Which property?

hethmar

Well, a big plus now is having a mortgage already approved in principal - if you have that?

typeractive

hethmar wrote: »

Well, a big plus now is having a mortgage already approved in principal - if you have that?

Hi Hethmar,

Not quite yet - though it won't be a problem (I'm pretty sure - hoping), I have a decent deposit to put down etc.

typeractive

Following my offer on the terraced property, I have a had the response below:

"still feel offer is too low, also will not agree to a retention of funds but would agree to you havving time between CX and LC to do works required."

Basically I made an offer, and also said that: should the lender not deem the property as mortgageable I would be willing to negotiate an to get the necessary work done (out of my own pocket) to put the property to a habitable state.

I think they mean the same thing, but I do not know what CX and LC mean!

As long as they agree to my offer (which I don't want to budge on), I am willing to get the work done (if necessary) from my own pocket (basically ask a kitchen fitter friend (well distant friend) to fit an old kitchen that he next rips out.

Can anyone suggest what they mean with their response? Do they mean between offer acceptance and legal completion perhaps?

I'm in a good position to help them with that - I'm hoping they would realise this and let me buy it!

Thanks

GDB2222

CX would be contract exchange I guess.

silvercar

You need to cover yourself, no point spending money on someone else's home if that doesn't give you guarantee of purchase at price agreed.

You also need to make sure you have enough money for the work to be done and the deposit.

Forget the idea of a rention on the mortgage. If there is no kitchen or bathroom (that means running hot water facility to both) you won't get any mortgage.

Both these properties are suited to cash buyers, or at least people who can borrow the money elsewhere. After 6 months ownership and the work completed, they remortgage to get their cash out.

GDB2222

I'm really surprised that lenders won't lend a reasonable proportion of the property value, especially if it is a repo.

typeractive

silvercar wrote: »

You need to cover yourself, no point spending money on someone else's home if that doesn't give you guarantee of purchase at price agreed.

Yep - exactly! I don't want to do any work only to lose out. How can I cover myself? With a good solicitor? That would write a contract to cover me

You also need to make sure you have enough money for the work to be done and the deposit.

Yep - that's another reason I want the price to come down a bit. I do have provision for both deposit and work, thoughI would only install the most basic kitchen just to get the property habitable (second hand / old ripped out kitchen).

Forget the idea of a rention on the mortgage. If there is no kitchen or bathroom (that means running hot water facility to both) you won't get any mortgage.

Right - I need a bit of help here.

I thought coming up with a retention deal meant: I could put a 'hold' on the property, pay for any works to be done, once it satisfies the mortgage lenders criteria they would then release the mortgage funds - the vendor gets the money, I get the house.

Is that wrong?

The vendor put in a kitchen sink, directly supplied to the water supply - the boiler is out of action. So there will be no hot water - I can pretty much guarantee that.

Both these properties are suited to cash buyers, or at least people who can borrow the money elsewhere.

Yeah - I would agree there, though I think I am still in a position to go for it! (well I hope so)

If you can help clarify a bit more that would be super.

Many thanks!

silvercar

Lenders put a retention on a property so that they retain some of the mortgage until certain works are completed. You generally have to pay a re-inspection fee and when the work is done you get your money.

If a property is uninhabitable or lacks basic functionality then the lenders can just refuse to offer a mortgage on it. Occasionally I have heard of full retentions ie they agree to mortgage it but they are retaining all the money until the work is done.

The problem is that the more they retain the less money you have to pay the vendor and do the work.

What exactly constitutes unmortageable as opposed to a retention can be down to the valuer. In fact one valuer can be tamer than another. It can help to be in the property at the time of the valuation, so you can discuss your plans. Your LTV can also influence things. We had a tough valuer who made some disparaging comments about one room, but our loan to value (LTV) was low so the lender wasn't bothered.

typeractive

silvercar wrote: »

Lenders put a retention on a property so that they retain some of the mortgage until certain works are completed. You generally have to pay a re-inspection fee and when the work is done you get your money.

Check.

If a property is uninhabitable or lacks basic functionality then the lenders can just refuse to offer a mortgage on it. Occasionally I have heard of full retentions ie they agree to mortgage it but they are retaining all the money until the work is done.

The problem is that the more they retain the less money you have to pay the vendor and do the work.

Check

What exactly constitutes unmortageable as opposed to a retention can be down to the valuer. In fact one valuer can be tamer than another. It can help to be in the property at the time of the valuation, so you can discuss your plans. Your LTV can also influence things. We had a tough valuer who made some disparaging comments about one room, but our loan to value (LTV) was low so the lender wasn't bothered.

Right. I think it might be difficult for me to be in the property when the survey happens. My LTV should be good, maybe that will help for something?

Thanks for the help, any chance you know what the following means?

"still feel offer is too low, also will not agree to a retention of funds but would agree to you havving time between CX and LC to do works required."

I don't know what the time between CX and LC mean exactly. Sure I can ask, but I think it makes me look a bit more clued up if I can respond with prior knowledge.

Let's say for example I was to do the work with my own finances prior to recieving the monies from the lender would a solicitor be able to adivse and support me, or is it too risky?

hethmar

Id assume CX is the exchange and LC is the legal charge (completion).

So they are saying they would agree to you doing the required works after you exchange contracts (and are committed) and when the funds are released at completion.