Delayed letter of offer and hike in interest rates

J

janeaflynn

Guest
I am an FTB. My mortgage advisor forgot to submit the application for the letter of offer. When i realised this, i contacted her and in the meantime the interest rates have hiked a quarter of %. I am applying for a split mortgage 150,000 at fixed rate and 135,00 at a discount tracker rate. I have also noticed that the fixed rate that the advisor had quoted me was 3.75 (three weeks ago) and is now 4.19% in the letter of offer. 2 questions:
1.Could the delay in the submission of my letter of offer have affected the fixed rate that i have been offerred?
2. If so, is there anything that i can do?
 
Jane, AFAIK the interest rate on your letter of offer is only valid for a certain time period. When are you due to close?
 
Received a copy of our offer letter about a month ago and the interest rate tracker was quoted at 3.6%, however since the last hike this will have gone up to 3.85% and probably up again by the time we close.
 
Something similar happend to me - before I went on holidays on 2nd June I posted off a form to my building society to fix our mortgage at a rate of 3.65% - when we got back on the 9th June there was a letter in the post saying that rate was nolonger available to us and the next available rate was 3.99%. I rang the IFRA and they said the B.S. were entitled to change their fixed rates whenever they wanted - so unfortunately, as I can see there is nothing either of us can do.
 
The rate applicable to your mortgage is the rate at the time your mortgage cheque issues, not the rate quoted on the loan offer, so the late submission of the application would not necessarily have resulted in a higher rate. Most lenders will allow you avail of the lower rate quoted on your loan offer if you close within a period of typically of 30 days from increase in rates, so given that you are due to close end of July, its not likely you would have been able to avail of 3.75%.
 
The interest rate you pay on your mortgage is the rate that is in place when you draw down your mortgage - this may be higher (or lower) than the rate quoted on your loan offer. A delay in aranging your mortgage would only result in a higher interest rate if the closing of the sale was delayed and here was an interest rate hike in the meantime.
 
The interest rate is the one agreed when you are approved. Go back and insist on the rate quoted. If the delay issuing the letters was from the bank you have a total right to the original rate.
 
Hi

I think there may be some confusion here. What Molly & Helen said was correct ie. that whatever the rate being charged on the day is the rate that you will be charged, no matter what rate is on your letter of offer. This is usually for fixed & variable rates. The T&C's of the Letter of Offer will cover this.

However, if you are going for a tracker mortgage with a specific margin over the ECB rate, you can insist that this be the same rate (margin) that you had agreed with with the Bank. However, if ECB rates rise you will also have to factor this in.

Regards,
P.
 
My uncle was re-mortgaging in march and the bank delayed sending letters of offer and by the time the letters were sent the fixed rate he had originally agreed was gone, te bak still honoured their original agreement and on the facility letter was an expiry date by which time the loan had to be drawn or the rate offer would expire - I think it was 2 moths from date of issue.
 
I rang the mortgage advisor twice today and she hasn't returned my calls. The original quote she had given me was back in the end of April (more than 3 weeks ago) i have just realised and was checking my dates. The quote she gave me was a verbal one and i wrote it down during our meeting. So, unfortunately, i have no proof of it in the form of a letter. I am hoping that she will return my call tomorrow.

Thanks so much for all of your replies. As a first time buyer and a person who does not work in the field of business, it's good to get a heads up on these things.
 
bambino said:
My uncle was re-mortgaging in march and the bank delayed sending letters of offer and by the time the letters were sent the fixed rate he had originally agreed was gone, te bak still honoured their original agreement and on the facility letter was an expiry date by which time the loan had to be drawn or the rate offer would expire - I think it was 2 moths from date of issue.
Click to expand...

That was a rare case of the bank deciding to honour an original quote but this is not the norm and your uncle would not have been entitled to it as you said earlier. Hel_n and Molly are bang on in what they say.
 
worth fighting for though as rare does not equal never - our bank honoured our original loan offer rate and we drewdown on the mortgage nearly 5 months after the offer was issued. In the meantime there were two hikes in interest rates.
 
I'm kinda in the same situation.

Supposed to be closing this Friday. All week the bank have been messing me around taking ages to collect a fax etc.

Now they are saying that we have to go back to solicitor and sign some ammendment letter because the interest rates are going up. We've paid our deposit already (from the bank) and they are saying that the interest rates are going up next Wednesday but if we are closing on Friday do we need to sign it?
Thanks, I'm getting a bit stressed out here.
 
If the bank have said you need to sign a new form then it sounds like you will have to sign it and take an interest rate rise. I'd imagine the original 10% deposit / bridging loan did not lock down an interest rate for the the other 90%.
 
when i drew down our first mortgage there was a letter of offer issued by boi with an interest rate stated on it and an expiry date. We were given 28 days to draw down at that rate or else have to use the prevailing rate at the time. We drew down before the end of the 28 days but after a rate hike and the bank honoured the letter of offer.
 
Thanks again for the replies. I was informed by the mortgage advisor that the rates at the time of draw down will apply and that it does not matter what is on the letter of offer. She also stated that a period of time (within which previous rates offered may be honoured) no longer applies. In the meantime, as ye are probably aware of, the rates have hiked again!! Do i have to wait until the house contracts are settled or can the draw down be speedened up prior to this?
 
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