Bottom of chain has mortgage pulled AFTER exchange

vexta

Not sure what you mean about the bit above the 10% not funded by the mortgage but in this case the FTB is the only one who's yet paid a deposit and that's made it up the chain as far as our solicitor.

picardygirl

dippydog wrote: »

Thanks Silvercar, but I am still a little confused. I know it is rare, but what you are saying, is excange allows for presumptions rather than necessities.

I would not want to book a removal van on the basis my mortgage could still be pulled, I always thought exchange meant that everyone was able to proceed when it seems that is not true.

I'm also unclear as to how mortgage companies work? I know an AIP is about as much use as a chocolate teapot, but if your solicitor says they have the mortgage offer back from the underwriter, I thought it was a done deal. But reading this forum, it suggests the mortgage complanies continue to do credit checks and the like post issue of the offer, rendering it also inaffective surely as they can still withdraw it?

That to me means there is little point in exchanging.

I am in agreeance - i was always told and certainly under the impression once exchange had taken place it was a done deal ! After the stress of our last house move, i always said i'd never move again ....................

barnaby-bear

dippydog wrote: »

Thanks Silvercar, but I am still a little confused. I know it is rare, but what you are saying, is excange allows for presumptions rather than necessities.

I would not want to book a removal van on the basis my mortgage could still be pulled, I always thought exchange meant that everyone was able to proceed when it seems that is not true.

I'm also unclear as to how mortgage companies work? I know an AIP is about as much use as a chocolate teapot, but if your solicitor says they have the mortgage offer back from the underwriter, I thought it was a done deal. But reading this forum, it suggests the mortgage complanies continue to do credit checks and the like post issue of the offer, rendering it also inaffective surely as they can still withdraw it?

That to me means there is little point in exchanging.

Exchange means everyone is legally *obliged* to proceed and they are taking personal RESPONSIBILITY for failure to do so..... if people are concerned that in the event of a mortgage being pulled they couldn't fulfil those responsibilities they need to exchange and complete on the same day or draw the mortgage down at exchange.... in Scotland making an offer commits you much earlier...

dippydog_2

barnaby-bear wrote: »

Exchange means everyone is legally *obliged* to proceed and they are taking personal RESPONSIBILITY for failure to do so..... if people are concerned that in the event of a mortgage being pulled they couldn't fulfil those responsibilities they need to exchange and complete on the same day or draw the mortgage down at exchange.... in Scotland making an offer commits you much earlier...

OK BUT this is where it therefore falls short imo.

If I have applied for a mortgage and been given the offer, I would assume the mortgage company are satisifed with all aspects of the mortgage. (Assuming I had ben honest and upfront and assuming they fulfill their obligation to determine I meet their criteria which, after all, is how they decide whether or not to proceed and give the offer, surely?)

If I then exchange and the mortgage company decide to pull the mortgage, why on earth should I then be personally accountable for them deciding to change their mind? They should be obliged to commit to the mortgage at exchange if I am being obliged to commit to proceeding...

And you see. my assumption until I read this thread, was that that was the case and it still leaves me with the belief that exchange of contracts is therefore fruitless.

GDB2222

vexta wrote: »

Not sure what you mean about the bit above the 10% not funded by the mortgage but in this case the FTB is the only one who's yet paid a deposit and that's made it up the chain as far as our solicitor.

It may be with your solicitor, but he is probably holding it on behalf of the people at the top of the chain.

silvercar

dippydog wrote: »

I would not want to book a removal van on the basis my mortgage could still be pulled, I always thought exchange meant that everyone was able to proceed when it seems that is not true.
....
That to me means there is little point in exchanging.

Your going to have to book your removal van at some point. Waiting til after exchange is prudent. Not booking one carries other risks.

vexta wrote: »

Not sure what you mean about the bit above the 10% not funded by the mortgage but in this case the FTB is the only one who's yet paid a deposit and that's made it up the chain as far as our solicitor.

