Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • drivebysighting
    • By drivebysighting 11th Sep 17, 10:24 AM
    • 8Posts
    • 1Thanks
    drivebysighting
    property "not lendable"
    • #1
    • 11th Sep 17, 10:24 AM
    property "not lendable" 11th Sep 17 at 10:24 AM
    Urgent Advice needed! - Banks saying property is "not-lendable" and we have already paid large deposit and exchanged contracts - what can we do if we can't secure mortgage without any fault of our own?

    Quick Summary -
    We exchanged contracts on a new build, now banks say the property is not lendable, we have already handed over large deposit. what option do we have, other then being forced to lose deposit or buying 100% cash if banks offer no mortgage.

    Details -
    We exchanged contracts with the Builder in August 2016 with a small Payment. Completion date of property was expected Oct2017. We made further payments since, adding up to 20%. In August 2017, we were asked to apply for mortgages as completion was nearing. When we applied to banks, the first response is now a shocking "applicaiton denied as surveyors recommendation is the property is 'not-lendable'. "
    the contract with the builder says we lose our deposit. We only spoke to the banks last month, so we have not had a mortgage in place, as we are first time buyers. The Mortgage brokers are trying to find other banks. But it still stands that the property is difficult to lend against and that it might be difficult to sell in the future. And we were not aware of this at the start. Also, its surprising the first bank brokers chose to apply to takes the worst possible view. surely they would pick/talk to bank they know.

    The reason given for "not lendable" is that the the property is in a commercial area with a Pub and casino on the same street.

    What we were adviced-
    We were not aware of what is the best approach, and the Builder setup a launch day where he invited two solicitor companies, and then we were encouraged to sign and exchange moments after providing holding deposit. The Solicitor we were pointed to was already there, he pointed out the various documents and key highlights of the contract and then encouraged us to sign. We assumed this is normal process for a new build launch event.
    We were not highlighted the risks involved especially the ones outside of our ability to borrow. As in we knew we were very eligible for mortgage, and thus assumed that getting the mortgage would not be difficult, we also had mortgage in principle ready. But what we were completely not expecting was the mortgage to be turned down because of reasons different from our eligibility, in this case, the eligibility of the property itself.
    Last edited by drivebysighting; 18-09-2017 at 2:25 PM.
Page 1
    • kingstreet
    • By kingstreet 11th Sep 17, 10:36 AM
    • 32,204 Posts
    • 17,247 Thanks
    kingstreet
    • #2
    • 11th Sep 17, 10:36 AM
    • #2
    • 11th Sep 17, 10:36 AM
    How/Why did a solicitor permit you to exchange contracts without a valid mortgage offer in place?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • davidmcn
    • By davidmcn 11th Sep 17, 10:40 AM
    • 6,067 Posts
    • 5,815 Thanks
    davidmcn
    • #3
    • 11th Sep 17, 10:40 AM
    • #3
    • 11th Sep 17, 10:40 AM
    what option do we have, other then being forced to lose deposit or buying 100% cash if banks offer no mortgage.
    Originally posted by drivebysighting
    Those are your options.
    • davidmcn
    • By davidmcn 11th Sep 17, 10:42 AM
    • 6,067 Posts
    • 5,815 Thanks
    davidmcn
    • #4
    • 11th Sep 17, 10:42 AM
    • #4
    • 11th Sep 17, 10:42 AM
    How/Why did a solicitor permit you to exchange contracts without a valid mortgage offer in place?
    Originally posted by kingstreet
    I'd also query why on earth they're paying 20% upfront!
    • drivebysighting
    • By drivebysighting 11th Sep 17, 10:48 AM
    • 8 Posts
    • 1 Thanks
    drivebysighting
    • #5
    • 11th Sep 17, 10:48 AM
    • #5
    • 11th Sep 17, 10:48 AM
    This is a new build, and one can't have a mortgage on a property which is not ready to be surveyed, is my understanding.
    • davidmcn
    • By davidmcn 11th Sep 17, 10:50 AM
    • 6,067 Posts
    • 5,815 Thanks
    davidmcn
    • #6
    • 11th Sep 17, 10:50 AM
    • #6
    • 11th Sep 17, 10:50 AM
    This is a new build, and one can't have a mortgage on a property which is not ready to be surveyed, is my understanding.
    Originally posted by drivebysighting
    I don't know who you've relied on for advice so far. You can have a valuation and a mortgage offer before it is complete. But you are where you are.
    • kingstreet
    • By kingstreet 11th Sep 17, 11:26 AM
    • 32,204 Posts
    • 17,247 Thanks
    kingstreet
    • #7
    • 11th Sep 17, 11:26 AM
    • #7
    • 11th Sep 17, 11:26 AM
    This is a new build, and one can't have a mortgage on a property which is not ready to be surveyed, is my understanding.
    Originally posted by drivebysighting
    Your understanding is incorrect.

