Mortgage about to collapse

ReubenjM

Okay, I'm wondering if you can help...

Found the perfect property, put in an offer, sale was accepted.
Went for a mortgage with HSBC and mortgage was also accepted.
Solicitors are working away and all is looking good...

Until I receive a call off HSBC saying that the valuator doesn't value the property at £130,000 but £120,000. They are now making some calls but are talking as if the mortgage could collapse.

We have met the lady selling the property we are after a number of times and get on very well. She plans to be out by the end of February but is not in a massive rush as there is no onward chain.

Do we have enough time to get a mortgage with another provider without the whole thing falling through?

Thanks in advance!

Reuben

user1168934

The options really are:

1. Find the remaining amount from somewhere.
2. Renegotiate the price from seller - I would do this.
3. Get another mortgage from some other provider, waste a lot of time and there is still a chance that the other provider will give you the same valuation.

This is a good opportunity for you to renegotitate on the price.

ReubenjM

Thank you for the advice. The difficulty we have is it is a shared ownership property and so we are buying 25% at £32,500. I don't see why it would affect HSBC as we're only getting a mortgage on 25% and the other 75% would be owned by the housing association. I doubt the seller would lower her offer even by a small amount as there was a lot of interest and offers put in on the property.

ACG

Because in HSBCs eyes you share is not valued at £32,500 but £30,000.

As has been suggested, its a case of plugging the difference, renegotiating or finding a new lender. At this stage I would be very surprised if the sale will collapse unless none of the above options can be done.

amnblog

Don't buy your share for a price you are not confident you could get on resale.

AnotherJoe

ReubenjM wrote: »

Thank you for the advice. The difficulty we have is it is a shared ownership property and so we are buying 25% at £32,500. I don't see why it would affect HSBC as we're only getting a mortgage on 25% and the other 75% would be owned by the housing association. I doubt the seller would lower her offer even by a small amount as there was a lot of interest and offers put in on the property.

Can you find £2,500 from somewhere? Bank of M&D? You'll need a 'no strings' letter and pay them back when you can or maybe they wont want paying back.

user1168934

ReubenjM wrote: »

Thank you for the advice. The difficulty we have is it is a shared ownership property and so we are buying 25% at £32,500. I don't see why it would affect HSBC as we're only getting a mortgage on 25% and the other 75% would be owned by the housing association. I doubt the seller would lower her offer even by a small amount as there was a lot of interest and offers put in on the property.

There might have been a lot of interest on the property when it was on the market (by the way EA's always say that regardless). But at this later stage the seller is also as keen to get it done as you are and he would not want to lose a buyer and go through the whole process of sale again if an agreement can be reached. The point is that you won't know whether he will reduce the price or not unless you ask him. You have a valid reason and probably an evaluation report to back it up. He is not going to refuse the sale simply because you asked him to lower the price - what have you got to lose?
If it doesn't work then you know what the remaining options are.

user1168934

AnotherJoe wrote: »

Can you find £2,500 from somewhere? Bank of M&D? You'll need a 'no strings' letter and pay them back when you can or maybe they wont want paying back.

I am no expert but I believe the OP will have to find a full £10,000 of the shortfall because the lender will do a 75% of the amount they valued the property at.

kingstreet

ReubenjM wrote: »

I don't see why it would affect HSBC as we're only getting a mortgage on 25% and the other 75% would be owned by the housing association

... because the lender requires a mortgage protection clause allowing it to purchase the remaining share if it repossesses your share. In that way it can sell the whole property.

If the figures are skewed by a downvaluation, it doesn't work as a proposition.