Mortgage offer not tied to property??

sims22

I'm hoping someone can shed light on our vendor's mortgage situation.

We are in a small chain (three including us) and have been ready to exchange since end of July. The vendor's purchase fell through and they have moved into rented accomodation. They want to complete on the sale straight away but they intend to transfer their mortgage to avoid paying a huge redemption penalty.

Their solicitor and the agent have said that their broker has advised them to apply for a mortgage offer not tied to a property so that they can complete this sale without paying a penalty. That way they have about six months or so to buy a property without penalty. The mortgage is with Woolwich.

I have to admit, I've never heard of such a thing and didn't think it was possible to get a mortgage offer not attached to property. My understanding is that offers are subject to survey etc. Can anyone shed any light on this situation? Any brokers able to work out what our vendors need to do to complete? I hope I'm wrong but I get the feeling we are being strung along and it could be months till they can complete.

Thanks

DVardysShadow

A mortgage requires 2 things

• Borrower able to meet repayments
• Property has enough value to see lender right if borrower defaults

So, a mortgage offer in principle says that the first criterion is met, now go and get a property which meets the second. This is where your vendor is now.

lelole

Hi,

I am not sure of this is what the broker is getting at - but when we were thinking of renting instead of buying straight away, our mortgage lender (also Woolwich) told us we could keep the product as long as we completed on a purchase within 6 months of the sale... we didn't need this, so did not find out the process, but it could mean this??

Leah

sims22

Thanks Leah, that sounds exactly like what our vendor has been advised. It's good to know as I thought it was a bit unusual.

Dvardy, thanks for the reply. Our vendor is a bit further ahead than that as they have an exisiting mortgage that they want to keep but without completing on a purchase.

PasturesNew

I know somebody who is selling at the moment (post survey stage now) - and they can't find somewhere to buy, so are asking their mortgage company if they can transfer it to a new house/mortgage that doesn't run back-to-back and how long they'd get ... I told them that if theirs allows it then 6 months to complete on the next one is quite a common limit.

It does happen.

sims22

Thanks PasturesNew. I wasn't sure if the agents were stringing us along at this late stage, making us wait potetially months until the vendors are ready to complete on a house. Hopefully they'll get the go ahead from Woolwich to complete soon while keeping their mortgage and not paying the redemption penalty.

Richard_Webster

Sometimes if you sell without immediately buying you can "transfer" the mortgage to the new property but you have to pay the penalty which is refunded when you buy the new property with a new mortgage using the same "deal".

The catch is that you generally do not get the refund in time to complete the purchase but a month or so after wards so you need to find the amount of the penalty in the meantime. Some people haven't got this money so have to tie the two transactions in at the same time, even if they have moved out of the place they are selling!