Bad Mortgage Advice – Accept Compensation Offer or Escalate?

by Readers Question

4 years ago

Bad Mortgage Advice – Accept Compensation Offer or Escalate?

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Bad Mortgage Advice – Accept Compensation Offer or Escalate?

I’ve recently received some bad mortgage advice from Halifax and hoping I could ask advice from any experts where on where I stand with the situation. Bad Mortgage Advice - Accept Compensation Offer or Escalate

I’m in the middle of purchasing a new build property to move into. I’ve reached the final stages of a mortgage application with Halifax, having received a mortgage offer, and a successful valuation of the property, though have run into some issues with the product selection at the end of the process.

I’ve been working with one of Halifax’s internal mortgage advisors. In the first meeting back in March we discussed the product range at the time and narrowed it down to several options that I could choose from. All of these fell under the ‘home mover’ range as I already own another property. The rates started at 3.1% going up to 3.5% depending on product fee, all based on an 85% LTV. The issue then was that all of those products expired on 31st August 2014 and my property is not due to complete until 26th September 2014. So I was advised by Halifax that I would have to select from the ‘next’ range of home mover mortgages once they become available with expiry dates after the September completion. The advisor promised to progress the application to final stage and contact me when the new range is released to complete the application. I was happy with this assuming rates were likely to go up by around 0.5% max knowing that this would still be affordable.

Having received no further contact from them until now I decided to call them myself the other day. It turns out the new range is now available, at 3.5% and 3.9% just as I had expected. However the mortgage advisor now tells me that because it is a new build I can’t select from the standard mortgage range. I have to choose the specific new build mortgage with a rate of 4.4%!… To make things worse this rate has actually increased since March as well, back then I could have had the mortgage for 4.19% (expiry is Jan15).

I launched a complaint with Halifax and they have made an offer of compensation, but I’m unsure whether I should take it or push things further for a better offer.

The offer is for me to take the 4.4% mortgage, and they will refund me cash upfront to cover the difference in monthly payment between the 4.19% and 4.4%. Plus £300 compensation.

Based on the fact that my original quotations were in the 3% range should I be pushing back on this and going for a larger cash refund? If I do, do I have a leg to stand on?

Their argument is that due to the expiry date on the 3.1%-3.5% I would have never been eligible for those anyway. My argument is that they shouldn’t have based my original quotation on those rates (bad mortgage advice) as it gave me unrealistic expectations of the monthly cost of the mortgage.

Any advice would be greatly appreciated.

Thanks

James



Comments

Mark Alexander

4 years ago

Hi James

How long have you been given to accept or reject the compensation offer?

With respect, I think your biggest mistake was dealing direct. You should have used a broker.

It may not be too late though, a good broker may be able to find you a deal which beats the Halifax offer, even with the compensation. If that's the case, then you should request compensation associated with the aggravation and costs associated with making a new application. If time doesn't allow for this then you must make a commercial decision and chalk this up as a learning experience.

Good luck, whatever the outcome.
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Neil Patterson

4 years ago

Hi James,

If I have read this correctly I sounds like the Halifax mortgage sales person has wrongly got too excited and secured you an offer on a product without realising it would run out before your completion date.

In my experience you will never be able to hold them to an offer that no longer exists. Therefore the compensation offered seems reasonable to me at first glance.

Alan Loughlin

4 years ago

I would just take it and move on, you can always change later. life is too short to get bogged down with arguments like this, they have admitted fault and offered a fair recompence.

Simon Loxham

4 years ago

It is very important with a Newbuild purchase that the adviser keeps an eye on the progress of the build and tackles the expiring mortgage offer or the product, or both. It is also not often appreciated that you can exchange contracts with one lender and switch to another before completion. The downside is that there may be another valuation fee involved.
If you would like to contact me I shall be pleased to guide you.

Mark Alexander

4 years ago

Reply to the comment left by "Simon Loxham" at "14/05/2014 - 15:46":

Hi Simon

If you want members to be able to contact you they will need your contact details. For this you will need to upgrade your member profile - please see >>> http://www.property118.com/business-sponsorship/

Thousands of landlords will read this and every other article published on Property118 in the coming weeks/months/years - all of our articles are search engine optimised 🙂
.

Simon Loxham

4 years ago

Thanks Mark, I will check out the link.

James Parker

4 years ago

Thank you for the advice everyone, greatly appreciated.

They made the offer this morning and asked for a decision by 5pm today. This is what set my alarm bells ringing as to why they need such a quick resolution.

They have also said that if I choose to reject the offer and escalate it could take up to 8 weeks for the complaints team to review the case.

I've since spoken to the mortgage advisor again and said that I am taking the night to think about it. She's out of the office tomorrow but has passed me a direct number for the branch manager to call in the morning with my decision.

I think I'll take the offer and learn my lesson for next time. I need them to get the paperwork out to the solicitors asap as the developer is pushing for exchange of contracts. If it will be difficult to prove my case with Halifax it's not worth the risk of the whole thing falling through.

Agree that it has been a huge mistake going direct!... I've always used brokers in the past. Thought I'd try the other route this time but it's backfired!

Thanks again,
James

Mark Alexander

4 years ago

Reply to the comment left by "James Parker" at "14/05/2014 - 17:25":

Hi James

Given the timescales and pressure to exchange contracts I think you have made a wise decision.

However, if I were you I'd still talk to a mortgage broker. If they manage to source a deal which costs significantly less it may well be worth your while to cut your losses with the Halifax and progress a deal elsewhere, secure in the knowledge that you still have your Halifax offer as a safety net to reply upon.

Thanks for sharing your story and I'm pleased we've been able to help 🙂
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Shakeel Ahmad

4 years ago

The Lenders just do not know what they are doing. poorly trained, non caring & having a civil servant mentality. To busy covering their back side and coming up with absurd basis of lending or not lending.

With all the regulations that is being laid out as a knee jerk reaction from the underwriters. They do not have the sense of understanding that their wrong advise could cost the buyer dearly.

I have given if asking for a car with my Banker.

Jeremy Smith

4 years ago

Reply to the comment left by "James Parker" at "14/05/2014 - 17:25":

Dear James,
You think you made a mistake going directly, but things change over time: I always used to go direct for my mortgages, but this time I went through a broker and it introduced 3 day delays each time I had a query !!

I ended up phoning the lender directly to get answers, you can't keep waiting for the broker to ring you back, after several emails, a phone call and 3 days lost.

....Keep things close to you , you have better communication, at least !!

Oh! ....Take the compensation, you seem to be getting a far better deal than me by far, even at the higher rates you've been offered !!

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