Seller dropped price - new mortgage offer needed ?

whiteswan

Hi

Had mortgage offer 2 weeks ago - survey was instructed.

The survey found some damp and recommended a specialist survey.

Specialist survey done and approx cost of work £1000 - however because LTV is 65% these works are not a retention matter.

But I have negotiated a £1000 reduction on the agreed price of the house.

So obviously mortgage offer was based on £1000 more.

The estate agent asked if my solicitor could treat this as an "allowance of works" and just hold back £1000 pounds when the money is transferred to them by Santander - they said this would negate the need for a new mortgage offer.

However my solicitor said that the offer from Santander strictly says that any change in sale price must be noted to them and a new offer has to be issued accordingly.

My question is does this all have to go through underwriting again ?

Or is it simply a case of Santander adjusting their figures with a mortgage of £1000 less ?

Dave

Wh05apk

Yes, you will need a new offer, based on the correct price.

kingstreet

The lender needs to reduce the price and issue a revised offer.

whiteswan

Thank you.........but it does it need to go through the underwriting process again or is it a quick adjustment of the figures?

Dave

kingstreet

A reduction is normally straightforward. Is there an accompanying reduction in the mortgage amount, to maintain the LTV, or will the LTV go up?

whiteswan

The money I am putting down as a deposit is the same - its just I need to borrow £1000 less.

Dave

Thrugelmir

whiteswan wrote: »

The money I am putting down as a deposit is the same - its just I need to borrow £1000 less.

Dave

Has to go through a formal process as it's a contractual matter. Though should be fast tracked.

Georgesmum79

I managed to get another £3K off my new build, but mortgage offer had arrived by then. I called the bank they just took note of it over the phone and that was it. We are borrowing about £10K more than we actually need: we will use a bit of to buy furniture etc and then just pay it straight back. The lender doesn't need to know what we do with the money. We can pau back unlimited capital at any time, so there's a lot of freedom. But this is First Direct and they are pretty fantastic with most things.

If I was you, I would have just kept the mortgage amount as it is and pocket the grand, maybe buy something nice.

Paully232000

Georgesmum79 wrote: »

I managed to get another £3K off my new build, but mortgage offer had arrived by then. I called the bank they just took note of it over the phone and that was it. We are borrowing about £10K more than we actually need: we will use a bit of to buy furniture etc and then just pay it straight back. The lender doesn't need to know what we do with the money. We can pau back unlimited capital at any time, so there's a lot of freedom. But this is First Direct and they are pretty fantastic with most things.

If I was you, I would have just kept the mortgage amount as it is and pocket the grand, maybe buy something nice.

I didn't think you would be allowed to do that, I thought your solicitor (as they are working for the mortgage company as well as the buyer) would have to let the mortgage company know of the change in price of the house.

buzzyzoe

Why don't you just pay a grand less deposit, then no need for the mortgage offer to be revised? If your mortgage allows overpayments, you can pay the grand you're saving back so you won't pay much in interest

whiteswan

I think my solicitor is acting in my best interests and also doing things strictly by the book.

I was leaning towards the "repairs allowance" - "pay less deposit" scenario but as my solicitor said the mortgage offer has a condition that strictly says "any" change must be notified to them - he is just doing what I pay him for.

After all if checks were done pre-completion by whomever and a reduction in sae price/deposit was found then I suppose it could throw the whole thing into jeapordy.

To be fair my solicitor has been excellent - albeit a bit expensive - but I suppose you get what you pay for - I have used them in the past.

Dave