Any Mortgage specialist - financial covenant

[The Merovingian]

Looking for some advice please

we are in the process of remortgaging 5yr fix 60% LTV product received offer from bank however they resent the offer letter adding the following;

"The following financial covenants shall apply to the Facility:
The Client shall ensure that the Loan together with any other outstanding financial
indebtedness that the Client has with the Bank] shall not at any time exceed 50% of the
Property Value (Loan to Value Percentage). The Property Value is the value (or aggregate
value, if applicable) of the Property set out in the latest valuation obtained by the Bank from a
professional valuer on such bases and assumptions as the Bank may in its discretion require.
The Bank may obtain a new valuation from time to time in accordance with Clause 2.8
(Facilities secured by Property) of the Lending and Finance Terms and Conditions and the
Property Value and Loan to Value Percentage will be calculated by the Bank by reference to that
updated valuation. Where the Bank is permitted to do so, the Bank will disclose the Property
Value to the Client upon request. "


I have queried the above as we are at 46.5% LTV but i am concerned that any redjustment in valuation could result in default through no fault of our own

Bank are claiming it is a standard covernant but i have never heard of such a clause and my concern is why was it not included in their original offer letter

[tight fart]

Look up Sarnie

[Sarnie]

The Merovingian said:

Looking for some advice please

we are in the process of remortgaging 5yr fix 60% LTV product received offer from bank however they resent the offer letter adding the following;

"The following financial covenants shall apply to the Facility:
The Client shall ensure that the Loan together with any other outstanding financial
indebtedness that the Client has with the Bank] shall not at any time exceed 50% of the
Property Value (Loan to Value Percentage). The Property Value is the value (or aggregate
value, if applicable) of the Property set out in the latest valuation obtained by the Bank from a
professional valuer on such bases and assumptions as the Bank may in its discretion require.
The Bank may obtain a new valuation from time to time in accordance with Clause 2.8
(Facilities secured by Property) of the Lending and Finance Terms and Conditions and the
Property Value and Loan to Value Percentage will be calculated by the Bank by reference to that
updated valuation. Where the Bank is permitted to do so, the Bank will disclose the Property
Value to the Client upon request. "


I have queried the above as we are at 46.5% LTV but i am concerned that any redjustment in valuation could result in default through no fault of our own

Bank are claiming it is a standard covernant but i have never heard of such a clause and my concern is why was it not included in their original offer letter

I've never seen anything like that in a mortgage offer.......makes no sense.....which lender is it?

[The Merovingian]

It's Barclays but I should add we are based in Guernsey so it is their offshore division

[Sarnie]

The Merovingian said:

It's Barclays but I should add we are based in Guernsey so it is their offshore division

Ah.........thought there must have been something quirky going on............different rules apply.......what reason have they given for not inserting into the original offer?

Why is there a second offer?

Or is this a Product Transfer with the current lender?

[The Merovingian]

They said it was omitted due to an internal error

It is new business we are transferring our mortgage from a different lender

[Killer2005]

Could it be a max 50% LTV product?

I'm not familiar with anything like from my time at Barclays but that wasn't the offshore bit.

[Sarnie]

Killer2005 said:

Could it be a max 50% LTV product?

I'm not familiar with anything like from my time at Barclays but that wasn't the offshore bit.

"we are in the process of remortgaging 5yr fix 60% LTV product"

[The Merovingian]

It's definitely a 60% LTV as that was my first thought

might be another mistake on their part as they don't seem to be particularly good

survey came back wit photos of a totally different property

i am not inclined to accept however we will forfeit almost £2k in arrangement and valuation fees

[Sarnie]

The Merovingian said:

It's definitely a 60% LTV as that was my first thought

might be another mistake on their part as they don't seem to be particularly good

survey came back wit photos of a totally different property

i am not inclined to accept however we will forfeit almost £2k in arrangement and valuation fees

Arrangement fees are refundable before completion if you've paid them upfront............

[The Merovingian]

Sarnie said:

The Merovingian said:

It's definitely a 60% LTV as that was my first thought

might be another mistake on their part as they don't seem to be particularly good

survey came back wit photos of a totally different property

i am not inclined to accept however we will forfeit almost £2k in arrangement and valuation fees

Arrangement fees are refundable before completion if you've paid them upfront............

Thanks Sarnie that is good to hear will be a bit more robust as to why the covenant has been requested

even so the survey fee was not cheap