Problems getting a mortgage on a Buy off plan!!!

wallsy

Hi All,
Back in 2006 I put a 10% deposit down on a one bed flat. The flat is now ready and I am being held to completion by the developer or face legal action to seek any losses. I have today had a valuation back and this is almost £50k lower than my contracted to buy price. The LTV amount is only 80% making this an impossible situation!!!! Any help or advice? Any one else in a similar situation? I would happily walk away and lose the 10% as the stress is killing me!
Wallsy ;o(

SplanK

did you exchange contracts at all?
Has the developer built the property in the time frame that was advised?
Did you sign any paperwork when giving the 10% deposit - if so - you will need to go over that with a fine toothcomb to see if there is anyway out of it - maybe seek the advice of a solicitor...

brit1234

Hi, its the risk you take. If the valuation was higher you wouldn't expect to pay more from it.

Get legal advise and see home much compensation you will have to give the builder for pulling out. In Northern Ireland builders are suing so you need good legal advice.

franklee

Have a look here for other people is a similar position, you may not be with the same builder but I think they will still have useful info and reckon they will let you join regardless:

http://www.berkeleyhomescollective.com/

maninthestreet

Three years to build a one bed flat? That must be some sort of record.
Why is a LTV of 80% an 'impossible situation'? Do you have any savings to make up the additional 10% of the purchase price??

DVardysShadow

wallsy wrote: »

Hi All,
... I am being held to completion by the developer or face legal action to seek any losses. I have today had a valuation back and this is almost £50k lower than my contracted to buy price. ... I would happily walk away and lose the 10% as the stress is killing me!

No comfort here. You won't be able to walk away for 10% if you have exchanged contracts. You could either let the developer resell or resell yourself, but you would still have to make up the difference to the agreed selling price.

No doubt, if it had panned out the other way and the valuation came out higher, you would have given the profits to a homeless charity. So it is sad to think that the homeless charity will lose out.

tek-monkey

Feel sorry for your situation, but as others have said thats the gamble you took when purchasing off plan. I'm sure you were aware of the risks, like any gamble there is just as much chance of it biting you in the !!! than you gaining.

wallsy

I obv did not make a good choice.

In 2006 I was struggling to get my foot on the property ladder. This seemed like a way I could afford to start. IE bye at 2006 prices and in 2008 when its ready (one year late) would have enough equity to buy without a big deposit. I know it was a risk, but I was young (still am young) I never thought that it could be worth over £50K less and the banks would be asking for 30% deposits.

I am also part of a group of other buyers in the same building. We have spent over £15k on legal advice. The advise is now to try and complete, as risking court could go any way. At the moment I feel that this is my only option now. Lose the £12K i put down in 2006 and risk court action. I have no other assets so if the builder won this would force me in to bankruptcy.

Thanks all

silvercar

With no other assets the ball is in your court. The builders don't gain if they force you into bankruptcy - in fact they lose out as they have to remarket. They may be willing to accept a compromise as they have nothing to gain and everything to lose.

When all said and done, bankruptcy in this country lasts a year at most. A painful year, but after that the slate is clean, though your credit record will be stuffed. Dont rule it out and certainly point this out to the developer.

"One year late" may save the day. They promised to deliver something in 2008 and failed so they breached contract. A judge may not be impressed.

tek-monkey

Be nice if you could make them responsible for the difference in value between date agreed and date actually completed. Would depend if they'd set a date though.

maninthestreet

Why has the builder delayed completion for what appears to be 3 years? Back in 2006 and for at least the first 9 months of 2007, the property market was considered to be in good shape.