Just incase advice needed please

AllyS

We applied for a C&G mortgage a few months ago and at the initial meeting told the mortgage advisor that my bf house (we are moving in together and getting joint mortgage) has some clauses one being that he only owns 80% of the house and it can always only be sold on at 80% it was a first time buyer scheme a few years ago.

Anyway, we needed to add an extra 20,000 to the mortgage in order to do some renovations as I have 2 children so that we can fit in his house (2 bed house).

We decided to re mortgage with C&G rather than stick with his current mortgage lender as it was £80 a month cheaper and we also managed to knock a year off mortgage too.

Anyway, we have found out today that the underwriters have rejected the mortgage because they are worried about the resale value. The mortgage advisor thinks there is still hope as he has another client with the same clauses that is going through today, thus then having a case, e.g. why are they getting the mortgage and not us. Would just like to add here that the mortgage advisor only told me that it had been rejected as I was chasing up what was taking so long - in his words I wanted to try and sort it out without you knowing that it had been rejected.

The frustrating thing is that even with the extra money we are borrowing less than 60% of the LTV.

I would like a little advice of what to do if the mortgage does not go through. Obviously we can go back to my BF current lender and ask if they will loan the extra money. What other alternatives are there to borrow the money? We could get a loan tomorrow for the money but the repayments on the loan are going to leave us with no emergency money

Also, if the mortgage does not go through obviously we have been honest from the start is there anyway that we can claim back for the legal fees that we have had to stump up?

If we do have to do the mortgage with the current lender will we have to pay out for legal fees all over again?

If you need anymore info, please ask

Thanks for any advice in advance x

AllyS

Anyone? Please xx

kingstreet

Is this a shared ownership property?

If so, has the work you're undertaking been approved by the landlord?

On the basis of what you've said, you've covered it. If you get declined, you need to consider what other lenders might offer and what you might get from the existing lender.

What made you pick C&G? They wouldn't have been my first choice for such a case. You dealing with a Lloyds Bank employee, or did you get an independent to do it for you while C&G were still taking introduced business?

AllyS

Yup we checked out permissions and have those from builders who own 20%.

We both bank with Lloyds and originally went in for a loan, when we realised we couldn't afford repayments, we were recommended to a mortgage advisor thus then starting this process. We thought that if C&G had an issue with the 80% clauses that we would never have been given a mortgage agreement, let alone being refused this far down the line.

Thrugelmir

What "renovations" are you proposing to do to the property with the extra £20k?

AllyS

This has been a long process and we got quotes and permissions for the work long before asking for the money, as we needed to know the work was realistic and allowed before applying for money.

Actual work is costing £16,000 and then the other 4,000 is contingency money which we have checked and can pay back if it is not used.

Thanks for help so far x

kingstreet

You say builders own 20%. Are you sure about that?

It's very important you check exactly how this property was purchased. I asked about shared ownership. Using this method, you would own a portion of the property and a third party, normally a registered social landlord, would own the remainder. You might pay them rent on their bit. When you wish to sell, you sell only your share and they retain theirs.

The builder deals tended to be shared equity and these work differently. You actually buy all the property - 100%. The builder lends you their bit and takes a second charge over the 20%, but when you come to sell, you sell all the property and pay them back from the proceeds.

If it's the latter and you try to do what you're doing, all you'll do is use the extra mortgage money to pay off the builder, unless they agree to what's known as a postponement of their second charge. Either way, at some point they are going to have to be paid back.

I hope I'm not giving egg-sucking lessons here and you've already got all this sorted out. Is there a solicitor appointed to deal with the remortgage? If so, can they confirm how the property is held?

kingstreet

AllyS wrote: »

We thought that if C&G had an issue with the 80% clauses that we would never have been given a mortgage agreement, let alone being refused this far down the line.

Quite the opposite. An agreement in principle checks your affordability and credit worthiness issues. There is normally nothing asked about the property until the full application stage and even then, it may be the valuer's report which uncovers something unusual in the construction or tenure of a property.

AllyS

Yes a solicitor is dealing with the remortgage.

Thanks for all the advice

If mortgage rejection stands I guess we need to go back to current lenders. Does that mean we will have to pay out for solicitor fees again?

Thanks x

kingstreet

AllyS wrote: »

Yes a solicitor is dealing with the remortgage.

Thanks for all the advice

If mortgage rejection stands I guess we need to go back to current lenders. Does that mean we will have to pay out for solicitor fees again?

Thanks x

No. Most of the legal work done can be used for a new mortgage application to another lender and if you use the current lender, there's still a transfer of equity to add you to the mortgage.