Mortgage broker - ask me anything

MarkymarkUK

Hi,

Had a mortgage offer made on a leasehold flat I wanted to let out. Conveyancer has uncovered a no sublet clause in lease. Freeholder has provided written letter stating subletting ok for the duration of ownership but lender won’t accept this and requires a deed of variation which the freeholder won’t do (even for a tidy fee offered).

Question is would any lender lend under these circumstances and without a deed of variation?

thanks,

Mark

K_S

MarkymarkUK said:

Hi,

Had a mortgage offer made on a leasehold flat I wanted to let out. Conveyancer has uncovered a no sublet clause in lease. Freeholder has provided written letter stating subletting ok for the duration of ownership but lender won’t accept this and requires a deed of variation which the freeholder won’t do (even for a tidy fee offered).

Question is would any lender lend under these circumstances and without a deed of variation?

thanks,

Mark

@markymarkuk I don't know tbh as it'll depend on what exactly is in the lease (I've had experiences in the past where solicitors misinterpret these clauses and make an incorrect report to the lender), the contents of the freeholder's temporary permission, etc. 

Normally the permission to sub-let can be retracted at any time, and the leaseholder will have no comeback, as the lease states you cannot sub-let.

If you aren't using one already (or you are using one who can't find another lender), I would recommend getting in touch with an experienced broker who can get the pertinent details and give you a clear answer on whether or not this is proceedable.

James_D

Hi, so I'm not sure whether this is beyond the sort of advice that you can give but I'd appreciate anything you can offer up!
I've got a mortgage application in, waiting for an offer. It went in on 5 April. Survey was done the following week. The vendor (elderly single lady) and her EA were very concerned that the lender would ask for a retention / down value the property and so refused to take it off the market until we had a mortgage offer. Obviously I'm keen to get the mortgage offer as quickly as possible and so my broker has been chasing the bank ever since. The bank have disclosed that the valuation came back at the full amount that we had offered for the property, but the underwriters are still processing our mortgage application (and so far as is possible to tell all signs are good, they are just busy).
The question is : should I inform the EA / vendor that the survey valued the property for the amount that we offered so that they can see that I am still in the running as a credible purchaser? There was probably quite a bit of interest on the property and so I don't want them to get impatient and move on to someone else. Would there be any down side for us in telling them now that the valuation was as expected, before we have a formal mortgage offer?

K_S

@james_d If their concern was that the property might be down-valued (it's a bit unusual tbh, I haven't had any of my clients say that the vendor is worried about a downval and so refusing to mark the property SSTC), I suspect an email from the broker to the EA confirming that the valuation has come through fine should do the trick.

OTOH, they might just be using it as an excuse to see if your offer can be bettered.

If that doesn't help, what are they expecting, that you send across a copy of the mortgage offer?

James_D

K_S said:

@james_d If their concern was that the property might be down-valued (it's a bit unusual tbh, I haven't had any of my clients say that the vendor is worried about a downval and so refusing to mark the property SSTC), I suspect an email from the broker to the EA confirming that the valuation has come through fine should do the trick.

OTOH, they might just be using it as an excuse to see if your offer can be bettered.

If that doesn't help, what are they expecting, that you send across a copy of the mortgage offer?

Hi there, thanks so much for your quick response. I'm more than happy just to tell them the valuation came through at the price we wanted, just thought it was worth checking if there was any reason I shouldn't do this that I can't think of myself! We offered the asking price the same afternoon we viewed, and about 3/4 days after it went up for sale. The offer was accepted immediately, but because of the EA's concerns about a down-valuation or retention they have kept it marketed as "for sale" until confirmation of our mortgage offer. 

It's an Edwardian terrace and there were a few cracks here and there in the ceiling, so I'm guessing this spooked the EA. My broker said the same as you, that it was unusual for them to not want to take it off the market for that reason. 

I literally just heard back again from my broker, they say the bank are only processing applications from 22-24 March at the moment and so it will still be quite a long wait. I think I will do as you have said and just forward them the email that the broker sent to me explaining that my application is still being processed but the survey came back to say the valuation is what we wanted. If there is no reason not to. At least give them something while we wait .. ?!

James_D

James_D said:

K_S said:

@james_d If their concern was that the property might be down-valued (it's a bit unusual tbh, I haven't had any of my clients say that the vendor is worried about a downval and so refusing to mark the property SSTC), I suspect an email from the broker to the EA confirming that the valuation has come through fine should do the trick.

OTOH, they might just be using it as an excuse to see if your offer can be bettered.

If that doesn't help, what are they expecting, that you send across a copy of the mortgage offer?

Hi there, thanks so much for your quick response. I'm more than happy just to tell them the valuation came through at the price we wanted, just thought it was worth checking if there was any reason I shouldn't do this that I can't think of myself! We offered the asking price the same afternoon we viewed, and about 3/4 days after it went up for sale. The offer was accepted immediately, but because of the EA's concerns about a down-valuation or retention they have kept it marketed as "for sale" until confirmation of our mortgage offer. 

It's an Edwardian terrace and there were a few cracks here and there in the ceiling, so I'm guessing this spooked the EA. My broker said the same as you, that it was unusual for them to not want to take it off the market for that reason. 

I literally just heard back again from my broker, they say the bank are only processing applications from 22-24 March at the moment and so it will still be quite a long wait. I think I will do as you have said and just forward them the email that the broker sent to me explaining that my application is still being processed but the survey came back to say the valuation is what we wanted. If there is no reason not to. At least give them something while we wait .. ?!

Looks like our broker beat me to it in telling the EA. So never mind but thanks for the advice!

MrBounce

Halifax have requested a letter from my accountant for my wife, as she has only 1 years self employed accounts...

The accountant has said they would write they estimate her earnings to be similar to the previous year, without giving a figure as they haven't finalised this last years accounts yet.. 

Would this be sufficient for a bank? 

Dda37

Hi I'm currently awaiting a valuation for my mortgage application with Barclays. I was initially worried about a 5+ year old default when applying however I'm now concerned as I only have a basic bank account, will this affect my mortgage application at all? 

Thanks, D 

K_S

Dda37 said:

Hi I'm currently awaiting a valuation for my mortgage application with Barclays. I was initially worried about a 5+ year old default when applying however I'm now concerned as I only have a basic bank account, will this affect my mortgage application at all? 

Thanks, D 

@dda37 The short answer to your question is - no, it should not

K_S

MrBounce said:

Halifax have requested a letter from my accountant for my wife, as she has only 1 years self employed accounts...

The accountant has said they would write they estimate her earnings to be similar to the previous year, without giving a figure as they haven't finalised this last years accounts yet.. 

Would this be sufficient for a bank? 

@mrbounce It's hard to say definitively as it may also depend on the case as a whole. However, limited to the self-employment aspect, given that they are happy to say that earnings will be similar to prior year, I'd imagine that would be sufficient...