"Recent Acquisition" mortgage lending?

Chopio

Hiya,

Has anyone heard of mortgage lenders placing restrictions on lending for homes that have been bought and sold very recently?

I found my dream home on the market in June this year but was outbid by a developer. The developer is now selling the property for an extra 10k without actually doing a thing to the place. I put in an offer which he has accepted but the estate agent advised me to double check that the mortgage company that we have our agreement in principle from is willing to lend on "recent acquisition" houses as many of them won't ?!?!

He said that apparently it all has something to do with stopping property investors from buying properties and selling them on quickly during a rising market without developing them... hmmm.. sounds like exactly what this developer has done.

I guess I'll never know why he decided to abandon the project and sell the house... maybe just a cash-flow issue or maybe he found some kind of doozer fault with the property so he is dumping it.

Do you have any experience of mortgage lenders being funny about situations like this?

Any advice would be really appreciated. I'm waiting impatiently for the Post Office mortgage line to open in the morning...

shortchanged_2

Sounds to me like this so called developer is probably a friend of the estate agent who have colluded and are attempting to make a nice little earner for each other by buying the property for under market value in the first place, doing !!!!!! all then netting themselves a nice easy few grand.

Chopio

That thought crossed my mind too - especially as at the time of the first sale we didn't even get offered the chance to increase our bid

The developer did actually get some planning permission sorted recently though. He got approval for a small extension and re-arrangement of rooms. So he must have had some interest in the property at least. I'm a bit worried that something dodgy came up when he had builders look into doing the work thats why he decided to abandon it. Another funny thing is that the estate agent didn't make any mention at all of this appoved planning permission - I only found out about it myself when I was googling the property trying to find out how much it had sold for.

That said - I still love the house and its so rare that anything comes up in the area we are looking that is within our price range.

Lance

It is strange a developer trying to sell a house for an extra 10 grand bearing in mind the costs involved to purchase and sell and Capital Gains Tax and the chance of being stuck with the property or selling it for less. He must also be aware of the problem potential buyers would have getting a mortgage on a house being sold a few months after purchase.

josievg

Post Office have this restriction. Their lending criteria includes 'We do not accept purchases where the vendor has owned the property for less than 12 months (except where we have given consent).

I don't know what the exceptions where they give consent are but I wouldn't be hopeful in this case. However, they are very helpful on the phone so worth giving a ring and finding out what the underwriters say.

betmunch

This is a very common restriction, but there is at least one lender that will do it and be fine with it I can think of off the top of my head.

You should see a whole of Market Broker for some proper advice but it can be done

Conrad

Lance wrote: »

It is strange a developer trying to sell a house for an extra 10 grand bearing in mind the costs involved to purchase and sell and Capital Gains Tax and the chance of being stuck with the property or selling it for less. He must also be aware of the problem potential buyers would have getting a mortgage on a house being sold a few months after purchase.

Not at all. I endeavour to do this myself just to make a little profit on the side. Each person has a personal CGT tax threshold. I can do one in my name and one in my wifes each year and be liable to no CGT.

Furthermore even if you do pay CGT you can still make a profit.

I have several clients than buy and sell for small profits per property.

Chopio

Thanks for the input

After a couple of disappointing phonecalls we went to a whole of market broker who helped us to find a deal. The choices out there were pretty limited despite us having a decent size deposit. It seems that lots of other lenders won't give out mortgages for properties bought and sold within the last 12 months - let alone the last 6 months

We ended up having to go for a 2 year fixed at a not so fabulous rate - but if it means we can actually buy the house then we just have to swallow it.

....Now I just have to hope that the mortgage company's surveyor will value the property at our offer price...... and not the 10k less that the developer paid for it less than 6 months ago.

I'm starting to feel like I'm living in a parallel universe to the one where house prices are "tumbling"...

Does that mean that I'm a mug?