Reducing sale price after mortgage offer received

royals182

Hi,
Just after some quick advice if anyone has been in situation.

We are progressing with a sell/buy. We have had the survey done on our new property and it has flagged a problem with the chimney breast being incorrectly supported. We have sought advice on the cost of this and could be in the region of 1000 to 1500 pounds.

My question is really, if we go back to the seller and he agrees to reduce price how does this affect the mortgage offer we have already received? I am worried about adding more delays to the process as our buyers are getting impatient! Will the bank (HSBC) easliy just reduce the amount of borrowing to stay within the 75% LTV we currently have.

Any advice gratefully received.

Thanks,
Royals182

Oxid8uk

We had a similar situation. Agreed an ‘allowance’ of £950 from the vendor to put right a problem once completed, rather than drop the purchase price (and the cash would be there on completion to do the remedial works). Our solicitor recommended this approach rather than reducing the purchase price as most lenders are fine with allowances, whereas changing the purchase price would require revised mortgage offers and hold things up. Turns out that HSBC class allowances as a reduction in the purchase price anyway so still had to wait for a revised mortgage offer to come through! Grrr!

With the reduced mortgage offer it meant we then had to put part of this cash allowance down as extra deposit due to being right on 80% LTV before the allowance, basically meaning the cash allowance on completion reduced from £950 to only a couple of hundred quid, and therefore we now cannot do the remedial works! :mad:

Our vendors wanted to complete quickly so we told HSBC this and they sent the revised offer out in 2 days. Other than being a bit annoyed with them viewing the cash allowance as a reduction in purchase price they were quick and efficient and it only held progress up for a few days.

liubeliu

Agree with Oxid8uk where we had similar situation and the amount on allowance allowed us to have funds to put right some work that needed doing

Wh05apk

Lenders will treat any "allowances" as a reduction in purchase price so will reduce the mortgage amount to fit in with the product LTV, as has been said though that may mean you have to pay towards the cost of the work slightly.

A new offer should only take a few days to produce, so shouldn't hold things up, the alternative, is to insist that the vendor does the work, and you will then pay the agreed price?

royals182

Thanks for the comments, really helpful.

Main worry was the hold-up revising the offer could cause but from what you have all said this should not take that long.

Now to agree an allowance amount!