Northern Rock down valued new build :(

peggydoodaa

Hi all

We've just exchanged contracts on a new build house that is due to be completed end of November. We've applied for our mortgage, via Northern Rock, but unfortunately they've down valued the property by 10k, so obviously dropped what they will lend us by 10k.

I've forwarded the valuation to the builders, hoping that we can negotiate with them but I can't help but think they are going to walk away from this.

Personal research has found that they have overcharged us on the house by 5k compared to the previous houses that are the same style, already sold on the development 6 months ago so I'm hoping to argue at least that portion of it.

Hoping to get a response from the builders tomorrow as to how they are going to play it.

Anyone else had this?

Any advice?

Ta, Peggy

harvey115

You exchanged without a mortgage offer at hand?

Anyways what's done is done.

Since you have already exchange the seller is no way obliged to reduce the price. However they may well decide in your favour if there is less interest in the houses they are selling, since they may possibly end up in the same position if selling to someone else.

As the exchange has been done and I presume you have paid 10% deposit as well, I am not sure if turning back is a valid option anymore.

If the developer does not reduce the amount are you able to get a full refund of you reservation + deposit amount from the seller and walk away?
If not, are you able to add an extra £10K in your deposit by the time the house completes?

If the bank has down-valued the house it means either to haggle to get it cheaper or the mortgage LTV is derived off this reduced amount, thus giving you a little less to borrow.

GMS

Sue the solicitor. Ridiculous to let you exchange without a mortgage offer in place.

Builder now holds all the cards. If you cant complete they get to keep the deposit and/or pursue you for the rest.

Solicitor negligent unless you have signed something agreeing to the risk.

Leon_W

This is why you should never exchange contracts before you have your offer and finances in place.

What if you had been declined any mortgage at all, then what ?

peggydoodaa

Thanks for the reply.
We actually part exchanged our current property with the builders, hence why we exchanged contracts before mortgage offer. We did have decision in principle etc before doing that though.

As far I can remember (terrible, I know), the contracts where conditional upon us getting a satisfactory mortgage offer so I hope we're covered if we need to pull out. We really don't want to pull out unless we really do hit a stale-mate.
We may try another lender if we can't sort it out with Northern Rock & the builders, but it's more money for surveys & another credit search on our file...

Obviously we're hoping the builders will reduce the price, or provide comparibles to prove it's worth what they're asking.

I'm not sure what I'm expecting to hear on here, guess I'm just wanting to put it in writing...

go_cat

Another lender would highly likely value it at the same price as northern rock

Thrugelmir

GMS wrote: »

Sue the solicitor. Ridiculous to let you exchange without a mortgage offer in place.

Not if solicitors advice was ignored.

Thrugelmir

peggydoodaa wrote: »

As far I can remember (terrible, I know), the contracts where conditional upon us getting a satisfactory mortgage offer so I hope we're covered if we need to pull out.

Unlikely the builder is going ahead to complete the property you intend to purchase if this was the case.

GMS

Thrugelmir wrote: »

Not if solicitors advice was ignored.

The last sentence of my post states this. I doubt a solicitor would proceed on a verbal instruction in such a case hence the signed part of my reposnse

peggydoodaa

At no point did the solicitor advise us not to exchange contracts. As it was a part exchange it had to be done sooner rather than later as far as we were concerned/led to believe.

The builders are going to provide comparibles for us to go back to our potential mortgage company and appeal...... waiting game now unfortunately.

FraudBuster

At no point did the solicitor advise us not to exchange contracts.

Was the solicitor acting for you or the vendor?

Guess that this will end in tears.