    As a newbuild specialist broker we undertake hundreds of applications each year. Most newbuild mortgage applications see surveyors value from plans/previous instances of the property.

    Either way, you should not have been allowed to exchange contracts without a mortgage offer in place. Even if the completion date is a distance away, several lenders issue offers with long expiry periods and will allow an offer to be extended and simply by applying, this mortgageability issue would have been raised before you made a financial commitment.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • drivebysighting
    • By drivebysighting 12th Sep 17, 11:15 AM
    • 8 Posts
    • 1 Thanks
    drivebysighting
    • #8
    • 12th Sep 17, 11:15 AM
    • #8
    • 12th Sep 17, 11:15 AM
    The process went like - Holding deposit > use builder recommended solicitor > exchange contracts > pay 20% deposit over 12 months > make mortgage application and survey > Bank chooses to decline {Present day}> completion date October2017.
    Last edited by drivebysighting; 12-09-2017 at 1:18 PM.
    • zx81
    • By zx81 12th Sep 17, 11:33 AM
    • 14,042 Posts
    • 14,728 Thanks
    zx81
    • #9
    • 12th Sep 17, 11:33 AM
    • #9
    • 12th Sep 17, 11:33 AM
    The process went like - Holding deposit > use builder recommended solicitor > exchange contracts > pay 20% deposit over 12 months > make mortgage application and survey > Bank chooses to decline {Present day}> completion date October2018.
    Originally posted by drivebysighting
    There's still a year till completion?
    • David White
    • By David White 12th Sep 17, 12:05 PM
    • 849 Posts
    • 367 Thanks
    David White
    Who's suggestion was it to exchange contracts before having a formal offer in place i.e did the developer/conveyancing team push you into doing this or were you eager to exchange yourself?
    I am a Mortgage Broker
    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.
    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • drivebysighting
    • By drivebysighting 12th Sep 17, 1:19 PM
    • 8 Posts
    • 1 Thanks
    drivebysighting
    date completion is October 2017.
    • lee111s
    • By lee111s 12th Sep 17, 1:20 PM
    • 2,858 Posts
    • 1,946 Thanks
    lee111s
    Using the builders solicitor was your first mistake...
    • drivebysighting
    • By drivebysighting 12th Sep 17, 1:20 PM
    • 8 Posts
    • 1 Thanks
    drivebysighting
    the process was laid out by the builder, the holding deposit, the exchange of the contract all happended the same day of the property launch at the launch event itself.
    • NelliePie
    • By NelliePie 12th Sep 17, 2:51 PM
    • 91 Posts
    • 303 Thanks
    NelliePie
    http://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/how-do-i-exchange-contracts/
    https://www.moneyadviceservice.org.uk/en/articles/what-you-need-to-know-about-contract-exchange-and-completion
    http://www.moneysavingexpert.com/mortgages/buying-a-home-timeline
    http://www.fridaysmove.com/conveyancing-advice-dos-and-donts-exchange-contracts/848
    http://www.premiersolicitors.co.uk/Residential,Conveyancing,FAQs,11278,10117,11263,0. html

    Pretty much everywhere I've seen states you should have your mortgage offer in writing BEFORE you exchange contracts so I'm not sure how you've managed to exchange without the offer in writing. I recently purchased a house and once the offer was accepted the mortgage was applied for straight away along with valuation, searches and survery etc. Contracts were only exchanged once my solicitor (and I) were happy that all of the necessary paperwork was in place and understood.

