Mortgage Probs

So_stressed

I met with a bank (won’t name it) a month ago to apply for a 170k mortgage for a self-build. I have a permanent job, 40k saved, no debts………. It was approved and the offer letter was sent out to me at a fixed rate for two years at 3.4%.
I went into bank next day with the signed letter, arranged valuation, architect’s report etc. I sorted my life assurance with this bank too. I requested an update every day as I was all ready to go with my self-build.
Today (1 month later) the bank came back to me saying they would give me the mortgage but under new conditions…………….when I queried as to what the conditions were I was told that my interest rate would rise from 3.4% to 4.65% fixed for two years. They also informed me that I have to begin the house and complete 60k of the work upfront before they will release any equity. I do have savings but was hoping to hold back from spending until decoration stage, they are also in a bank for another 8 months earning interest. (some interest fund)
I was told that the mortgage rate can change up until the cheque is written. So whats to say when I spend my 60k on the house that the rate will have increased massively?
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Really disappointed over this, I think the banks are doing all they can to avoid giving money to us. How on earth will Ireland ever recover? Very frustrating situation

goz83

So_stressed wrote: »

I met with a bank (won’t name it) a month ago to apply for a 170k mortgage for a self-build. I have a permanent job, 40k saved, no debts………. It was approved and the offer letter was sent out to me at a fixed rate for two years at 3.4%.
I went into bank next day with the signed letter, arranged valuation, architect’s report etc. I sorted my life assurance with this bank too. I requested an update every day as I was all ready to go with my self-build.
Today (1 month later) the bank came back to me saying they would give me the mortgage but under new conditions…………….when I queried as to what the conditions were I was told that my interest rate would rise from 3.4% to 4.65% fixed for two years. They also informed me that I have to begin the house and complete 60k of the work upfront before they will release any equity. I do have savings but was hoping to hold back from spending until decoration stage, they are also in a bank for another 8 months earning interest.
I was told that the mortgage rate can change up until the cheque is written. So whats to say when I spend my 60k on the house that the rate will have increased massively?
If the mortgage rates were getting

Really disappointed over this, I think the banks are doing all they can to avoid giving money to us. How on earth will Ireland ever recover?

Sounds like Ulster Bank to me. I had the same problem with them 3 years ago for a 5 year fixed interest rate. We got approved and drew down €380k a few weeks later (full amount). When the first direct debit came out, It was a bit more than agreed. Upon investigating this, I discoered they had raised our interest rate by 1%. They said they reserved the right to change the interest rate until the money was drawn down. I pointed out that I had signed for a lower rate and expected that rate to be honoured. After some phone calls, the rate was lowered and a refund of the overpaid amount agreed. This refund never materialised, but I never chased it.

Look at the terms of the agreed offer. Do they have a time clause on it that you have to draw down the loan by a certain date? I'm not 100% sure, but I don't think they can just change the details, simply because no cheque has been written. You made an agreement and it should be honoured. Otherwise, try a broker and see if you have any luck.

phormium

While I have no great love for UB I feel I have to defend them based on the last comment. It is not uncommon with all the lenders that the rate can change before drawdown. The loan offer is in general the rate available on that day and drawdown date could be months off so the rate is usually not guaranteed to be the rate you will get at drawdown. While at the moment rates are going up, if they were going the other way as happened in the past then this would be an advantage as loan could have been drawn at lower rate than loan offer.

Again not uncommon to expect customer to spend their own money first and then start drawdown of mortgage, you say you would be earning extra interest but you would also be paying repayments on the mortgage which would surely cancel out any gain in interest.

asjm

sorry kinda jumping on this thread. have had same problem but with a broker, doing a self build, got approval for mortgage for 200k, (will not be using the full amount tho) were just waiting on site to be transfered into our names, which it took OH parents solictor over 2.5 months to do!!! eventually it was signed over to us on the 26th April, went to draw down on that day as we have started the house with our own money and were told that the rates for a 3yr fixed has gone to 5.34%, previously 4.34%. rates changed on the 15th April.

I was livid, but after arguing it the broker & solictor there isn't a thing that they can do it. it states it on the loan offer that the rates can change before you draw down, so if you dont draw done for another 2 months it could have changed again!

we are still waiting on draw down and i'm praying rates dont change again! best of luck with it