When is a non refundable application fee refundable on a mortgage turned down?

by Readers Question

3 years ago

When is a non refundable application fee refundable on a mortgage turned down?

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When is a non refundable application fee refundable on a mortgage turned down?

Having bought a 1 bedroom flat on a bridging loan six months ago we applied for a mortgage with Paragon to repay the bridging.refund

One of the terms and conditions was that the £150 application fee was non refundable.
We were happy with the fee and applied through our broker.

The flat was part of an Office to Residential conversion of approximately 30 apartments.
With the conversion fully completed and a tenant in place we thought that it would be a straight forward application.

However after several weeks Paragon declined the application stating something along the lines of there were “too many apartments in the building”
We could not get a more comprehensive explanation and are sourcing an alternative mortgage provider.

We would accept the loss of £150 application fee if we did not have a sufficient income, were not achieving a sufficient rent or chose to change our mind and go with a different provider but for Paragon to just say no without providing a proper explanation goes against the grain.

Has anyone else experienced a situation like this and appealed?



Neil Patterson

3 years ago

Hi Mark,

30 flats is not that big a number.

However at a guess Paragon may mean that they are over exposed in the block already with mortgages. They may not want to lend on too many properties in the same block to reduce their risk eg too many eggs in one basket. They may also consider it out of keeping with the area and are concerned there will not be enough demand.

I would definitely enquire further for your own peace of mind and it can't hurt to ask for the money back and if you are unhappy with the answer all banks have well established complaints procedures to instigate.

I concur with Neil.

This could be "too many apartments in the building" that they already have mortgages on.

Or it could be too many storeys? Their limit (within the M25 for example) is 4 storeys.

It all boils down to what your Broker told them in the first place. In our experience, Paragon are an excellent lender who will go and see a property even before an application is submitted to confirm that it fits their criteria. Maybe your Broker is more 'resi' and doesn't understand BTL? If he comprehensively detailed a war and peace case study before the application was submitted, and they still then declined it with all pertinent info to hand, then you may have cause to get an application fee refund, as they may have misunderstood the preamble.

As Neil says, 30 is not a big number and we know the lenders who would say yes to that.

Laura Delow

3 years ago

A good Mortgage Broker should check first if a lender is over exposed to the development & if not, you may have grounds for recourse with your Broker.

Joe Bloggs

3 years ago

formally complain to get your money back. paragon would have known at the outset if they were 'over exposed' and only they could know that. if necessary take it to the ombudsman.

my first btl mortgage was with paragon and the valuers report mentioned the bath being dirty! dont seem to have improved.

"....the bath being dirty! dont seem to have improved."

Wash it then!


Joe Bloggs

3 years ago

what a stupid comment. valuations are to report on matters which significantly affect value of the mortgagees security. a dirty bath obviously does not fall into that category!

Mr Bloggs, we have crossed swords before because of your lack of sense of humour. Your reply was entirely expected, shame.

Joe Bloggs

3 years ago

no we crossed swords because you were giving incorrect advice.

humour usually = funny.

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