Power of attorney mortgage application
You might have been appointed as an attorney for someone unable to make large decisions themselves.
One of your primary responsibilities may be to manage their property and financial affairs. This could include property transactions or mortgages.
Mortgage applications involving a power-of-attorney (POA) can be complex and require extra diligence. There is help. This guide to power-of-attorney and mortgage will provide you with all the information and point you in the right direction.
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What does power-of-attorney mean for mortgages
You might be asked to act as a financial power-of-artist if you are a donor. This includes managing financial affairs and any mortgages and ensuring they get paid.
It is difficult to manage all of these things for someone who can no longer do so. However, support is available. Mortgage advice from mortgage brokers can offer tailored advice and assist attorneys in navigating the complex mortgage process.
These are the services that a good mortgage broker can offer…
- Discuss with you whether existing mortgages are feasible for the donor.
- Check that the donor is eligible for the lowest rate on any mortgages currently in force
- Recommendations on whether or not a new mortgage application is in a donor’s best interests
- Assess whether equity release or remortgages are in the best interests of their clients
- Recommendation for insurance products to protect the donor
Our network has mortgage advisors who specialise in helping people in such situations that have lost mental capacity. They can provide impartial guidance and deal with the enquiry with sensitivity.
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Applying for a mortgage as power of attorney
A power of attorney is someone who acts on behalf of a donor to apply for a mortgage. The attorney may have to ensure that the person they are acting for has somewhere to stay indefinitely.
All mortgage lenders may not accept these circumstances. Some lenders won’t allow an attorney to apply for a mortgage for the person they appointed. Those who can accommodate this will usually double-check the agreement’s legal document to ensure nothing is illegal.
Lenders who accept power-of-attorney mortgage applications may request additional underwriting assessments. They may also insist on manually reviewing the details of the deal. You may encounter additional conditions and caveats.
Criteria for eligibility, possible restrictions and caveats
The lender may ask for the following information to grant a power-of-attorney mortgage application.
- A copy of the power-of-attorney legal document
- Additional checks by their underwriters or the legal department of the lender
- If the attorney borrows from the donor’s account, permission from the Office of the Public Guardian.
- Some lenders may decline to lend if the attorney and donor are both borrowers.
- Some lenders won’t allow an attorney to remortgage for the donor.
Mortgage lenders often reject these applications. Many will want to know all the agreement details, including why the donor cannot sign the mortgage deeds. These details are often given to the legal department of the mortgage provider for review.
There are likely to be restrictions and caveats from certain lenders. However, other mortgage providers have a better understanding of the needs of donors and attorneys than others. These lenders are flexible and will assess each case individually.
Talk to a mortgage broker today for more information. We have several existing customers who have attorney power.
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Is it possible for a power of attorney to transfer property to oneself?
Attorneys who manage financial affairs can purchase and sell the property when it is in the donor’s best interests, but transferring property to oneself is a grey area.
Mortgage lenders recommend that you proceed with caution.
An attorney cannot use their position to gain personal benefit or to benefit themselves. If you plan to purchase the property yourself, it is necessary to contact the Office of the Public Guardian for permission.
They will decide if a sale to an attorney is in the donor’s best interests and ensure that the agreement is fair.
If you are acting as an attorney for a donor, it is unlikely that you can buy their property below market value. However, OPG permission is required.
Equity release and power of attorney
An attorney can take out an equity-release mortgage for their donor. However, not all equity release providers are comfortable with this. The ones that would consider it will have strict checks and take steps to prevent misuse of POA.
The equity release provider will want to see all documentation confirming the attorney’s POA status. They will also seek evidence that Office of the Public Guardian permission has been granted. The provider will also need to know why an attorney is taking equity releases on behalf of a donor. They might find some reasons justifiable, but others may not.
Most equity release providers that accept the power of attorney applications will allow it for the following reasons:
- Let the donor know that they can release funds to allow them to continue living in their home.
- To cover the cost of home care.
- Home adaptations to support a donor with mobility issues
- Repay family support costs
There are many legitimate reasons an attorney could claim equity release on behalf of a donor. Lenders may approve of other reasons, but they will be required to show evidence that the funds were used for the stated purpose.
