Vendor recently bought property - Need to inform lender WHY?

FTBNewbie_2

Hi all

I have had a mortgage offer through the post and solicitor has started with searches but notes that the property I am buying was recently purchased by the vendor (last few months).

Solicitor has now said that this will need to be disclosed to my lender and my lender will look to find out how much it was sold for and if there have been any improvements to property (i'm guessing a gain has been made).

Is this normal? Given that bank has already provided me with my formal mortgage offer can the outcome of the vendor's purchase price effect my mortgage?

Thanking you all in advance.

Thrugelmir

The lender is merely protecting itself from a scam.

FTBNewbie_2

Hi thanks

Sorry to be annoying do you mind explaining what you mean by scam.

Is that by me or vendor or both?

Yorkie1

Lenders don't like to lend where the seller has owned it for less than 6 months (either till date of mortgage application or date of completion, depending on lender).

People often say it's to do with money laundering regs - though I've read another explanation on here which my brain is failing to recall.

Thrugelmir

Money laundering is one concern. Buyer pays cash for property then legitimises money by selling it on. Possibly even on the face of it at a loss.

ACG

The odd lender will do less than 6 months but those are the exception rather than the rule.

Dave_Ham

You really need to be careful here as your frustration on the situation could get much worst.

You need to understand the exact date of purchase, as most highstreet lenders and many non highstreet will simply pull the plug on your mortgage offer in this scenario and hence your solicitor flagging it up.

There are a few reasons behind this but there is no necessity to understand them and why, as crucially they all have this in their terms and conditions and their criteria is their criteria and most will not bend.

Communicate the details to your lender asap, as if not the Solicitor will when things will be harder to re-arrange.

Good luck

FTBNewbie_2

Many thanks for the replies, I did a bit of research once the 6 month rule was brought up and as many have said - the outlook does not look good.

DaveHam - Do you mean I am better off calling my lender and informing them before my solicitor does to see if they will bend the rules or at least confirm that that they won't pull the offer if I wait until 6 months has passed?

the vendor purchased the property early November and according to my solicitor the date I viewed it and put my offer in - all seems very fishy.

marlot

I have heard of estate agents under-valuing property and buying it themselves (or a close friend buying it) with a view to turning it around quickly.

kingstreet

Santander's criteria says it will look at the case to ensure it's clean, but there's no automatic decline.

If the property has been owned by the vendor for less than
six months, the application may be referred for investigation.
This could result in delays to completion or in some instances
the application being declined.

Dave_Ham

Before you incur any further cost, you need to call the lender and ascertain how they will treat this as some lenders will simply not have it.

They are unlikely to bend rules, just tell you their criteria.

It always would concern me that the Estate Agent either had no knowledge or declared no knowledge with this sort of situation.