If the Seller has owned the house for less than 6 months...

Jamesyc

Hi everyone!

I've recently joined this forum, it's been a great help, so thank you.

I do have a question that I couldn't find the answer to though. We are FTB and have found our perfect house. We've recently had an offer accepted, mortgage offered (Nationwide) and Solicitors have begun working.

The solicitors have flagged up that the house is Part Exchange and so we will be buying off of Persimmon, rather than the person that lives there. Not a problem, but apparently some lenders will not lend against a house that has been owned by the seller for less than 6 months? Does this sound familiar?

I can't understand why this would be a problem? But then again, I don't work in lending or even finance!

Thanks in advance.

molerat

Correct, in fact on was on an old Homes Under The Hammer this morning where the buyer had to arrange short term finance at a cost of £5k.

http://www.cml.org.uk/cml/handbook/englandandwales/question-list/201

Mortgage_Mark_2

As above, that is indeed correct, many lenders have a problem with mortgaging a property that has not been owned for six months. Nationwide however, do not, from memory - give them a call, I'm pretty sure you'll be ok.

molerat

Looking at my link it seems that Nationwide can be flexible whereas many others are a strict no.

Jamesyc

Thanks for the replies.

I did have a look at your link and I assume it's on a case by case decision. Hopefully as it's a Persimmon trade in there shouldn't be a problem, but I'll have to wait and see.

What's the purpose of the 6 month thing then?

molerat

A couple of blogs as to the reasoning, basically all about historical greed and getting caught out. Much simpler to say no than to investigate each case.

http://www.property118.com/remortage-within-six-months/31856/
http://thepropertymermaid.com/blog/6-month-rule

pinkteapot

I've never thought about part-exchange traded-in houses before. Surely it's not the case that builders have to hold on to them for six months before reselling! You'd think there'd be an exception for that scenario.

You might find it easiest to use a broker who knows which lenders will accept less than six months ownership and which won't... HSBC have a blanket ban on less than six months ownership so don't bother with them.

Jamesyc

Well that's why I'm a little confused as I can't see the logic in the 6 month rule for Part Exs.

Surely builders wouldn't bother if that was the case as most people buying require a mortgage.

We've already had an offer from Nationwide, at an excellent rate (2.99% fixed 4 years) so I'm hoping they will be OK with it.

zzzLazyDaisy

Jamesyc wrote: »

Well that's why I'm a little confused as I can't see the logic in the 6 month rule for Part Exs.

It is because the land registry does not record the reason for the sale/purchase.

All the lender has to go on, initially, is the land registry title deed that states the new owner acquired the property less than 6 months ago. That is enough to raise a red flag.

You then need to find a lender who will investigate the reason for the quick purchase/sale and make an informed judgement.

People who inherit property and seek to sell on within 6 months often meet the same problem.

molerat

Jamesyc wrote: »

Well that's why I'm a little confused as I can't see the logic in the 6 month rule for Part Exs.

molerat wrote: »

Much simpler to say no than to investigate each case.

Lazy bankers

Jamesyc

I'll be really annoyed if they withdraw their offer. We did mention it was a part ex to the mortgage advisor at Nationwide in our mortgage meeting.

Solicitors have contacted Nationwide, so it's a waiting game. What a crap start to the weekend.