Charge against current property as temporary part payment for new one?

pumbie

Currently own a house in England, just sold for £315k with £155k mortgage (£160k equity). No other debts. Completion of sale is dragging on - now at 14 weeks and no exchange - chain is robust but pen-pushers are taking their time.

Have bought a house in Scotland for £150k but due to delays with sale I am now up against the fixed date of entry and risk being in breach of contract (and potentially losing the property) which I wish to avoid. Vendor is going into rented and has no outstanding mortgage, so the proceeds will become savings.

Have tried bridging finance but no joy due to need to split the charge over both properties and no-one willing to do this over two jurisdictions for that level of loan. Can't quite raise enough against the current property alone as a first charge even if I could stomach the fees and interest. Lenders are insisting on max 70%LTV AFTER 12 months of accumulated interest is rolled in, so the most we can raise is about £40k and this means taking a £200k+ loan at ridiculous% and about £7k in fees.

Cannot remortgage current house as we fail affordability checks. Wife has given up work hence the need to reduce outgoings and the (much) cheaper house.

Cannot take a mortgage against the new house because we fail affordability checks due to current mortgage and outgoings (even though that'll be gone in a few weeks there's always the "what if...?" scenario so no-one will lend).

Have raised £100k from savings and friendly family members but still £50k short.

Question: Assuming the vendor is willing of course, is there any way we could offer a mix of cash and some kind of legal charge against the current property to make up the full purchase price? If so, how - using what instruments - and what would be the process / likely cost?

I have a Scottish lawyer handling all things related to the purchase, and an English lawyer handling all things related to the sale. Who would do what?

Any other ideas welcomed! :beer:

Thrugelmir

In such cases bridging finance is the answer.

You need to apply maximum pressure on your chain.

Surprised that you are committed to purchasing the other property. Given you've not exchanged. 14 weeks isn't that long in the scheme of things. All sorts of issues can arise that cause delays.

pumbie

Thrugelmir wrote: »

In such cases bridging finance is the answer.

Can't raise enough - tried 4 different lenders - 2 direct and 2 brokers, no joy. Max I can raise is £45k and this is by taking a loan around £200 to pay off current mortgage too - so very expensive.

We had a decision in principle for the full amount (split between second charge on current house, first charge on new house) but when we tried to invoke the underwriters bounced it because they're not prepared to deal with the complexities of the two different legal systems for such a small amount. I offered to pay any excess legal fees but was refused.

Thrugelmir wrote: »

You need to apply maximum pressure on your chain.

Believe me, I'm doing everything possible. We're stuck on a query about a TPO at the moment and every time we think we're moving, some other stupid thing crops up.

Thrugelmir wrote: »

Surprised that you are committed to purchasing the other property.

It's a Scotland thing. Despite best efforts to stall, missives were concluded after about 6 weeks committing us (it was commit or lose it and at the time we put faith in the bridging DIP). Managed to negotiate 8 weeks with seller to complete despite the more usual 2 and thought that would be long enough to cope with any wrinkles. More fool us!

Now the time's up and I'm looking for other options.

TonyMMM

What penalties are you faced with in Scotland if you fail to complete the purchase (other than losing the house) ?

Pixie5740

TonyMMM wrote: »

What penalties are you faced with in Scotland if you fail to complete the purchase (other than losing the house) ?

The missives have been concluded to the OP is legally bound to purchase the property. Even if the property in Scotland burnt to the ground the OP would still be legally bound to to go through with the purchase. If the OP cannot complete the purchase then it could potentially costs the OP a lot of money which the Scottish solicitor should have explained to the OP prior to concluding the missives. It's not too dissimilar to someone in England exchanging contracts and then failing to complete.

Really the OP needs to speak to their solicitor in Scotland ASAP. I'm actually surprised the solicitor in Scotland allowed the OP to conclude the missives without having a formal mortgage offer and just a DIP.

If you want to make some kind of deal to the vendor in Scotland then you'll have to do it through your solicitor. It was always dangerous waiting for a chain to form in England whilst at the same time purchasing a property in Scotland as our mechanism for purchasing property is much swifter.

Edit: You would also need to speak with your English solicitor to see if it's even feasible to place a charge against your current home at this stage in the game. I would imagine that could slow down the whole process of selling your current home.

davidmcn

Pixie5740 wrote: »

Even if the property in Scotland burnt to the ground the OP would still be legally bound to to go through with the purchase.

Er, no, invariably the missives say that either party can walk if that happens. Though we're (hopefully) going off-topic...

Pixie5740

davidmcn wrote: »

Er, no, invariably the missives say that either party can walk if that happens. Though we're (hopefully) going off-topic...

Someone needs to tell Shelter Scotland that then.

http://scotland.shelter.org.uk/get_advice/advice_topics/finding_a_place_to_live/buying_a_home/finalising_the_sale

(Yes off-topic)

davidmcn

Pixie5740 wrote: »

Someone needs to tell Shelter Scotland that then.

http://scotland.shelter.org.uk/get_advice/advice_topics/finding_a_place_to_live/buying_a_home/finalising_the_sale

Have just done so! Looks like they copied and pasted that bit from some English advice.