Bank withdrawing mortgage offer at 11th hour

fluffyCygnet

Hello

I hope someone can help! We're very close to exchanging on our first flat, we've had a few hiccups but everything seemed to be going fine. Today I got home to find a letter from the bank simply saying they've had some information from our solicitor and they can no longer proceed. The flat is 'unsuitable'.

They wouldn't tell us much on the phone, other than that there's a problem with the asbestos report (there isn't one), and the allowance we have requested (£3,900) to get some damp fixed puts us over some threshold or other.

It seems to us these are both things that can be resolved, so we're just really shocked that it's an outright 'NO'. Countrywide (guess the bank!) haven't even queried these things to our knowledge. It feels like there's something else going on, as we now only have 2 months until our mortgage offer runs out so there's no chance we can actually use it.

Has anyone had these problems and overcome them? Surely we can just get the asbestos survey and come to another arrangement over the damp?

Any advice greatly appreciated!

DVardysShadow

Ask your solicitor for all their correspondence with the bank. They won't give it to you, but you are entitled to it and it may well reveal what has happened.

fluffyCygnet

Thanks DVardysShadow! Our solicitor is very good and has kept us in the loop with everything so far, so I think she will let us know what's happened, but she doesn't even know that the bank has refused to proceed yet!

Do you know if we can appeal? It just seems like they don't want to give us the mortgage and would use any reason. Could we get our money back if we complained to the Financial Obudsman and they agreed the bank had refused the mortgage unnecessarily?

DVardysShadow

It is pointless speculating until you know what the problem is. Basically the process for deciding whether to give a mortgage is

• Is the applicant good for the money?
• Is the property good to cover the loan?

It seems that the property has not come up to scratch given that the comment is that the flat is 'unsuitable'. But given that it is information from your solicitor, it could be either. Get to the bottom of it with your solicitor.

Thrugelmir

fluffyCygnet wrote: »

It just seems like they don't want to give us the mortgage and would use any reason.

Quite possibly. There's no automatic right to a mortgage. Banks can choose their customers.

Normally the advice is not to spend any money with the solicitor or on searches. Until a formal mortgage offer is received.

fluffyCygnet

We have the formal mortgage offer! We're about to exchange!!! They've pulled out of the purchase because we asked for an allowance to cover damp work and there's no asbestos report - two things we can resolve.

The more I think about it, the more I think there's something fishy going on, like they've maxed out their quota for this month.

Lavendyr

fluffyCygnet wrote: »

They wouldn't tell us much on the phone, other than that there's a problem with the asbestos report (there isn't one), and the allowance we have requested (£3,900) to get some damp fixed puts us over some threshold or other.

What is this allowance you have requested? Does it put you over a LTV which means you no longer have the deposit that you need, or is there an issue with the valuation of the property compared to the amount they have offered to lend? Can you get by without the £3,900? Why do they need an asbestos report - is there asbestos in the property?

fluffyCygnet wrote: »

Has anyone had these problems and overcome them? Surely we can just get the asbestos survey and come to another arrangement over the damp?

You would think so - if there is an issue with the "threshold" that the damp rectification costs put you over, can you just fund the rectification works yourselves and get an asbestos report done?

They need to start talking to you or you need to go elsewhere for your mortgage, simple as. If they won't explain their reasoning and work with you to find a solution, then I agree it sounds odd and you may be better seeking a mortgage elsewhere, especially if you are not aware of any significant issues with the property which cause it to fall below the value of the offer you have made.

Sorry I can't offer more specific help but just some further thoughts & perspective. Good luck getting things sorted.

anselld

3900 is OTT to fix some damp unless it is a cellar or something. This may have rung alarm bells. Who told you this amount was necessary?

fluffyCygnet

Thanks Lavendyr!

The allowance is for damp work that needs to be resolved, but yes, it may well take us over the LTV. But surely all they need to do is not agree to the allowance? They don't need to cancel the whole purchase...

I think there should be an asbestos report because the flat was converted in the 1960s, which we don't mind as we'd like to know there's no asbestos. But again, surely they can just request this be carried out rather than make us pull out of the purchase?!

Could we just go and get a mortgage somewhere else, and can we find out whether the new mortgage company would have the same bizarre criteria before we apply?

fluffyCygnet

Hi Anselld

That amount is from a quote which we all felt was too high. However, we really need to get a new boiler (there are 3 in a 2 bed flat!), and possibly rewire the place, so it's more an allowance for repairs. But if the bank had a problem with the amount we could just send them the quote report for the damp, which we got from Kenwood.

Thrugelmir

fluffyCygnet wrote: »

That amount is from a quote which we all felt was too high. However, we really need to get a new boiler (there are 3 in a 2 bed flat!), and possibly rewire the place, so it's more an allowance for repairs. But if the bank had a problem with the amount we could just send them the quote report for the damp, which we got from Kenwood.

So have you now applied for additional monies to conduct repairs. After receiving the mortgage offer.

What did the surveyors report say about the damp issue?