Vendor has owned house less than six months

Julfulbub

Fire_Fox wrote: »

Can you sell yours and rent the house you are going to buy? Presumably it's empty and the vendor won't be able to sell to anyone else who needs a mortgage?

This is an option we are considering if the vendor is open to it. I need to do my homework though and make sure I have assurances in place and all bases covered. I am worried about lender deciding letting me have a grace period to carry my product over and honoring it, whilst not causing further complications when I have to go through new mortgage application for additional borrowing.

Julfulbub

Eyesparky wrote: »

This is a new one on me. So anyone who renovates and resells properties is being cobbled by the banks under "money laundering" criteria. Nonsense. The banks seem hell bent on destroying the free market at all costs at the moment. The OP has had a valuation that shows that the developer has added value (or managed to buy well) but the banks own valuation is not considered good enough. I wonder if the banks will be applying this rule to themselves ... after all they are repossessing a number of properties at the moment and flipping them straight onto the market. If they have not owned the properties for more than 6 months, are people allowed to raise mortgages in order to buy these repos. Something tells me that the situation will be treated very differently.

Well there is an allowance made for RBS flipping properties. The underwriter sent me the below ( I draw your attention to the last point) but this isn't something that was sent out with my mortgage offer, I imagine it is something out of the underwriters 'handbook'

Back to Back Mortgages
Residential & Buy to Let Mortgages:

We will not lend where the purchase of the property completed within the last 6 months. This includes:

• • purchases where the vendor has not owned the property for at least 6 months and;
  • remortgages where the customer has not owned the property for at least 6 months.

Back to back mortgages can be an attempt to disguise the purchase price paid or are part of a series of rapid transactions to release equity or inflate the value. Often the customer and valuer are not aware that the property has recently been bought for a price well below that being currently asked for.

Solicitors are required to disclose any transaction in the last six months to mortgage operations and, if this happens, cases will be declined after offer unless the situation falls into the categories below:

• • We will consider residential mortgage applications from customers who have had a bridging loan simply because of delays in selling the existing property, subject to normal underwriting. For example:
    • • The previous property couldn’t be sold in time and the applicants had to fund both properties for a period of time. The previous property has now been sold and the applicants are looking for a mortgage on the new property as the bridging loan is no longer necessary.

This is the normal bridging scenario. Buy to let applications are not acceptable in this situation.


Another example of bridging is where the customer has funded the purchase through their own funds or funds from a close family member due to timescales and is now setting up the mortgage. However the lending would be restricted to the original purchase price or valuation, whichever is the lower.

• • Where the property has been recently inherited and lending is required for residential or buy to let purposes.
  • Where a fixed/discounted rate was ported to a new property and has now expired. The customer wants to remortgage within the 6 month period to gain a new rate. Proof of the rate roll off is to be obtained e.g. mortgage offer/rate roll off letter from the previous lender.
  • Where the vendor is the mortgage lender in possession i.e. the property has been repossessed within the last 6 months and is being sold by the mortgage lender or their agent. This does not include repossessed properties being purchased cheaply at auction and then sold on by a third party.

Eyesparky

Anyone would think they were manipulating the market to undermine the sale of properties that compete directly with the large stock of repossessed properties they have on their books or are looking to add to their books. Perhaps credit card lenders should prevent people from using their credit facilities to buy products from retailers who have had the products in stock for less than 6 months ... after all, the retailer could be trying to disguise the true price they paid for the goods.

poppysarah

Eyesparky wrote: »

Anyone would think they were manipulating the market to undermine the sale of properties that compete directly with the large stock of repossessed properties they have on their books or are looking to add to their books.

You could get your own back by offering only 40% under asking prices.

And don't buy until one of them accepts at that price.

Eyesparky

poppysarah wrote: »

You could get your own back by offering only 40% under asking prices.

And don't buy until one of them accepts at that price.

Nice idea, but the market decides the price ... something the banks don't seem to grasp in this instance. I was at an auction earlier in the year where the man next to me managed to buy a property at a really keen price as there was little competition in the room early in proceedings. Later on he disappeared for a while to talk to the auctioneers and when he returned he was pretty happy as he had flipped the property to a couple who had arrived late for the auction. He had made a profit and they still got the property withing the budget they had set for the auction ... everyone happy. If they had arrived on time they would have likely had to pay a similar price as the original purchaser would have bid a fair bit higher. The market set the price twice within a couple of hours at different levels and no one was in any way attempting to manipulate the market or launder money. Naturally, under the 6 month rule the banks are trotting out now, the ultimate purchasers would have ended up in a real tough place trying to find finance within 28 days or lose their deposit, fees and survey costs. Nice to know the banks are going out of their way to financially disadvantage their legitimate customers. :rolleyes:

puddy

this doesnt affect me personally but im really surprised at this, they seem to be making their own rules up about how long someone has to have owned something, what has it got to do with them if someone buys a house then sells it later, thats business isnt it?

the person over the road from us will get a shock then, land registry states that the house was bought for 80k a couple of months back (our house was 136k, exactly the same), it obviously needed doing up and thats what a whole team have been doing recently, its probably nearly ready to sell (if that is what the owner is doing), i wonder how this will happen if most lenders are to be going down this route

Julfulbub

Today I have managed to get the lender to take responsibility for the situation, they have conversations recorded of me clearly telling them the situation when I initially rang them about the price change. They however failed to transfer this information to their on screen notes.

They started talking about compensating us but I told them I wasn't really happy with this as I had disclosed all information to them prior to the offer being made so I want to know on what grounds they have withdrawen my offer as its not my fault that someone in their organisation didn't do their job properly. They agreed with me on this.

I have asked them to consider my case on an individual bases and run whatever checks they need to on my vendor to satisfy themselves. The girl I spoke to is going to put this foward tomorrow - a long shot I know but worth a try.

Does anyone know if they are boud to my offer in anyway and have to have a legitamate reason to withdraw it?

Doozergirl

I really don't think that they are bound. There's no law that says someone has to lend you money

Of course, I really hope that they look at this properly for you!

samroo

Does anyone know if this rule also applies to part-exchange houses bought by developers

Julfulbub

Doozergirl wrote: »

I really don't think that they are bound. There's no law that says someone has to lend you money

Of course, I really hope that they look at this properly for you!

I think you are probably right Doozergirl. But my one question if that is the case is, at the bottom of my mortgage offer it states that if I fail to uptake the offer I have to pay a £99 fee. If they are not bound to lend, why am I subject to a penalty if I decide not to uptake? Surely a penalty implies a contract of some kind and a contract should protect the rights of both parties???