If you are applying for a power of attorney, it is a good idea to speak with a broker specialising in equity release.
They will be able to negotiate the best deal for you and your donor, as they will know which lenders are allowed.
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Remortgages by the power of attorney
Many mortgage lenders will accept remortgage requests from attorneys trying to refinance for their donors. This would be in the donor’s best interests in certain situations, such as if they have an existing mortgage and are about to switch to a more costly standard variable rate (SVR).
Some lenders won’t allow full mortgage applications and only allow attorneys to remortgage. Other mortgage providers will consider the reason for the remortgage. Some lenders won’t approve a remortgage request that changes the mortgage type from residential or buy-to-let.
Speaking with a mortgage broker before applying for a power of attorney is a good idea. An advisor familiar with donor and attorneys’ requirements can increase your chances of getting the financing you need. It could also save you money over the long term.
Power of attorney for property and financial matters
You are a property and financial law attorney.
- Money, taxes and bills
- Bank and building society accounts
- Property and Investments
- Pensions and other benefits
You can make decisions if both the donor and you have the mental ability.
- The lasting power of attorney LPA ) says you can
- The donor grants permission
You cannot make decisions if you don’t have the mental capacity.
The money can be used to take care of their home or to buy them food.
If they have one, discuss decisions that will affect the donor’s daily life, medical care, or living arrangements with them.
Discuss where the donor will reside with your health and welfare attorney if you decide to sell their home.
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Take care of your money and your property
You must keep the donor’s finances separate from yours unless something is already in your name,s such as a joint bank account or a home.
Management of the money and accounts donated by donors
Banks and other organisations (such as pension providers and utility companies) will require proof that you are an attorney. To prove that you can act on behalf of the donor, use your lasting power-of-attorney
Other details may be required, such as:
- Your name, address, and date of birth
- The address or name of the donor
Other information such as an account number may also be required.
Spend money on donations or gifts
Except for the LPA, Unless stated otherwise, you can still spend money on:
- Gifts to friends, family members or acquaintances for occasions where you wouldn’t normally gift gifts (e.g. birthdays or anniversaries).
- Donations to charities that donors would agree to accept, such as a charity they have donated to before.
You must file a Court of Protection request for any other type of donation or gift, even if they have been given before. These include:
- Paying for someone’s university or school fees
- Allowing someone to live in the donor’s property without paying market rent. Anything they pay less than market rent counts as a donation.
- Interest-free loans
Even if the donor has previously spent money on such items, you must verify that they can afford the gift. You can’t donate their money if they cannot pay for their care costs.
For more information about giving gifts or donations, please refer to the guidance.
Property buying and selling
Get legal advice
- The sale price is below market value
- You want to purchase the property yourself
- You are giving it to someone else
Making a Will
You can request a statutory will for the donor who needs it but cannot do it.
It is impossible to change the will of a donor.
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There are many types of power of attorney mortgages
There are many types of power of attorney, and you can have more than one.
Ordinary power to attorney
This includes financial decisions and is valid as long as you can make them. This is a good option if you require temporary cover (hospital stay, holiday), if it is difficult to get out, or if you want someone else to act on your behalf.
Lasting Power of Attorney (LPA)
LPAs cover financial decisions, as well as your health care and finances. If you cannot make your own decisions or lose your mental capacity, an LPA will be in effect. If you want to be covered in the future, you will create an LPA.
Enduring power to an attorney (EPA)
LPAs replaced EPAs in October 2007. However, EPAs signed before October 2007 should still be valid. The EPA covers financial and property decisions. It is effective if you cannot make them or if someone else wishes to do so.
Talk to an expert mortgage broker
It’s crucial to seek the right advice if you are an attorney applying for mortgage financing on behalf of a donor. It can be complicated to get mortgage financing.
Expert advice is often a good idea.
Our broker-matching service is free and can help you find the right advisor. This person will have knowledge and experience in arranging mortgages, including power of attorney.
For a no-obligation chat, contact us today.
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