    I'm sorry I can't be much help with your situation now but I wanted to come by and wish you luck


    Edit to add: Also aren't you supposed to have some form of life insurance and buildings insurance etc before exchanging. Even the MSE timeline page says it's usually 2-6 weeks between offer and exchange.
    Last edited by NelliePie; 12-09-2017 at 2:54 PM.
    When life gives you lemons, find the tequila!
    MFW: FTB June 2017 £144k. Target 128k June 2019
    • davidmcn
    • By davidmcn 12th Sep 17, 5:46 PM
    • 6,067 Posts
    • 5,815 Thanks
    davidmcn
    Pretty much everywhere I've seen states you should have your mortgage offer in writing BEFORE you exchange contracts so I'm not sure how you've managed to exchange without the offer in writing.
    Originally posted by NelliePie
    It may be good advice to do so but you can take the risk if you want.

    Also aren't you supposed to have some form of life insurance and buildings insurance etc before exchanging.
    Why would you need life insurance?

    Buildings insurance isn't necessary for newbuild properties until completion (if you're buying off-plan you might only be insuring a patch of mud!). The builders will have their own cover during construction.
    • lord tyrannus
    • By lord tyrannus 13th Sep 17, 7:35 PM
    • 83 Posts
    • 44 Thanks
    lord tyrannus
    I'd say you need to be speaking to a different solicitor asap to see if the builders solicitor has acted negligently on your behalf by exchanging without a mortgage offer in place.

    Who is the builder? I might of missed it in the thread but why exactly is it not lendable?
    • davidmcn
    • By davidmcn 13th Sep 17, 7:38 PM
    • 6,067 Posts
    • 5,815 Thanks
    davidmcn
    I might've missed it in the thread but why exactly is it not lendable?
    Originally posted by lord tyrannus
    It's in the OP:
    The reason given for "not lendable" is that the the property is in a commercial area with a Pub and casino on the same street.
    • Rich2808
    • By Rich2808 13th Sep 17, 8:06 PM
    • 506 Posts
    • 397 Thanks
    Rich2808
    Have your brokers tried Natwest - they are allegedly more flexible on this front?

    http://www.intermediary.natwest.com/intermediary-solutions/lending-criteria.html

    Property types - acceptable
    Flats over or immediately alongside business premises.
    • kk20
    • By kk20 14th Sep 17, 9:10 AM
    • 122 Posts
    • 42 Thanks
    kk20
    I would say you need to look at reporting the solicitor for all the losses you will accrue. I cannot see how it is standard practice to exchange contracts without an offer of mortgage.


    It isn't unheard of for a mortgage offer to be reassessed AFTER an offer has been made (and THEN contracts exchanged - but before completion) a bane of self employed people near year end completions - banks may ask for the latest year finances and reassess etc.


    As to what you can do now? You have already signed agreements with the solicitor so at this moment in time the house is agreed to be yours, you need to pay for it at completion (I assume there is a clause in the contract where you pay a pct if you pull out). You can either look at taking the solicitor to court and getting the agreement undone (I would guess there are "this is a risk" portions of the agreement to cover themselves) or you can go to a decent broker and get another mortgage.
    • davidmcn
    • By davidmcn 14th Sep 17, 9:50 AM
    • 6,067 Posts
    • 5,815 Thanks
    davidmcn
    I would say you need to look at reporting the solicitor for all the losses you will accrue.
    Originally posted by kk20
    Nowhere has the OP told us what advice they received before entering into the contract. If they were told in black and white that they'd be obliged to come up with the money on completion day then I can't say they'd have much of a case. The fact that solicitors tend to be very cautious these days doesn't mean that it's negligent to "allow" clients to exchange contracts - at the end of the day the decision is the client's, and many have no need to be concerned about having a mortgage offer or otherwise finding the cash when the day comes.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

398Posts Today

5,162Users online

Martin's Twitter
  • I believe I can boldly go where no twitter poll has gone before https://t.co/HA0jC92gAK

  • OK I'm wilting to public pressure and there will be a star trek captain's poll at some point next week

  • I can get that. My order is 1. Picard 2. Janeway 3. Kirk. Too early to say where Lorca will end up (or would you? https://t.co/kawtCOe9RA

  • Follow Martin