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Power of Attorney and Mortgages

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 24, 2021

If you’ve been appointed as an attorney for someone who no longer has the mental capacity to make big decisions for themselves, one of your main responsibilities might be to manage their financial affairs. This could potentially include property transactions and mortgages.

Mortgage applications where there’s a power of attorney (POA) involved can be complicated and often call for extra lender diligence. But the good news is that there’s help available. We’ve put together this guide to power of attorney and mortgage applications to bring you the information you need on this subject and steer you towards the right advice.

What does power of attorney mean for mortgages?

If you have been appointed as a financial power of attorney, you might need to buy or sell property on the donor’s, manage any mortgages they have and make sure they’re paid, consider whether things like remortgages and equity release are in their best interest and think about what type of protection insurance they might need.

Managing any of these things for somebody who no longer has the capacity to take care of them personally is a huge responsibility, but support is available. There are mortgage brokers who specialise in helping attorneys and they can offer bespoke advice on all of the above.

The right mortgage broker can provide the following services…

  • Advise you on whether any existing mortgages are affordable for the donor
  • Make sure the donor has the best rate on any existing mortgages
  • Advise you on whether a new mortgage application is in the donor’s best interest
  • Impartially assess whether remortgages or equity release are in their best interest
  • Recommend protection insurance products for the donor

There are mortgage advisors in our network who specialise in helping people in these circumstances. They fully understand the needs of someone who’s acting as an attorney and can provide them with impartial guidance and handle the enquiry with sensitivity.

Applying for a mortgage as a power of attorney

Somebody who’s acting as a power of attorney can apply for a mortgage on behalf of their donor. This is because the attorney’s responsibilities may include making sure the individual they’re acting on behalf of has somewhere to live indefinitely.

Not all mortgage lenders will consider a mortgage application under these circumstances. Some won’t even entertain the notion of allowing an attorney to apply for a mortgage on behalf of the person who appointed them, and those who can accommodate this usually place extra scrutiny around the agreement to double check there’s nothing underhanded going on.

Many lenders who are open to power of attorney mortgage applications request additional underwriting assessments and may insist on manually checking the finer points of the deal. It’s not uncommon to encounter additional requirements and caveats here.

Eligibility criteria, potential restrictions and caveats

For a power of attorney mortgage application, the lender might request the following…

  • A copy of the power of attorney documentation
  • Extra checks from their underwriters and the lender’s legal department
  • Office of the Public Guardian permission if attorney is borrowing on donor’s behalf
  • Some lenders will decline outright if attorney and donor are both borrowers
  • Some lenders will only allow an attorney to remortgage on behalf of the donor

Mortgage lenders are known to proceed with caution on these applications. Most will be keen to know all of the details surrounding the agreement in advance, including why the donor is incapable of signing the mortgage deeds themselves. This information is often passed over to the mortgage provider’s legal department for evaluation.

While there’s a good chance you’ll encounter restrictions and caveats from some lenders, the good news is that other mortgage providers understand the needs of attorneys and donors better than others. These lenders are known to be flexible with these deals and assess applications on a case-by-case basis – speak to a broker to find out who they are.

Can a power of attorney transfer a property to themselves?

While attorneys who’ve been charged with managing the financial affairs of another person can buy and sell property when it’s in the donor’s best interest, transferring a property to themselves is something of a grey area and mortgage lenders would proceed with caution.

An attorney cannot use their position for personal gain or to benefit themselves, so it’s necessary to contact the Office of the Public Guardian (OPG) for permission if you’re planning to buy the property yourself. They can rule on whether a sale to the attorney is in the donor’s best interest and will make sure the agreement is fair and above board.

In most circumstances, you’d be unlikely to be able to buy a donor’s property for below market value if you’re acting as their attorney, but OPG permission is needed regardless.

Power of attorney and equity release

It’s possible for an attorney to take out an equity release mortgage on behalf of their donor, but not all equity release providers will be comfortable with this, and the ones which would consider it will be stringent with their checks and take measures to ensure there is no misuse of POA.

The equity release provider will expect to see full documentation confirming the attorney’s POA status and will be keen to see that Office of the Public Guardian permission is in place. The provider will also want to know the reason an attorney is taking equity release on the donor’s behalf. Some reasons might be justifiable to them, while others might not.

Most equity release providers who consider power of attorney applications will generally allow it for the following purposes…

  • Release funds so the donor can afford to continue living in their home
  • To pay for the cost of care at home
  • To make home adaptations for a donor who needs mobility support
  • To repay family support costs

The list of legitimate reasons for an attorney to claim equity release on their donor’s behalf are not strictly limited to the above. There are others which lenders might approve of, but expect to be asked to provide evidence that the funds are being used for the stated purpose.

Speaking to a broker who specialises in equity release is recommended if you’re making a power of attorney application. They will know exactly which lenders allow this with the least caveats and restrictions, and can negotiate the best deal on behalf of you and your donor.

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Power of attorney remortgages

Some mortgage lenders are perfectly happy to consider remortgage applications from attorneys who are trying to refinance on their donor’s behalf. There are scenarios where this would obviously be in the donor’s best interest, such as them having an existing mortgage that’s about to switch to a lender’s more expensive standard variable rate (SVR).

Indeed, some mortgage lenders only allow attorneys to remortgage and won’t accept full mortgage applications from them. Other mortgage providers will base their lending decision on the reason for the remortgage. For example, some lenders won’t be willing to approve a remortgage application that would change the mortgage type from residential to buy-to-let.

This is why speaking to a mortgage broker before you proceed with a power of attorney application is recommended. Having an advisor on your side who understands the needs of remortgage requirements of attorneys and donors can boost your chances of getting the finance you need, and might even save you time and money in the long run.

Speak to an expert mortgage broker

If you’re an attorney who’s applying for mortgage finance on behalf of a donor, it’s important to get the right advice before you begin. This can be a complex area of mortgage lending and it often pays dividends to have an expert in your corner.

We offer a free broker-matching service that can ensure you’re paired up with the right advisor. This will be somebody with knowledge and experience of mortgage applications where power of attorney is involved, and a strong track record arranging them.

Call us today on 0808 189 2301 or make an enquiry and we’ll match you with a broker who specialises in power of attorney mortgage applications for a free, no-obligation chat today.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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