Mortgage refusals on spurious grounds?

Techiescot

Been refused a mortgage (by arange of lenders) on what I consider really spurious grounds.

Already paid £165,000 towards a self-buildwhich should be worth £300,000 when completedin a - has kitchen and bathrooms in already and is completelywind and water tight. Want £60 to complete it.

The reasons for refusal have not been affordability butfrom three lenders the refusal was on one of the following reasons:

1. Flat roof on part of the building (but it is less than25% and comes with a 40 year guarantee)
2. Maintenance agreement with my ex made in a court in Hong Kong (which is where the kids were born and where we lived when the agreement was made)
3. The new build property is next to the Head Office of mylimited company (the "head office" is our home address and I havebuilt the new property in the grounds of my old house). No trading is done fromthis address as I have a shop about 40 miles away.

Can anyone help me to understand what is going on? Affordability or my credit rating (999) not mentioned in the refusal. It appears that they arefinding any excuse not to lend to me.

Any ideas where I go from here? Many thanks for anyadvice or ideas given. Yours hopeful ...but demoralised

kingstreet

TBH what you consider spurious can be a very good reason why a lender does not want to lend. TBH trying to mortgage a part-built property is difficult at the best of times...

Have you addressed your requirements via a broker or are you trying to do this alone?

holly_hobby

Techiescot wrote: »

The reasons for refusal have not been affordability butfrom three lenders the refusal was on one of the following reasons:

1. Flat roof on part of the building (but it is less than25% and comes with a 40 year guarantee)

Standard flat roof maintenance reivew (ie removal of old provision and replacement with new felting, watersealing, balast etc) is every 10 yrs. The larger the area, the more exposed the area to the elements and weathering, the more costly the job, and the more likely it won't be maintained adequately - that is where I believe they (guided by their surveyor) are coming from

1. Techiescot wrote: »

   Maintenance agreement with my ex made in a court in Hong Kong (which is where the kids were born and where we lived when the agreement was made)

   Suggests there is an affordability element in the mix.

Techiescot wrote: »

The new build property is next to the Head Office of mylimited company (the "head office" is our home address and I havebuilt the new property in the grounds of my old house). No trading is done fromthis address as I have a shop about 40 miles away.

You've built a self build house in the grounds of your company land boundries ?
Is the land your HO is located on (and within the grounds you have built you new house) mortgaged, do you own outright or is it an asset of your Ltd Co ?

Do you have planning permissino for the build ? (silly as it may seem to ask, some peeps forget its needed !)

Is the HO, a traditional house or a obvious commerical unit ?

If mortgaged (either to you or the company), did you obtain the lenders permission for the build ?

Notwithstanding this, does the new build house have its own boundries, private entrance and right of way (os of the business boundries), its own utilities (ie not spared off the existing dwelling), and its own title deed ....

If the land belongs to the Ltd Co, you have issues that the house build on it (if not on sep title) is also an asset of the company.

So you can see there may be several issues causing lenders to decline (apart from the fact that the surveyor, even if all the above is obtained, may simply not be happy with the re-sale possibility of the unit due to its close to business prems etc - and thats what the mge lender is interested in, in the event of possession how easy can they off load it).

Spurious to you as a layman, is not spurious to a surveyor or mortgage lender.

Looks like you may be funding the rest with cash .... either from a company loan or other sources.

Bit more meat on the bones will help us to guide on this ......

Hope this helps

Holly

Dave_Ham

As above and which lenders have so far refused you?

dunstonh

The reasons for refusal have not been affordability butfrom three lenders the refusal was on one of the following reasons:
Flat roof on part of the building (but it is less than25% and comes with a 40 year guarantee)
Maintenance agreement with my ex made in a court in Hong Kong (which is where the kids were born and where we lived when the agreement was made)
The new build property is next to the Head Office of mylimited company (the "head office" is our home address and I havebuilt the new property in the grounds of my old house). No trading is done fromthis address as I have a shop about 40 miles away.

Maintenance agreement is an affordability consideration.

The other two are suitability considerations and flat roofs are something lenders often restrict in some way. New builds have own issues but the link to commercial issues is probably something that can be explained and cleared up where there is no trading or business equipment/stock/buildings.

