Buyer with no mortgage

Gstrang81

Hi guys,

I hope someone here can give me some guidance or help put my mind at ease around a very odd situation!

We are in the process of selling our house and buying a new one. We signed our missives on the 1st of May with settlement of the sale and purchase to happen simultaneously on the 9th. We received a phone call from our solicitor at 3.30 on the 8th to say our buyer had no mortgage so settlement could not take place!!

The buyers solicitor has advised a mortgage has been approved but they are waiting on the mortgage papers coming through. Our sols have advised the buyer was bankrupt in 2012 and this has been settled but a previous mortgage offer has been withdrawn. My understanding of the process is that you must prove you have a mortgage before a formal offer can be made? And how can it get to hours before completion before their solicitor notices they don't have the funds to actually buy the house!

Fortunately missives were not concluded so we're not legally responsible for the other house yet but this purely down to good thinking from our solicitor. A buyer further down the chain has already asked for their asking price to be reduced to compensate for the delay and to stop them pulling out. I'm worried that the buyer's mortgage is non-existent and that we could potentially move the house we're supposed to be buying!

Does anyone know what this means or been in a similar situation before? And should we be looking at putting our house back on the market to prevent any further delay?
Thanks in advance

[Deleted User]

Gstrang81 wrote: »

My understanding of the process is that you must prove you have a mortgage before a formal offer can be made?

You can't have a mortgage before making an offer on a property, as the mortgage is secured on the property in question. Many mortgage applications fall through prior to purchase.

If you don't think your buyer can complete, then you should put the house back on the market.

Gstrang81

Deleted_User wrote: »

You can't have a mortgage before making an offer on a property, as the mortgage is secured on the property in question. Many mortgage applications fall through prior to purchase.

If you don't think your buyer can complete, then you should put the house back on the market.

That's my gut feeling, I think we have a time waster! Thanks for responding

davidmcn

Gstrang81 wrote: »

My understanding of the process is that you must prove you have a mortgage before a formal offer can be made?

Your understanding is wrong, as I'm sure your solicitor can explain to you. Apart from anything else you wouldn't normally make a full mortgage application until you have a price agreed in principle, and that doesn't happen until your offer is accepted in principle.

And how can it get to hours before completion before their solicitor notices they don't have the funds to actually buy the house!

Because it's hardly uncommon for buyers to be working frantically behind the scenes to get their finance sorted. No sense in spooking the other party until it becomes necessary to do so.

Fortunately missives were not concluded

Not sure what you meant by "we signed our missives" then - I take it you haven't concluded a contract for either the sale or the purchase?

should we be looking at putting our house back on the market to prevent any further delay?

Wouldn't do any harm.

Gstrang81

davidmcn wrote: »

Your understanding is wrong, as I'm sure your solicitor can explain to you. Apart from anything else you wouldn't normally make a full mortgage application until you have a price agreed in principle, and that doesn't happen until your offer is accepted in principle. - I should have been clearer, I meant having an AIP or DIP in place prior to making an offer. We had to show our AIP to the estate agent before they would pass on our offer for the property we were buying. I know they aren't worth the paper they're written on at times which certainly seems to be the case here!

Because it's hardly uncommon for buyers to be working frantically behind the scenes to get their finance sorted. No sense in spooking the other party until it becomes necessary to do so. - I understand this but we have a baby which the woman clearly saw when she viewed our property. If I had been in that situation, I would have wanted to give the other party as much notice as possible to make sure they were aware. Naive, I know

Not sure what you meant by "we signed our missives" then - I take it you haven't concluded a contract for either the sale or the purchase? - We signed the papers for the sale of our house but the final stage of concluding the missives (I think this is exchange of contract in E&W) hadn't taken place for the one we were purchasing. If it had, we would have been in breach of contract because we couldn't proceed with the purchase (the equity from our sale is covering the deposit of the new property.

Wouldn't do any harm.

- Looks like our best option right now