Selling a piece of land to neighbour

marks77

Hi

Our mortgage company has agreed to let us sell a small piece of land to our neighbour. However, they are asking what the sale price is..?

Do they really need to know? They are satisfied that the release of equity will not affect the sale price of the property should we default so don't understand why they need to know the sale price?

I've searched the web and can't see why the sale price is relevant to them given that it doesn't affect sufficiently the value of the property without this strip of land..
I maybe being really dumb and naive here but can anyone enlighten me?

Thanks

G_M

Have they actually agreed, or is their agreemnt conditional on this information?

If they are satisfied as to the value of the remaining property vis-a-vis the loan I too don't se why the information is pertinant, but... sadly they hold all the cards if their agreement is conditional.

davidmcn

It might not make sense, but perhaps they have a box to tick (for those cases where they require the proceeds to go towards the mortgage).

The information isn't going to remain confidential once the sale is registered, so why not just tell them?

Enterprise_1701C

Have you asked them why they have asked you the price?

princeofpounds

Do they really need to know?

Probably not. Do they want to know? Yes. It's their security you are disposing of.

I presume they want to check that you are not degrading your financial position by selling at a deep discount. Think about it - if you were going to go bankrupt and default on your mortgage, selling part of the plot to a 'friend' for peanuts would be a good way to hide assets.

moneyistooshorttomention

princeofpounds wrote: »

Probably not. Do they want to know? Yes. It's their security you are disposing of.

I presume they want to check that you are not degrading your financial position by selling at a deep discount. Think about it - if you were going to go bankrupt and default on your mortgage, selling part of the plot to a 'friend' for peanuts would be a good way to hide assets.

I've seen someone (try to) hide their house under the name of one of their parents in order to avoid it being included under assets they owned in a case like that, so can also understand why the mortgage company are protecting themselves just in case...

eddddy

Hi marks77

FWIW - I know of 2 people who were in a similar position to you.

The first had a mortgage with a mainstream lender, his answer was... "Once you grant permission to dispose of part of the land, I will start price negotiations with a purchaser. If I do sell the plot, I hope it will achieve £x"

I imagine they just wrote £x in a box on a form somewhere. They never revisited the question. The eventual sale price was about 20% higher.

The bank didn't put any pressure on the borrower to repay any of the mortgage - or try to sell any him any investment products etc.


Second person had a mortgage with a specialist (i.e. sub-prime) division of a bank. They put pressure on the borrower to pay off a chunk of his mortgage - but he pushed back, and didn't have to in the end. Perhaps the bank just wanted to cut back their sub-prime exposure.

marks77

After the lender saying that they consent to the land being sold and then some abiguity around car parking off road, asking for a valuation, they have today declined it! The surveyors have valued the property 20-30k below what most properties have sold for in the area/street and now lender is saying that after land is sold we will be higher than our 85% LTV mortgage product..
Gutted is an understatement..We were going to use the sale proceeds to do some renovations to the property.

Anybody have any ideas what we could do now? Appeal the valuation Get another valuation? Negotiate part of the sale to be paid off the mortgage? If we do that, do we get the buyer's solicitor to arrange to pay us and the lender on completion day or do we have to have an agreement with the mortgage company that we will pay x amount after sale goes through..?
Thank you..

eddddy

It's up to the lender...

But I guess if you offer to pay-off enough of the mortgage to get under 85% of the new valuation, that should be acceptable. (Have you checked for any penalties for repaying part of the mortgage?)

The lender will liaise with your solicitor to make sure they get paid on completion.

davidmcn

Payment from the proceeds would be arranged through the solicitors.

The other option is to ditch your existing lender altogether and remortgage your new smaller abode with someone else.