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Signed missives, mortgage falling through

To be brief, we put a reservation fee on a Stewart Milne new build home last September. Completion date May/June/July this year.

We had went to a previous mortgage advisor who said we would be able to obtain the mortgage and even got us one in principal which expired in December.

Once putting the reservation fee down Stewart Milne wanted us to sign missives within 2 weeks of this. We were advised by our broker not to sign until mortgage was in place. Solicitor advised us that we could (and should) as Stewart Milne was threatening to put the house back on the market. Being naive and feeling very pressured we signed the missives, thinking since we had the mortgage in principal we should be fine.

5 months down the line we have since sold our 1 bed flat and moved back in with in-laws to save for the remainder of our 10% deposit. Within that time our original mortgage advisor had went awol, not returning emails or phone calls. We went to a new one who has now said we cannot get the mortgage that we were told we could get with our salaries. We would be around £15,000 short, even with our 10% deposit.

This has obviously devastated us, we are stuck between a rock and a hard place and really don't know where to go from here.

I understand that we are legally bound to complete on this house now but there is no way we can scrape another 15,000 within the timeframe we need to get the mortgage on top of our 10%. On the other hand, I know we will be charged for pulling out even if we could.

Lesson learned, we should never have signed the missives without having the full mortgage offer in place. Of course will have to speak to solicitor and Stewart Milne but just looking for advice/any experience/potential options that we have.

Comments

  • csgohan4
    csgohan4 Posts: 10,600 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    the solicitor and/or broker, were they from the developer?
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • middleclassbutpoor
    middleclassbutpoor Posts: 774 Forumite
    Sixth Anniversary 500 Posts Name Dropper Photogenic
    edited 11 February 2019 pm28 7:09PM
    flk2294 wrote: »

    Once putting the reservation fee down Stewart Milne wanted us to sign missives within 2 weeks of this. We were advised by our broker not to sign until mortgage was in place. Solicitor advised us that we could (and should) as Stewart Milne was threatening to put the house back on the market. Being naive and feeling very pressured we signed the missives, thinking since we had the mortgage in principal we should be fine.

    I would ask your solicitor what to do seeing as they 'advised' you to sign the missives AND what the consequences you are going to face if you cannot complete?

    I for one minute cannot believe that a Solicitor would put you in that position. You have said you only signed with the knowledge you had a mortgage in place which would suggest you did know that signing without finance was a bad idea. For you to know this was a bad idea, you probably have an idea of what the consequences may be also?

    However, I can't also believe you will be the first person to have gone through this either so as I say - speak to your solicitor and take it from there.
  • Solicitor told us legally we could sign missives without a mortgage offer in place since it was a new build. Then told us that we would essentially lose the house if we didn't sign when SM wanted us to.

    I'm not going to lie, my gut told me not to but we were also comfortable enough with our mortgage in principal to go on and sign the missives as we didn't want to lose the house.
  • I should point out the solicitor did not tell us the consequences of signing the missives and then failing to complete.
  • They were suggested by SM and were put in place to value the home for them. They also gave us a value to put our flat on the market which was what we went with. So in essence yes they were but were originally only sent to value the home for a guaranteed buyer contract.
  • Im not an expert on scottish law so cant comment but

    https://www.mygov.scot/buying-a-home/making-an-offer/

    the above would indicate unless there was some clause within the missives to account for your situation, you could be financially on the hook for a sum of money if you cannot find the funds to complete?

    Are you sure you can't get help in any way - HTB Scotland - or gifted deposit for example?
  • davidmcn
    davidmcn Posts: 23,596 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    flk2294 wrote: »
    I should point out the solicitor did not tell us the consequences of signing the missives and then failing to complete.
    Ok, that's poor, and you might have a case if they've failed to give you proper advice, but as far as Stewart Milne are concerned you're in a contract with them. And you do seem aware that the contract is binding and that there are financial consequences of not coming up with the money on time.

    If you're sure that you can't scrape together the price then you might want to put Stewart Milne on notice now that you're not going to be in a position to settle, so they can mitigate their loss by putting the plot back on the market. It's likely they can sell for much the same price (or even higher?), in which case you might not have any significant costs.
  • csgohan4
    csgohan4 Posts: 10,600 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    Oh dear, You got the solicitor from the Developer who won't have your back but their own commission and the developers.


    Anyone who reads this, never ever use any services from the EA/ Developer unless you want to be taken for a ride.




    Now Op did you have in writing what they advised you in regards to the exchange of contracts?
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
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