Retracted mortgage offer

Lurcheral

Hi all,

I recently applied for a let-to-buy mortgage and was initially approved by Halifax pending them checking out the property that I wanted to buy.

I was initially advised that due to the new EU regulations coming in at the end of March that I needed to get my application approved before these kicked in as it was possible that I may not be eligible after such time.

So I applied and got the mortgage offer but was expecting to have three months or even six months to then find a property. Anyway after five weeks (last week) my mortgage offer was retracted presumbly as there hasn't been any movement at my end.

My question is, is this common for a mortgage offer to be withdrawn so quickly? I didn't really want to take one out so early on in the year but was advised to because of these new rules and unfortunately that meant that I was approved at a time when the market was quiet. I was hoping that I would then have several months to find somewhere.

I'm also unsure now whether these new EU rules will affect me as I don't know what the affordability criteria is now (if it has changed at all) and fail to find any proper info on the net.

Thanks

haras_nosirrah

How can you have a mortgage offer without a property?

Do you mean a mortgage agreement in principle?

Lurcheral

Yes, sorry an agreement in principle.

stator

Agreement in principle isn't worth much to be honest. Why do you want a valid agreement in principle?

Lurcheral

Basically, I didn't know anything about let to buy mortgages so contacted various brokers in early Jan to find out the situation.

All of them told me that there were changes coming in at the end of March organised by the EU which would potentially make it harder for me to get a mortgage. Therefore they advised that I should start the application at that time (early Feb) so that I get approved before these changes come into effect.

I personally was only making provisional ennquiries to maybe move Summer/Autumn but because of these EU changes was advised to get on with it. So I didn't particularly want an agreement in principal before finding a property but was advised that I should get the process started even though I hadn't found a suitable property. So that's why I'm in the situation I'm in now.

Malmo

Have you asked the lender or your broker why the AIP is no longer valid?

In any case, what you are referring to is the Mortgage Credit Directive (MCD). This legislative framework will basically classify buy to let (BTL) transactions as either "consumer" or "professional", with consumer buy to let (CBTL) becoming a formally regulated market in order to afford borrowers some level of regulatory protection, similar to the residential owner occupier market. This may mean tighter or more involved lending criteria where lenders have not already aligned their criteria with the UK's own Mortgage Market Review (MMR).

Let to buy will generally be classified as CBTL where only one property will be let and there is no "recent" track record of letting a property that has already been sold.

Thrugelmir

Lurcheral wrote: »

So I applied and got the mortgage offer but was expecting to have three months or even six months to then find a property.

You'll be subject to the criteria at the time of making the full application. Until you make a full application you don't have a formal mortgage offer.