Techiescot

It is a farm - but we don't farm anymore. Two of us have a shop 40 miles away but get important mail delivered to home.

I own the land outright. The plot has planning permission.

Own boundaries, access, utilities, deeds etc. No business connection at all. Business doesn't own any of the land or buildings and no business is conducted there.

Surrounding land is jointly owned by the family except for their own houses/plots on the farm - no problems getting theirs built/mortgaged a number of years back.

Maintenance was not being used as evidence of affordability (but I included it as it was part of my income which also includes company directorship salary, Buy-to-let rental income, income from a mast, shares income). I gave them everything.

Flat roof material has 40 year guarantee
(Planner insisted on flat roof even though I didn't want it but that is another complaint ...grrr)

I have been through a broker and directly to my own banks. House is now virtually complete and paid for via inheritance as I lost my mum last year.

GMS

Are there any agricultural restrictions on the property?

Is the mast on the property and if so what are the arrangements on this? Could the lease be causing problems for the lender(s)?

Are there any shared access arrangements or shared septic tank/drainage?

Lenders do not need to lend and will walk away from any property deemed to be risky. Ultimately it is their money and no matter how spurious you consider their decline to be they are under no obligation to lend.

amnblog

Getting a self-build type property where you have already started work is a problem and will have reduced your options.

You may find you will need to get short term (bridging funding) to finish the building work and then re-mortgage on to a standard mortgage product once the work is complete.

Bridging on £60,000 will cost you perhaps £4,000 over 6 months.

Techiescot

I have been trying to get this mortgage since the beginning (and I knew self build would be a challenge but I didn't think it would be impossible!)

It will be finished in three weeks so I will now pay for it all myself .... at least I will be mortgage free!!

No agriculture on the land. No restrictions at all.

Mast is half a mile away on the other side of a forest so not connected at all.

holly_hobby

Great, it has planning permission, with its own defined boundries, private access (ie access is not via the farm yard/acreage etc or from right of way), and its own independent utility supply ..... which brings me to, does it have its own title deed ? (ie making it a complete separate entity to the farm itself ?).

As notwithstanding whether a lender will find it attractive (re flat roof etc), the property must be standalone with its own title deed detaching it from the farm boundries and deeds.

You say that you have family whom have also erected self build units on the farm land, which you believe to be mortgaged ..... but you do need to be aware that each property is independently assessed, and what was considered suitable lending security at one time, may no longer be seen as such in a tightened market ..... although if your house is of standard build, standard materials, nothing outlandish, and no agri ties or restrictive covenants, this will help rather than disuade a lender. Whether the same lender (s) will consider your own application will depend upon their current critiera, and overall exposure between the other family units they have already financed on the farm.

There may be more to this than we know, or you are aware of ..... as asked by Dave H. whom are the several lenders you have approached, and did they all give the same 3 reasons for decline - also are you also absolutely sure that affordability was not an issue - given that maintenance (which we now know, is in relation to you receiving not paying) was mentioned ?

As stated above, lenders are not duty bound to lend on any one application, they are guided by several factors including their surveyor. So you need to tread carefully if you go down the Bridge Loan route, as to how you will redeem this expensive (and essentially short term) method of borrowing, if you are unable post completion, to later source a remortgage lender to facilitate equity release to repay the BL.

Hope this helps

Holly

Techiescot

Hi


Each lender only refused on 1 ground ... and I asked about affordability and they all said that what I was asking for was affordable - and now I have almost completely paid for the build, the LTV is very low (20%)

Bank of Scotland was the Head Office thing (BTW, two other businesses (completely separate from us) operate using the same address and postcode but are down a different farm road)

They are my own bank and I went to them directly to finance the last 20%. They had told me they would give me a mortgage if I got it wind and water tight and I had an agreement in principle from them.

When I was looking for a mortgage to start the build, I went through Build Store as they are the only people who do a self build mortgage in Scotland (so I was told)

on the Flat roof question - Scottish Building Society

and

on the Maintenance issue from a foreign court - Furness.

I am now going to pay the builder from my own funds and start paying off my Buy to lets rather than have a mortgage on my home. Probably a better idea in the long run ...