Had a mortgage promise 1 month ago
 

with a fixed rate of 5.9 for 5 yrs,im kinda tied to my current lender due to a mahoosive clause of £5k repayment if i leave,long story.

as i have now found a house to buy,mine has sold, i phone them up to get it all going and get told the mortgage promise is not valid at the 5.9% rate and its now 6.2%, i say wo wo wo i have it in writing saying its valid until 31.1.08,he says not the interest rate,just the amount aloud to borrow, i say WTF is the point of that then,its not a promise is it if i go to take it out and the rate and payback has changed.

so,is ^^^ true

one fecked off due, never happened last time i borrowed a mortgage

Read the offer, and the small print. If the offer is for 5.9% then that is what it is. All lenders are regulated by the FSA, mention that to them if you feel they are being unfair.

A mortgage promise is usually for the amount and the level of discount, not the base rate which will be set once hte mortgage has been taken out.

was it fixed or variable?

do you have an offer or just an agreement in principle? if its an offer the rate should be secure for 6 months from first offer

From what he said I just assumed that it was for a fixed rate mortgage. If its a fixed rate mortgage then the offer (if it is an offer) should be honoured. Anything else is just a farce, as nobody would be able to choose which fixed rate deal to take if lenders just changed their minds.

If it was a variable/tracker/capped etc then yes the rate will alter with the base rate, it will be the discount (as stated above) that should remain constant.

A mortgage promise is an agreement in principle. This is not an offer, but basically a sheet of paper to give to estate agents to tell them you can borrow X amount. You can't have an offer without a property, so what he told you is correct. You get the rate which applies on the day of actual application

what fast bloke said, pisses me off, we get told we can borrow x amount at x amount per month, fixed for 5 yrs, cool.

then we find a property and get told when we actually apply for the application that rates have changed and now its gone from x amount to +50 per mth more !!!

totally ridiculous as u cant budget for the future if they change the rates they tell you, so how do u know u can afford the mortgage in 2 mths time ???

stupid stupid

Well I got a mortgage offer valid for 3 months IIRC that was for a specific property and for a very long term fixed rate (for as long as I lived in the property) and I made bloody sure that this was a firm offer that could not be changed or withdrawn within the offer period.

have you actually taken that policy out tho ?
i didnt have a property at the time of the mortgage promise to go to tho, hence an application as such wasnt made,just the offer,which can change APR at anytime !

There is a difference between an agreement in principle and an offer.

An agreement in principle is the lender saying to you that your credit is good, and that we are prepared to lend you £x subject to various things. This being valuation etc etc. They have not made an offer to you at this time, and you have not made any commitment to them in any way at all. The rates they based their agreement on can change

An offer is a binding agreement in such they cannot alter the offer. You however, do not have to accept the offer. By this point you will most likely have paid for some sort of survey on the house, and have therefore committed yourself in some way to the lender. The lender has totally committed themselves to you, they cannot alter things at this stage.

In order for a lender to make a firm offer, you can surely understand that they will want to have seen the property that you are wanting to buy. In your case they had not, so you had an agreement. In DL's case the offer was made on a specific property, and hence the rates would not change for 6 months.

You could not get an offer as you did not know which house you were going to buy (so I understand). However, what you could have done is to get an offer on a "portable" mortgage based on your own home that you currently lived in. That would have fixed the rate, and then you would have just had to port the mortgage onto the property you were going to move into. Doing that in practice can incur some fees, most notably two valuation fees, one for your house, and another for the house you end up moving into. There can be other conditions too.

Your mortgage adviser should really be taking you through all of this.

sounds like i had yes/no men on the phone, its all too late now, lost out on the 5.9 and am stuck with the 6.3 for 5 yrs.

cheers for the info, all good to know for the future..............

You really shouldn't be taking a mortgage that you couldn't afford if the rates rose by a few percent.

If it was fixed for 5 years I wouldn't see a problem with going on a tight budget.

The Rig - Is this Halifax/Bos/BM? You can reserve a fixed rate if you pay the reservation fee when you dip it (to get your mortgage promise) - A broker should have told you this. If you go straight to the lender then they will only tell you what makes them more money

yeah,with halifax.

i wasnt told anything about how to scure the mortgage promise,as i dint have a house to buy when we sold, i got the promise and thought cool,5.9% for 5 yrs it is.

when i phone to get it all rolling now we have a house to buy,its 6.3% !!

you watch,now its 6.3 for 5 yrs,next mth,the rates will go DOWN !!

grr

Luminous is correct - a mortgage promise is not a mortgage offer.

A mortgage promise is merely a commitment to consider you for a mortgage of a certain level. It is completely different to a mortgage offer which is tied to a specific property and it is only at that time that the rate will be set.

It is a shame this was not explained better - this information is on the website and would have been in the conditions attached to your 'promise'.

Rates will probably stay static now for some time.

yeah,i get it all now, but it said nothing of this on the paperwork i got, said offer was valid until jan 08,if it said valid until jan 08 subject to rates staying the same all would of been cool,but it didnt.

All lenders are regulated. There is a set procedure for complaints, and you may have grounds for one.

They have to provide you with reasonable and accurate information when you are trying to take out a mortgage with them. If you told them that you were wanting to fix the rate, then what they have done is not to follow your instructions correctly.

You could consider complaining, and simply embarrassing them into offering the deal that you believed you were getting, and asked for. The process may take a little time, but I would try it as you are getting locked in for 5 years!

As I work in the mortgage business. Sounds like the promise was done on a variable rate. If it were fixed, then the rate is automatically booked for 30days.

In the end it makes no difference. If the rates were higher for your 5 years of discount the 'difference' would be added to your mortgage anyway.

If you look at the 'total cost' of the mortgage most decent variable rate mortgages will have the lowest cost overall. Nationwide is usually good of total cost as there are no shareholders to reward with profits.

Surely if tied to a lender with a mortgage already (hence the 5k early repayment fee) the agreement must already be in place else the 5k part wouldn't come in to play and he therefore he should get the 5.9%. Confused???