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  • 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 2
    • kk20
    • By kk20 14th Sep 17, 10:11 AM
    • 122 Posts
    • 42 Thanks
    kk20
    well obviously, without all the information to hand then of course we cant say "We would do this". However, the timeline of events looks very unorthodox for a house sale. Even if a component is in place for a get out clause, asking a person for exchange of contracts on a property over 1 year away is very suspect. A regular mortgage vendor might not even look at an offer long term (im not saying that a vendor WONT offer); a regular solicitor would probably advise people against completing without money in place. I would also imagine a contract that is being drawn up for you as instructed on your behalf should be working for your interests. I would imagine such contracts would highlight the risks. I know my solicitor contracts have always highlighted the "normal" risks, never mind a risk of "you are exchanging contracts without having a definite means to pay".


    Horses for courses. But the options are still valid; look at defeating the agreement, look at a new mortgage, pull out and pay the clause penalties, pay cash.
    Last edited by kk20; 14-09-2017 at 10:16 AM.
    • davidmcn
    • By davidmcn 14th Sep 17, 1:04 PM
    • 6,084 Posts
    • 5,831 Thanks
    davidmcn
    Even if a component is in place for a get out clause, asking a person for exchange of contracts on a property over 1 year away is very suspect.
    Originally posted by kk20
    But not that unusual when developments are being sold off-plan. Here's a current thread about a development not scheduled for completion for three years: http://forums.moneysavingexpert.com/showthread.php?t=5709877

    So the developers are (presumably) expecting everyone to sign up well in advance of a date anybody could get a suitable mortgage offer

    I would also imagine a contract that is being drawn up for you as instructed on your behalf should be working for your interests.
    Buyers have very little negotiating clout - pretty much take it or leave it.

    And no matter how strongly solicitors advise clients, often their clients have pound signs in their eyes and are convinced nothing can go wrong (or at least that the risks are worth it).
    • drivebysighting
    • By drivebysighting 18th Sep 17, 2:12 PM
    • 8 Posts
    • 1 Thanks
    drivebysighting
    Thanks!
    Have your brokers tried Natwest - they are allegedly more flexible on this front?

    ...
    Property types - acceptable
    Flats over or immediately alongside business premises.
    Originally posted by Rich2808

    thanks for your suggestion! appreciate it :-)
    • drivebysighting
    • By drivebysighting 18th Sep 17, 2:14 PM
    • 8 Posts
    • 1 Thanks
    drivebysighting
    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?
    Originally posted by David White
    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.
    • drivebysighting
    • By drivebysighting 18th Sep 17, 2:20 PM
    • 8 Posts
    • 1 Thanks
    drivebysighting
    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.
    Originally posted by davidmcn
    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.
    • davidmcn
    • By davidmcn 18th Sep 17, 2:31 PM
    • 6,084 Posts
    • 5,831 Thanks
    davidmcn
    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.
    Originally posted by drivebysighting
    But you were told that the contract obliged you to pay the balance of the price on completion?
    • Time2go
    • By Time2go 18th Sep 17, 2:32 PM
    • 183 Posts
    • 40 Thanks
    Time2go
    Are you sure you have exchanged and not just reserved as searches would have had to be done and even to exchange normally takes weeks.
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