HSBC residential mortgage - 6 month rule?

chumbawamba27

First time buyer here and so am new to everything.

I've been merrily trundling along on the house purchase path. Have had a mortgage offer from HSBC subject to a valuation which is going to take place on Thursday. Have paid for the valuation and a survey to be done, instructed solicitors. Searches have been carried out, draft sale contract prepared etc.

I've just, this evening. come across something called the '6 month rule' which says that many lenders won't lend to a buyer if the seller has owned the property for less than six months. The lady I'm purchasing it off bought in cash in April . She's a wealthy lady, in her 80s, and had bought it for a 'town pad' but then decided it was too big for her so wanted to sell it again. She never even moved into it.

HSBC have never asked me anything about the length of time the vendor has owned the house. I have emailed them this evening and am so worried. I need to be in the house by the end of september due to my children's school situation. From others' experience, are Hsbc likely to withdraw the offer?

:(:(

[Deleted User]

I suspect it's an anti money laundering tactic, but that doesn't help you.

Obviously you'll have to wait for their response - personally, I might ring them up to discuss it and then you'll know the situation, rather than waiting (and worrying) for an email response. Why not ask the advice of your solicitor too? Try not to panic - you say that you need to be in there by the end of September, but by October it will be 6 months since the vendor bought the property anyway, so HSBC may be willing to just delay the offer rather than pull the plug (and you'll need to find some short term accommodation to bridge the gap).

Let us know how you get on.

hazyjo

You'll prob find the school will allow you X number of months to actually move in after the start date. Check with them.


Or see if they'll accept a long gap between exchange/completion.


Or change lender. Some may lend on it.


It's very common not to lend on a property owned by the previous owner for less than 6 (or even 12) months.


Jx

ThePants999

I don't think it's a money laundering thing - I think banks are just concerned that if someone sells that quickly, there's something wrong with the property that might only come to light when they repossess!

davidmcn

ThePants999 wrote: »

I don't think it's a money laundering thing - I think banks are just concerned that if someone sells that quickly, there's something wrong with the property that might only come to light when they repossess!

I think it's more of a fraud thing - a common tactic is (or was) to have connected parties buy/sell properties in rapid succession, pushing up the price each time. Eventually someone runs off with the vastly inflated loan funds.

And in general it just looks a bit fishy if someone is selling quickly, unless there's an obvious justification like a part-exchange scheme or a developer who has done the place up.

troffasky

davidmcn wrote: »

unless there's an obvious justification like a part-exchange scheme or a developer who has done the place up.

Interesting comment. Knowing little about these things I had assumed that a developer would be holding on to a property for the shortest time possible, and that you could "do up" almost anything in less than a year. If 6-12 month rules are the norm for lenders then clearly that can't be the case.

davidmcn

troffasky wrote: »

Interesting comment. Knowing little about these things I had assumed that a developer would be holding on to a property for the shortest time possible, and that you could "do up" almost anything in less than a year. If 6-12 month rules are the norm for lenders then clearly that can't be the case.

6 months is the normal limit (per the CML Handbook) - see previous threads here for discussion about why developers don't necessarily make as quick a buck as you'd think. Of course it also depends how you're counting - if it's 6 months at the completion date (rather than the date of the mortgage offer) that's not too bad.