Discount rate in writing

Hi All,

I was looking for some advice/opinion. We are in the process of getting all the required documentation from a lender we chose based on a deal that the broker managed to get from them. The deal was a tracker for the first 12 months at a reduced rate. The remaining term of the mortgage will be on a tracker again, at a discounted rate from the advertised rate (this was the special deal part). We thought this was a good deal and decided to get loan packs issued etc.

However on the loan agreement the original 12 month period is stated and then the remaining term is flagged at their current advertised variable rate. I was told this was standard and in 11 months time we would be issued with the options we could take....of which one would be the discounted rate mentioned above.

I'm concerned that in 11 months time the institution could deny all knowledge of the deal and we would have to go in at a higher rate than we were originally offered, therefore I have sinced asked for written confirmation of the offer. I have been told in no uncertain terms that this is not possible, I am currently arguing with the broker on this matter.

Surely a deal that is offered which makes you chose one provider over another should be issued in writing? I thought this was a basic consumer right?

Any opinions greatly received.

sonnyikea said:

However on the loan agreement the original 12 month period is stated and then the remaining term is flagged at their current advertised variable rate. I was told this was standard and in 11 months time we would be issued with the options we could take....of which one would be the discounted rate mentioned above.

I'm concerned that in 11 months time the institution could deny all knowledge of the deal ..............

Click to expand...

Who told you this was standard? Was it the broker or the lender?

Personally i feel, if it's not written down, it does'nt exist

"A verbal contract is not worth the paper it's written on."
-Samuel Goldwyn

If you are getting one discounted tracker margin for the first 12 months and then another discounted tracker margin for the remainder of the loan term then I would imagine that the two margins applicable should be detailed in the loan agreement. For example if the standard tracker margin was 1.10% and you were getting a 12 month intro offer of 0.90% and thereafter a discounted margin of 1.0% then the latter two figures and the period of the loan to which they apply should be specified. I agree with the previous poster regarding the inadvisability of taking these things on trust. Get them written down. It's the only way to ensure clarity.

Thanks to both of you,

I thought it was strange that both discounted rates weren't shown on the loan agreement but the broker and the lender both confirmed that this was their normal practice. On one hand we don't have a leg to stand on regarding the discounted rate, on the other we aren't tied into a rate should an even better rate be available in 11 months time or we decide we would like to go fixed etc. I'll talk to my solicitor regarding the rates on the loan agreement.

Thanks for confirming my suspiscions about having it in writing. It seemed a perfectly acceptable request but was met by a very forceful rejection. Terms such as 'don't you trust us' and 'do you think the institution would give you that discount if you defaulted on payments in the first 12 months' were mentioned by the broker. Which has me worried that neither company (broker or lender) have a basic grasp on the concept of a legally binding contract. (Suffice to say this is a major lending organisation).

I will stand my ground and if they cannot come up with the requested document then we will go elsewhere.

Thanks again - this forum is very, very useful.

I don't know what the normal practice is in these situations but if I was you I would definitely look at getting the relevant discounted tracker margins in writing.

I wanted to give you an update for others for future reference.

After a stern argument with the broker and a request for the offer in writing I have been told that there is no record of the deal with the lending institution, therefore the deal is no longer being offered.

It's pretty late in the day for them to come back with this as we had decided to go with the instiution based on the deal we were offered. Their standard rates are not competitive so we are going with a different lender. Thankfully this has come to head now and not in 12months when we would have effectively been locked into the lender.

A letter of complaint will be issued to the broker, the lender and also IFSRA - not sure what good it will do but I'm hoping it will prevent a similar fate befalling others in the future.

What really narks is the lack of apology by either of the companies after a number of misleading pieces of information were given to us culminating in this final piece of news. If it was some back alley loan shark I could understand it but this is a major lender, backed by a major financial institution.

Thanks again for all your help in this.

I had a similar issue with Ulster Bank. I was led to believe I was on a permanent tracker of 0.95% above ECB. A few weeks ago they wrote to me to tell me that my one year discounted rate was up and they offered me a tracket that was 1.15% above ECB. Where I made a mistahe was the fact that the original mortgage offer from UB was sent to me 8 (yes, eight) times and it was messed up somewhere each time. When I finally got an offer where the numbers added up I missed the fine-point regarding the one year discount rate (which wasn't in the previous 7 offers!). Anyway, I rang Ulster Bank and hoo'd and haw'd and they agreed to drop the tracker rate back down to 0.95%.

sonnyikea -- did you talk to the lender directly at any stage? I've heard of other cases where a broker claims a lender has approved a large loan at great rates, only for the borrower to go to another broker or direct to the lender (after problems with the original broker) only to find that the lender has no record of any application for the borrower!

8 times! Our loan agreement has been issued 3 times and I thought that was bad.

How can this level of ineptitude be right? How are the institutions allowed to mislead people in these ways? Obviously you have to read the fine print but anyone can be forgiven for missing something on the 8th time of asking.

Glad you got the tracker rate down to the agreed level. I think these points highlight that it pays to read carefully everything you are given and ensure everything is included in the loan agreement. I don't even think a separate letter of confirmation is enough as it is legally worthless (according to my solicitor).

MugsGame,

Yes I had to clarify the brokers comments with the lender several times as we were losing faith in the broker. They stated that if we had a deal then it should be noted on their system somewhere, if it was then they would honour the agreement. In our case they had no note, although our loan agreement had been issued so at least we existed on their system. This is when I started asking for the deal in writing.

If this practice is widespread then there should be something done about it. In our instance the broker belongs to an estate agent which is a member of the IAVI. Maybe I should send a letter to them as well while I'm at it?

I was remortgaging to buy a rental property at the same time as I was buying another primary residence...that really screwed the bank up! In the end I just bypassed my mortgage broker and dealt with the bank directly...that removed one source of 'noise' and speeded things up.