Mortgage Disaster

trenewth

Hi,

We went through a mortgage broker and got a mortgage offer. We were hoping to complete this week, but a situation has occurred that appears to have destroyed our hopes of moving to a new home.
- We have substantial debts, but have equity in the house that we were hoping to pay these of with. There would be £42400 left over
-We have a gifted deposit of £100000
- Our house purchase is £345000
-Our mortgage offer is £238500

We believed that our debts were to be payable on completion. All conversations had led us to believe that this was the case. The mortgage lenders solicitor has requested that all debts should be repaid three days after completion-at the latest. Correspondence between us and the brokers had all talked about payment on completion, as had all the initial discussions by phone.
After a discussion with my solicitor today about the mortgage company's solicitor asking for statements and settled accounts, I phoned the brokers and mortgage company and asked questions about this and they told me that repayment of all debts had to happen BEFORE completion. They say that this is in the mortgage offer, but both I and my solicitors cannot see this.
When I again phoned the brokers they said that we had 'ticked a box' indicating that we were 'happy to repay on or before completion' and they had proceeded on that way. That is despite all discussions (and calculations) between us and the broker were on a payment on completion only basis. I asked the broker how on earth we were supposed to pay off the debts before, as we clearly had engaged their services with the sole option of payment on completion. Where did they think that we were going to get the money from? Our solicitors say that this is crazy, but the brokers say that we should ask about releasing some of our gifted deposit in order to do this- which our solicitors say that we cannot do. I honestly don't think that we can do anything about this now- we have to pull out from our purchase now. Any ideas out there?

chunkytfg

Cant you just pay the Debt with a portion of the gifted deposit and then whats left along with the equity in the house you're selling to buy the new one totals the same amount?

System

You have a gifted deposit of 100,000 just use that to pay the debts...

trenewth

We hope to do that. But our solicitors say that probably isn't possible...

Bad_Ash

While it might be a complete pain can't you complete the sale of your house to release the equity and pay off the debts, and then complete on the other house a few days later.

This would mean that your removal costs would increase and have to include some storage, and you would need temporary accommodation for those few days.

trenewth

They are asking for letters that confirm that all debts are paid off, which could probably add even more time to the move. We are now just considering backing out of the purchase, still selling the house, paying off the debts, moving into rented for six months, waiting for the credit ratings to improve and then going with a mainstream lender.

amnblog

Which Lender is this?

Thrugelmir

Why are you using a different solicitor to that of the mortgage company?

trenewth

Pepper Money is the lender. We used the solicitor we used on our first house move. Pepper have their own, which we paid for up front, as part of the T&Cs of the offer.

Kynthia

Get a better broker and a new mortgage offer for this house that allows repayment on completion.

davidmcn

I don't understand the logic, and suspect someone in the process is misunderstanding the intention of the condition. Surely the solicitor can sort out payment of the debts on completion, in a way that satisfies Pepper?

If you were to take the stance e.g. that the vendor has to repay their mortgage before you buy their property, nothing would ever get done - in practice the solicitors use the purchase price to redeem the mortgage, and cover that with an undertaking to your solicitors - so I would expect either your solicitor could undertake to Pepper to redeem the loans, or Pepper's solicitor could do it.