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re-negotiated purchase price pre-exchange
bdh198
Posts: 1 Newbie
Hi
We are in the process of buying a house and have agreed a purchase price. The bank did all their credit checks and agreed our mortgage application with a 57% LTV mortgage.
However, after getting a Homebuyers survey done the surveyor identified some issues that needed addressing and which he flagged up in his survey as rating level 3 (Defects that are serious and/or need to be repaired, replaced or investigated urgently). We got several local builders to give their opinions as to cost to put right the issues and the average cost was in the region of £12,000.
Obviously these issues affected what we were prepared to pay for the property and we managed to negotiate a £12,000 discount with the seller.
Our plan is to pay £12,000 of our own money to the purchase and proceed with the same level of lending with the bank as originally agreed. The property's value is effectively £12,000 lower as a result and that changes our loan to value ratio. It is now 59% as opposed to 57%.
Is the bank likely to require us to resubmit a new mortgage application because of this fairly minor change to the lending position?
Our concern is that as a 'quid pro quo' to the seller we have agreed to aim for an exchange within the week, but if we have to re-submit a mortgage application we will take a lot longer than that. He may decide it is not worth pursuing our offer any further and pull out of the deal (he does not need to sell, and is not in an on-going chain).
We are in the process of buying a house and have agreed a purchase price. The bank did all their credit checks and agreed our mortgage application with a 57% LTV mortgage.
However, after getting a Homebuyers survey done the surveyor identified some issues that needed addressing and which he flagged up in his survey as rating level 3 (Defects that are serious and/or need to be repaired, replaced or investigated urgently). We got several local builders to give their opinions as to cost to put right the issues and the average cost was in the region of £12,000.
Obviously these issues affected what we were prepared to pay for the property and we managed to negotiate a £12,000 discount with the seller.
Our plan is to pay £12,000 of our own money to the purchase and proceed with the same level of lending with the bank as originally agreed. The property's value is effectively £12,000 lower as a result and that changes our loan to value ratio. It is now 59% as opposed to 57%.
Is the bank likely to require us to resubmit a new mortgage application because of this fairly minor change to the lending position?
Our concern is that as a 'quid pro quo' to the seller we have agreed to aim for an exchange within the week, but if we have to re-submit a mortgage application we will take a lot longer than that. He may decide it is not worth pursuing our offer any further and pull out of the deal (he does not need to sell, and is not in an on-going chain).
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Comments
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The solicitor will report back to the mortgage company and let you know if there's a problem, so best check that's ok, but I would think at this LTV level it's unlikely to affect it. Do you have a broker you could check with, if you can't get a quick reply from your solicitor? I assume your solicitor was already in agreement that the exchange date you arrived at is realistic?0
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I don't think you'll need a new application but I think you will need an amended offer showing the new purchase price.0
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We're in this boat too, although still waiting for our builders to report back. We're going through a broker, and I did ask him what happened. He said the lender would need to update their paperwork, but there shouldn't be any need to reapply or jump through all those application hoops again.© Cuilean 2005. Any connection between your reality and mine is purely coincidental.0
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