bought off plan cant get a mortgage

franklee

pmurray wrote: »

Hi, Yes you are spot on, but you may also be charged interest from the date completion should have taken place. I am in the process of this at the moment. My only defence is the amount the builder is charging me, my solicitor has asked the builder to proove their losses. Not fair, I know as the builder looses nothing.

Aren't the builders losses the difference between the amount you are contracted to pay and the amount they eventually sell for plus expenses in finding the new buyer and interest on the money for every day it's late?

Having exchanged contracts the builder should be able to reply upon the amount you agreed to pay hitting his bank account at the agreed time. That money may well be earmarked for use elsewhere in the business, to pay suppliers, contractors and staff, begin the next lot of building etc. If enough buyers default then the builder will have cash flow problems.

In large blocks of flats many buyers defaulting will devalue the whole block causing problems for the people who did complete as the flats will become worth less at the same time as there isn't anyone to pay the maintenance charges for the empty flats so the place goes downhill.

I do have sympathy for those who can't complete but not if they blame everyone else but themselves. I didn't see anyone lining up to pay the builder more when prices rose between exchange and completion so I don't really see why falls should be shouldered by the builder and the fallout shouldered by those who did complete.

pmurray

I find it incredible that you can compare this to the value of property increasing, in that situation everyone was in a win win situation. The bottom line, is that most people on this forum bought a property in good faith, on the understanding that they would be able to secure a mortgage on it. Through no fault of their own they were unable to do so.

If I understand your comments correctly, you are saying that only the purchaser should suffer a loss due to the economic situation and the builder should get all their money by whatever means.

franklee

pmurray wrote: »

I find it incredible that you can compare this to the value of property increasing, in that situation everyone was in a win win situation. The bottom line, is that most people on this forum bought a property in good faith, on the understanding that they would be able to secure a mortgage on it. Through no fault of their own they were unable to do so.

If I understand your comments correctly, you are saying that only the purchaser should suffer a loss due to the economic situation and the builder should get all their money by whatever means.

Yes but only if contracts have been exchanged and the builder has fulfilled their side of the contract. Surely exchange of contracts is when it becomes binding on both sides. Anyone exchanging with a proposed completion date well into the future is taking a risk that all will be well by completion date, that the house will be worth what they expect, that they will have kept their job so still be eligible for the mortgage, that the lender dosn't want a bigger deposit etc. If they did not want to take this risk then they should not have exchanged contracts and their solicitor should have explained all this to them. So it isn't through no fault of the buyer as it's wrong for a buyer to rely upon the good times rolling on especially over the last few years towards the peak of a massive house price boom.

I do have sympathy if the builder was very late getting the property ready, like say a year later than originality estimated. But once again the buyers solicitor should have explained this risk and got a long stop date put in if it was crucial or if that was not possible just advise the buyer not to exchange!

Fire_Fox

muscles wrote: »

Thanks for all the responses.

Just started to negotiate with George Wimpey whilst i firstly try to get a mortgage offer. Wondering if anyone knows where my initial deposit of £15,250 which i paid to George Wimpey goes? Does this go towards my mortgage as a deposit or does the developer keep it?

For but to let mortagages the best deal on the market is 35% deposit so i need that deposit back or i wont be able to complete and will probably be sued!!!

Stop negotiating until you have all the facts at hand. And stop panicking or you will make a mistake in the negotiation process. You clearly don't understand the purchasing process and this needs addressing or you will be eaten alive by the other side.

You need to get hold of your contract and go through it with a fine tooth comb. Visit the solicitors in person and sit there until you get a copy of the contract. You need ONE angle to get out of this contract - the fact that you have split with your partner, can't get a mortgage or need your deposit is irrelevant.

Your angle needs to be that the delay of the purchase is a breach of the original contract, and has effectively made the property unmortgageable. Ask for a letter from the other side confirming the new completion date, then quote from this and from your contract in your letter.

GDB2222

Fire_Fox wrote: »

Your angle needs to be that the delay of the purchase is a breach of the original contract, and has effectively made the property unmortgageable. Ask for a letter from the other side confirming the new completion date, then quote from this and from your contract in your letter.

The trouble is that the original completion date was mid-2008, and the OP would have been in no better position to complete then as prices for these flats had already nose-dived.

GDB2222

pmurray wrote: »

I find it incredible that you can compare this to the value of property increasing, in that situation everyone was in a win win situation. The bottom line, is that most people on this forum bought a property in good faith, on the understanding that they would be able to secure a mortgage on it. Through no fault of their own they were unable to do so.

If I understand your comments correctly, you are saying that only the purchaser should suffer a loss due to the economic situation and the builder should get all their money by whatever means.

So, someone enters a contract without having secured the funding in advance, and they are not at fault? Why not?

This off-plan purchasing was largely gambling that prices would continue rising. You talk about the economic situation, as if it was extraneous, but the present economic situation has been caused by these sorts of deals. Basically, whilst I am actually highly sympathetic, people in this situation should recognise that they are the architects of their own misfortune.

ad9898_3

I have to say I have little sympathy for the OP, the flat is obviously a BTL, as he states he already has a house, he wanted to make money by doing nothing other than watching the HPI create a nice pension pot.

What he actually did was place rather a larger wager on red at the roulette table, when the wheel stopped it came up black, that's the way cookie crumbles.

Trollfever

The developers will usually have employed very expensive lawyers to draw up their sales contracts.

Caveat Emptor.


.

pmurray

Because, funding WAS in place at time of purchase.....then the lenders changed their lending criteria, who is at fault?

Yes it was a gamble, for investors, but not for people who wanted to move into their property and then could not, due to low valuations or being unable to get the money together.

QUOTE=GDB2222;21898127]So, someone enters a contract without having secured the funding in advance, and they are not at fault? Why not?

This off-plan purchasing was largely gambling that prices would continue rising. You talk about the economic situation, as if it was extraneous, but the present economic situation has been caused by these sorts of deals. Basically, whilst I am actually highly sympathetic, people in this situation should recognise that they are the architects of their own misfortune.[/QUOTE]

GDB2222

pmurray wrote: »

Because, funding WAS in place at time of purchase.....then the lenders changed their lending criteria, who is at fault?

Yes it was a gamble, for investors, but not for people who wanted to move into their property and then could not, due to low valuations or being unable to get the money together.

You are just quibbling. You could not secure mortgage funding so far in advance. You may have thought you would meet the borrowing criteria when the time came, but that is not the same as having an irrevocable mortgage offer (which does not exist as far as I know) or the cash in the bank. The buyer was taking a huge risk, but maybe did not even realise it. So, if he took the risk recklessly he's at fault, and if he was too incompetent to understand what he was doing he was still at fault, although I suppose one ought to be sympathetic.

And it was a gamble, whether for investment or owner-occupation. I concede that someone needing a property to live in might have been more desperate to make the gamble.

I'm sorry to hammer on about this, but as long as people keep avoiding responsibility for their own actions, this country will continue to slide into oblivion.