Example: House price 250k, 10% deposit paid at exchange= 25k, if mortgage is 150k, 40k coming from sale of current property then there is 35k personal funds. I wouldn't pass this 35k to solicitors and risk losing the tax wrapping, interest on notice accounts etc until exchange.

picardygirl wrote: »

I am in agreeance - i was always told and certainly under the impression once exchange had taken place it was a done deal !

You have to operate on the basis that people will meet the contracts they have entered into. Although there are a few threads of people with problems they make up a tiny minority of transactions.

The risks of only completing on the same day as exchange is that someone tries to reduce price on the day, or that someone walks away. If you did arrange to exchange and complete on the same day, you would have to pay for removals etc and commit your funds before exchange, leaving you at far greater risk of being out of pocket with no redress.

barnaby-bear

dippydog wrote: »

OK BUT this is where it therefore falls short imo.

If I have applied for a mortgage and been given the offer, I would assume the mortgage company are satisifed with all aspects of the mortgage. (Assuming I had ben honest and upfront and assuming they fulfill their obligation to determine I meet their criteria which, after all, is how they decide whether or not to proceed and give the offer, surely?)

If I then exchange and the mortgage company decide to pull the mortgage, why on earth should I then be personally accountable for them deciding to change their mind? They should be obliged to commit to the mortgage at exchange if I am being obliged to commit to proceeding...

And you see. my assumption until I read this thread, was that that was the case and it still leaves me with the belief that exchange of contracts is therefore fruitless.

Because you've entered into a contract the vendor to buy the house. To do this you enter into another contract with the mortgage company to get the funds to fulfil your first contract - a second contract that usually allows them to withdraw the offer at any point.... if you'd entered into a contract that didn't allow this you would have come back but most mortgage contracts don't.... your liability to the first contract is independent of your second contract and nothing to do with the vendor. If you have a credit card debt with goldfish and were relying on a loan offer from lloyds to pay it but it was withdrawn you'd still be liable for your legal obligations to goldfish....

GDB2222

barnaby-bear wrote: »

Because you've entered into a contract the vendor to buy the house. To do this you enter into another contract with the mortgage company to get the funds to fulfil your first contract - a second contract that usually allows them to withdraw the offer at any point

Yes, but the real point here is that nobody in their right mind would go ahead on that basis. Of course, not many people read the small print, so they may not be aware of what they are doing. Their solicitor should advise them, but as this is apparently the norm, they perhaps won't. To be frank, I am not aware that the offer to grant the loan can be withdrawn on a whim, and I really doubt that it is so.

On the other hand, if somebody fails to provide all the relevant particulars on the application form (and a bankruptcy 5 years ago is clearly relevant), it is not surprising that the mortgage offer can be withdrawn. Hiding the bankruptcy details or providing them at some later stage of the application is really asking for trouble.

dippydog_2

barnaby-bear wrote: »

Because you've entered into a contract the vendor to buy the house. To do this you enter into another contract with the mortgage company to get the funds to fulfil your first contract - a second contract that usually allows them to withdraw the offer at any point.... if you'd entered into a contract that didn't allow this you would have come back but most mortgage contracts don't.... your liability to the first contract is independent of your second contract and nothing to do with the vendor. If you have a credit card debt with goldfish and were relying on a loan offer from lloyds to pay it but it was withdrawn you'd still be liable for your legal obligations to goldfish....

Indeed - but nor would I agree to pay the debts to goldfish until I was in receipt of the money from lloyds.

So I feel that exchanging contracts is dangerous because it commits me to purchasing a house without any knowledge of whether the funds will be there until completion? I'm dependent on the bank honouring their offer but actually they don't have to.

So really I am best off exchanging and completing in one day!

silvercar

So really I am best off exchanging and completing in one day!

Which runs the risk of:

a) anyone of the people in your chain pulling out and the deal collapsing

b) anyone gazundering on the day

c) having no removals arranged, no redirection of mail, broadband etc

d) losing interest or tax savings on money needed for completion.

If your a FTB with no sale, no family and just a purchase, then exchange and completion on the same day could seem attractive.

If you have a sale and purchase to tie up, young children/ old relatives/ pets to move with you it can seem a nightmare.