Mortgage agreed in principle, impossible condition attached when offered

candy8234

My daughter and partner had an offer accepted on a property about 3 months ago after having an 'offer in principle' for the mortgage arranged by a mortgage broker. They told them all their circumstances at the time, and thought an 'offer in principle' meant as long as they were able to prove all the facts were correct, the mortgage would go through. After weeks of the mortgage provider coming back with one question or another which they have been able to answer with evidence quickly, they received the mortgage offer today but with an impossible condition attached. My daughters partner owns a buy-to-let property that is being sold, but has a tenant in there until August. They did have an earlier buyer on the buy-to-let property who pulled out, so the current purchaser is not far into the purchase. They are not relying on the money from this sale for the purchase of their new property. The mortgage provider has made the offer, but will not release the money until completion of the buy-to-let sale. Right from the start the mortgage provider has known the details of the buy to let property, and they earn more than enough to cover the mortgage, and have the deposit. They can't complete on the sale of the buy to let property until August when the tenancy ends, so their vendor will not be prepared to wait that long having already waited 3 months. The mortgage provider has taken money from them for the valuation and there may also have been a fee(I'm not sure), and has now moved the goalposts. Would be grateful for advice as to what they should do next? Is there a regulatory body who they could complain to.

banks4u

Why did they tell them that they Are selling the buy to let? Also if they complete their property before the sale of the BTL they will have an extra 3% Stamp Duty to pay.

If nothing is dependant on the BTL sale, then I would just go back to the lender and say that it won't be sold. Does he current rent cover 125% of the mortgage? If it does then there shouldn't be an issue.

Thrugelmir

No grounds for complaint. An offer in principle is not a guarantee of a mortgage offer. Lender is advancing the money so lender sets the terms of the offer.

candy8234

They know about the 3% stamp duty, and realise there is nothing they can do about it. I don't know what the rent is on the BTL. Accept what you say Thrugelmir, but it has taken 3 months of asking for info. one item at a time, then asking again for the same item then putting their application to the bottom of the pile. If the BTL was going to be an issue, would have helped if they'd known sooner, now looks likely they will lose the property of their dreams and be out of pocket. i would expect there to be guidelines on our how long they should take to make an offer, one way or the other. If this happens frequently there must be lots of people who lose their properties because the vendors won't wait that long.

Funny_old_game

Surely it not the lenders fault the first purchase fell through as they were going to advance on the premise that property wouldn't be an ongoing commitment irrespective whether it was 3 days or 3 months.

Plan B needed as they would need some serious influence to amend the offer now.

amnblog

If the intention was sale and purchase at the same time, the broker may have set the deal up accordingly, hence the terms of the offer.

It may be that the offer can be amended and the lender will allow the BTL to be retained. That depends on the Lender.

Also the couple will have to find another 3% of the purchase price in tax to complete the new purchase. (Refundable if they sell the BTL within 36 months, but the cash flow has to be managed).

The Broker should be in prime position to discuss their options.

candy8234

The intention wasn't sale and purchase at the same time. The broker is as shocked as they are about the conditions attached to the offer, and is going to appeal to the provider tomorrow. He doesn't have to sell the BTL, but they decided to so that they would have a good amount of cash to do some home improvements once they are in. Yes, they know about the 3% stamp duty. Presumably if the lender wont budge, the broker will be able to advise on another lender, but whatever happens it now needs to happen fast. Does anyone know if there are any lenders who have a reputation for making offers quickly?

amnblog

Who is the Lender? Is the broker saying the Lender knew the BTL was to be kept from outset? You also said the buy to let is entirely self funding?

minimike2

Asking for bits one at a time over a prolonged period. My money is on Santander.

amnblog

If it is, and the BTL property is self funding I don't see what the problem is.

getmore4less

amnblog wrote: »

If it is, and the BTL property is self funding I don't see what the problem is.

the potential problem is the place is for sale and lenders know that needs vacant possession unless to a letting business.

There is the risk the sale fall through and no tenant is in place.

Perhaps the OP's finances will not cover that scenario.