Mortgage pulled?

r83_2

As thorough as you can get!! But surely those tiny % of people didn't end up loosing the full deposit? I pray they didnt. If they did, I think I will opt in for this same day exchange stuff? So do I understand correctly that - with this same day exchange, solicitor will draw money from the bank before they will accept our 5% deposit? And once bank ave released the mortgage fund, they will put mortgage+deposit and pay to the seller? The process is tougher and scarier as every day goes pass. First worry about the mortgage criteria, thn AIP, thn Offer, now exchange and finally completion !!!! C'mon Lottery !!!

kingstreet wrote: »

On the one hand, you have a lender which has the right to withdraw a mortgage offer for any reason right up to completion.

On the other you have the law, which deems it a breach of contract if a house purchase contract is exchanged and not completed at the correct time.

One of the reasons a 10% deposit is collected by the solicitor prior to exchange is to compensate the vendor should the purchaser fail to meet his/her legal obligation.

Once again, I would say this is a very rare occurrence which happens in only a tiny percentage of cases. The buyer should however be aware of it and the possible implications.

kingstreet

r83 - you've already been audited, so this should not be an issue for you!!!

This is what normally happens. You pay your deposit to your solicitor. He sends the report on title to the lender requesting the mortgage money for a particular day.

He then contacts the vendor's solicitor and confirms he has the deposit and contracts can be exchanged with completion on the agreed date.

They exchange contracts verbally.

The mortgage money arrives on or before completion day and the solicitor pays the purchase funds over to the vendor's solicitor and completion takes place.

The problem is that the lender decides to audit the case at the point the report on title arrives. It takes place while exchange is happening, then if the worst happens, the lender withdraws the offer. The solicitor then does not get the completion monies leaving the purchaser unable to complete and the deposit is forfeit.

As I've mentioned before, the best solution would appear to be a "dummy run" of the report on title which the solicitor uses to see if an audit is triggered.

r83_2

Noted! Thank you. WRT below statement, would solicitor be doing this dummy-run themselves or shall we request it? I know we've already been audited but just scary thought keeps coming in to me head

kingstreet wrote: »

As I've mentioned before, the best solution would appear to be a "dummy run" of the report on title which the solicitor uses to see if an audit is triggered.

kingstreet

Only a solicitor can forward the report on title to the lender. The solicitor is acting for the lender as well as for the purchaser and it's the solicitor's way of telling the lender everything is okay and he's happy to recommend they proceed with the mortgage advance.

r83_2

Gotcha! I am doing my conveyance through Taylors Legal. I will surely be asking them this as a personal favour. Thanks a lot Sir

kingstreet wrote: »

Only a solicitor can forward the report on title to the lender. The solicitor is acting for the lender as well as for the purchaser and it's the solicitor's way of telling the lender everything is okay and he's happy to recommend they proceed with the mortgage advance.

kingstreet

Come back and let me know how they respond to this. I haven't tested it with a solicitor yet and I'd like to know if they see any pitfalls in doing it.

r83_2

I have just asked via an email, I will keep you posted. I dont know how this affects us because, ours is currently being built and expected to be finished around 15th October.

kingstreet wrote: »

Come back and let me know how they respond to this. I haven't tested it with a solicitor yet and I'd like to know if they see any pitfalls in doing it.

r83_2

My solicitor referred me back to MA and here is his response -

"it is true that the offer can be pulled, but as pam says this is rare and only in extreme
Circumstances. The most common reason is if either of you were suddenly unable to work due to ill health or accident... This is the reason for the urgency in having your critical illness and life cover underwritten prior to exchange of contracts. The only other reason an offer may be pulled is if the underwriters perform extra credit checks before completion and find any new unsecured borrowings that weren't there when you applied.

Other than this, there is really no conceivable reason that the offer would be pulled"

Interesting and reassuring. I think it is wait and watch game! Cant believe I will have to go through this pain as well !!!

kingstreet wrote: »

Come back and let me know how they respond to this. I haven't tested it with a solicitor yet and I'd like to know if they see any pitfalls in doing it.

kingstreet

That's an adviser who's never had an offer pulled at audit. The response is accurate but incomplete and this;-

This is the reason for the urgency in having your critical illness and life cover underwritten prior to exchange of contracts

could best be described as self-serving, if he is the one selling the life and critical illness cover.

I agree that the situation would change in the event of illness or disability but these aren't the willful acts of a lender effectively re-underwriting a case and you can insure against them. There's nothing you can do to stop your offer being pulled at audit (all application data being true and complete accepted).

r83_2

Right - IS there anything concrete that can be done that would safeguard our deposit in an event of mortgage pull? As much as I know the answer, I don't want to hear it Scary !!!

kingstreet wrote: »

That's an adviser who's never had an offer pulled at audit. The response is accurate but incomplete and this;-



could best be described as self-serving, if he is the one selling the life and critical illness cover.

I agree that the situation would change in the event of illness or disability but these aren't the willful acts of a lender effectively re-underwriting a case and you can insure against them. There's nothing you can do to stop your offer being pulled at audit (all application data being true and complete accepted).