it takes a little while for closed cards to update so in theory they *could* search you and see your old, existing £10k card (now with nothing on it, but £10k of available finance) and a new card with £15k limit and £10k used). To them this would appear as an additional £15k of unsecured finance being available to you, which *could* impact things like affordability. *Could* in both cases as it would be very unlucky, but not impossible. In comparison, an extra £15k of potential unsecured debt appearing could be as bad as £25k of secured finance on a new BMW.....

Only the balances are factored in, not the limits........

 

[Peerzy]

It's only 2.5k.

Lloyd's would have lent 310k
Ive only asked for 209k

Ah, that definitely won't be an issue then.

Only the balances are factored in, not the limits........

Lenders do consider available unsecured credit, along with additional credit searches by other lenders?

How would a lender react if they saw (an extreme case....) 10 new credit applications, 5 new credit cards with an additional £100k of available credit being granted just before lending £250k?