Bank wont release interim stage payments

Kate Moss

Hi,

Myself and my partner purchased a site from my father some years ago and we obtained planning on same. We then purchased a mortgage from a bank. We drewdown a stage payment for the purchase of the site in 2006. Since then we have been carrying out substantial groundworks and put in foundations. We were doing same slowly so as to build the property for as little as possible and to draw down as low a mortgage as possible.

In December 2009 we submitted an architect's certificate and cheque request to the bank for the next drawdown to enable us to proceed with construction.

On the 22nd. of December 2009 the bank contacted my partner to say that the account is dormant and that we must submit our up to date financial details. He also indicated that we need to reapply for the mortgage!

The special conditions of the letter of loan offer indicate that we must notify the bank if our financial circumstances change. Our financial details are unchanged, other than for my wage to have slightly increased. There is also no drawdown deadline for the stage payments. Our planning permission has not expired. We received no prior notice in any respect of the Bank's requirement to drawdown within a particular timeframe. We are still unaware of their timeframes.

We have worked hard for this house. We are not wealthy, but we have saved hard for years and lived in houses of very poor condition so as to save on rent.

The bank today contacted my partner saying they want year end accounts for 2008, projected accounts and details of contracts for 2010 as he is self-employed.

Is anybody else in this position? Do the banks have a right to do this and if so, under what legislation?

We have told the bank that we are not taking this and that if they pursue the matter that we will seek compensation from them.

I would be very grateful to hear from anybody in a similar situation.

Thank you.

Priapus

Kate Moss wrote: »

The bank today contacted my partner saying they want year end accounts for 2008, projected accounts and details of contracts for 2010 as he is self-employed.

Is anybody else in this position? Do the banks have a right to do this and if so, under what legislation?

We have told the bank that we are not taking this and that if they pursue the matter that we will seek compensation from them.

I would be very grateful to hear from anybody in a similar situation.

Thank you.

Hello Kate!

I assume this stage payment mortgage was initiated a number of years ago?

Sometimes when people use stage payments for a self-buid they do not use all of the funds they were approved for (sometimes). Because all funds have not been drawn down the mortgage appears "uncomplete" on the banks systems. If the self-build was initiated a number of years ago it is likely that the bank did a clean up on its systems and just assumed you were not using the retained amount (the undrawn funds) and simply removed the funds you had not drawn down. For certain reasons which I wont go into, it is better for the banks to have these mortgages "completed". So they removed your remaining funds. This is what it sounds like.

Considering the passage of time since the initial mortgage was made, coupled with the fact that your partner is self-employed, plus the down turn in the economy they will want to see updated income details. This is normal.

As to your other questions, yes they do have the right to remove the funds if they are not drawn down. There will be conditions in your mortgage agreement specifying certain covenants you need to fulfill. Legislation is not required.

Not providing them with up to date information is biting off your nose to spite your face. They just want to make sure your economic situation has not changed too much. Understandable given the down turn and an applicant been self-employed. Seeking compensation from them is a non-runner too.

Best thing is to provide up to date income data. They will give you the remaining funds more than likely if you are in good standing payments wise.

Hope this helps! Good luck

stepbar

Kate Moss wrote: »

Hi,

Myself and my partner purchased a site from my father some years ago and we obtained planning on same. We then purchased a mortgage from a bank. We drewdown a stage payment for the purchase of the site in 2006. Since then we have been carrying out substantial groundworks and put in foundations. We were doing same slowly so as to build the property for as little as possible and to draw down as low a mortgage as possible.

In December 2009 we submitted an architect's certificate and cheque request to the bank for the next drawdown to enable us to proceed with construction.

On the 22nd. of December 2009 the bank contacted my partner to say that the account is dormant and that we must submit our up to date financial details. He also indicated that we need to reapply for the mortgage!

The special conditions of the letter of loan offer indicate that we must notify the bank if our financial circumstances change. Our financial details are unchanged, other than for my wage to have slightly increased. There is also no drawdown deadline for the stage payments. Our planning permission has not expired. We received no prior notice in any respect of the Bank's requirement to drawdown within a particular timeframe. We are still unaware of their timeframes.

We have worked hard for this house. We are not wealthy, but we have saved hard for years and lived in houses of very poor condition so as to save on rent.

The bank today contacted my partner saying they want year end accounts for 2008, projected accounts and details of contracts for 2010 as he is self-employed.

Is anybody else in this position? Do the banks have a right to do this and if so, under what legislation?

We have told the bank that we are not taking this and that if they pursue the matter that we will seek compensation from them.

I would be very grateful to hear from anybody in a similar situation.

Thank you.

By signing an offer letter, you agreed to the terms and conditions of the loan.

If a certain term was unfair you may have recourse. I don't see how requesting UTD financial details is unfair. The bank are hardly able to read minds are they?

The timeframe is decided by you, not the bank. You should have built the house as quick as possible, that's not the banks fault.

Kate Moss

Thank you Priapus,

Your reply is most helpful.

I am a legal executive. I have checked and re-checked the conditions of the mortgage. We have fulfilled same.

What I cannot understand is that we were not notified of this deadline. As I am aware, a contract must have a start date and a finish date! Also, the financial regulator's consumer protection code states, amongst other things, that a regulated entity must supply information to a consumer on a timely basis, giving regard to the urgency of the situation and the time necessary for the consumer to absorb and react to the information provided. Given that the information was provided when we requested a further drawdown obviously shows the bank's not complying with the code. When a drawdown is requested, money needs to be paid by the consumer (mortgagee) to the builder.

Also, our planning permission has not run out, surely a self-build is allowed the planning permission time.

Either way, I will not be letting the bank take away my tracker mortgage. This is after all their main aim.

shabbyalonso

Just reading your thread there Kate. I understand your frustration, especially when hard work has been put in, savings spent and frugally, you're trying your best to keep costs down (this is the sort of thing that everyone should strive to do). However, the down side is that in the current climate, banks do not wish to lend money - whether for new business or existing business (like yourself). I have heard of this before, whereby the time between the initial drawdown and second drawdown is excessive, the bank will seek up-to-date details. I would agree with the bank to a degree here insofar as regardless of the previous crazy lending that went before us, it is essential that the bank does not further any more funds, to those who are unable to pay, given previous track records. Of course, I don't mean your good self here - as indicated in your mail, income has gone up so shouldn't be a problem. However, as long as the bank are satisfied that this is the case, there should not be a problem. Into the bargain, your partner is self-employed which again, given the current economic position, the bank will want to know if long term job security is there.

I don't think you would get very far in chasing the bank for compensation in this regard as they'll simply stick to the line that they are looking out for your best interests (i.e. ensuring that, if they don't see up-to-date details, they could be lending to someone who cannot afford an increase of mortgage borrowings). The best thing to do would be to produce the up-to-date details but converse with the bank in a bid to avoid going through a completely new application. This certainly can be done and your existing mortgage can be "topped up" so to speak, hence keeping you on the same tracker rate. Yes, banks hate tracker rates but I would strongly suggest that you produce the documents, try to track down someone in the bank with a sympathetic ear and push for the existing mortgage to be given a further advance. There is no question that this can be done - and it's not an unreasonable request.

All-in-all, the bank can request the up-to-dates, you are probably best to produce them and then negotiate the next stage payment under the existing terms. Otherwise, I reckon you'll end up more frustrated with no other option! Best of luck with it and with the remainder of your build.

soden12

The bank are hardly able to read minds are they?
[/quote]

Depends on the bank - whoever organised McCreeveys loan was able to read his mind...

Toots

Soden12, take a month off from your repeated trolling. If you have nothing helpful to add here, don't bother posting at all.