Sub sales and Back to back transaction Mortgage

lonibra

I would never try this with a normal mortgage, it's just too risky with auction deadlines and I would give myself a heart attack in the process.

I've bought an auction property once, a BTL and my MB got it on a bridge mortgage (all ready to go before the auction date) and then remortgaged to a normal rate after I got tenants in. That was a very smooth process.

I think the OP has an additional complication in this being a sub-sale. From the conveyancing handbooks that looks like a bigger issue than the back to back.

But I think the OP said he has some experience in all this so wants to DIY it.

london21

Deleted_User said:

Honestly its not a case I would touch with a barge pole. Unless you were going to bridge it in the short term and then remo afterwards I wouldnt be taking the risk of attaching my name to an advised process of trying to get a 1st charge mortgage with weeks before an auction deadline.  Honestly even a bridge is probably going to take too long with how long valuations are taking to happen at the moment.  

Saying that, here is a list of lenders on my system who may consider a back to back transaction when it has been bought at auction:

Nationwide, Principality, Leeds, Natwest, Santander, Virgin, Barclays, Clydesdale, Accord, Hanley, Stafford Railway, Buckinghamshire, Hinkley and Rugby, Furness, Swansea, Harpenden

Each of these will be subject to their own individual criteria and most of the time just down to how certain underwriters feel about the case.   I've had lenders on this list decline back to back cases, and ive had lenders not on this list agree them even though they say they wont.  It really comes down to the strength of the case.  With your timescales you really want to avoid the back and forth questions from underwriters so hopefully you get lucky. Most lenders publish underwriting timecales if you search for the lender name and add 'for intermediaries' at the end

Thanks a bunch for the response, will contact Virgin bank first thing tomorrow morning to get their opinion and will also look  into getting a Mortgage broker ASAP. I have until the 15th July to complete. 
The situation is at present vendor's name not on regustry and seller's solicitor will provide AP1 submitted to HM Land registry to my solicitor. 

my latest solicitor's response: 
"In terms of the lender requirements, the CML is silent in respect of purchasing properties that have yet to be registered under the name of the seller. I referred one to the Halifax a number of weeks ago and they would not accept the position.

My advice would be to purchase for cash and think about mortgaging in the future when the registration has taken place. If you proceed with a mortgage, I will have to report the position to the lender and seek their authority to proceed (whichever lender you use)."

read the lending criteria for Halifax and tsb and they clearly stated no so wouldnt bother with those. in the first instance. 

"The seller shall, in addition to the Transfer Deed provide to the buyer:

a) The Transfer Deed from the registered proprietor to the seller

b) SDLT5 Certificate in respect of the Transfer to the seller

c) Form AP1 in respect of the transfer to the seller"

(section 37, Land Registration Act 1925).

37 Powers of persons entitled to be registered (i thought section 2 applies in this instance)

(1)Where a person on whom the right to be registered as proprietor of registered land or of a registered charge has devolved by reason of the death of the proprietor, or has been conferred by a disposition or charge, in accordance with this Act, desires to dispose of or charge the land or to deal with the charge before he is himself registered as proprietor, he may do so in the prescribed manner, and subject to the prescribed conditions.

(2)Subject to the provisions of this Act with regard to registered dealings for valuable consideration, a disposition or charge so made shall have the same effect as if the person making it were registered as proprietor.

(3)Rules may be made for extending the provisions of this section to the case of any person entitled to be registered as first proprietor, and to any other case for which it may be deemed expedient to prescribe.

london21

lonibra said:

I would never try this with a normal mortgage, it's just too risky with auction deadlines and I would give myself a heart attack in the process.

I've bought an auction property once, a BTL and my MB got it on a bridge mortgage (all ready to go before the auction date) and then remortgaged to a normal rate after I got tenants in. That was a very smooth process.

I think the OP has an additional complication in this being a sub-sale. From the conveyancing handbooks that looks like a bigger issue than the back to back.

But I think the OP said he has some experience in all this so wants to DIY it.

The last few days have been very stressful if I am honest. I have never had experience of back to back sale. This is my first auction property and tbh prefer normal sale. I will seek a mortgage broker tomorrow who has experience or can help secure mortgage although time is going fast. will have to have plan a,b and c. 

K_S

@london21 As JMA said, it would take a very brave/foolhardy mainstream resi broker to dive in to this case (especially if you are buying it to live in), primarily because there is no way they can guarantee or even be confident of getting an offer through and completing within the 4(?) weeks left and the ramifications of that.

Even if you are pursuing that route, alongside that you may want to consider getting your bridging options from a couple of brokers. Make sure to get at least a couple of quotes/indicative-quotes and understand what you need to put an application in and the timelines involved.

Google auction bridging loans and read up on it a bit, especially the different components to the cost involved. Ideally find one where there is no upfront cost other than the valuation fee (no getting away from that unfortunately). At lower LTVs, bridging lenders may offer Hometrack/desktop valuations so that will quicken the process up as well.

If you are buying to live in, that will be a regulated bridge and take a bit longer to process by the lender than if you were buying to let. 

Like you said make sure you have a plan B and C. Good luck!

MWT

K_S said:a

Like you said make sure you have a plan B and C. Good luck!

Personally I’d go straight for plan ‘C’ for  ‘cash’…

This transaction should have started with a bridging loan ready to go, or cash in the bank.

Since the OP has said that they can’t afford to lose the deposit and that they could raisie the cash from friends/family, I’d go straight for that at this point, and then take the time to arrange the right finance with the time to do it properly…

london21

MWT said:

K_S said:a

Like you said make sure you have a plan B and C. Good luck!

Personally I’d go straight for plan ‘C’ for  ‘cash’…

This transaction should have started with a bridging loan ready to go, or cash in the bank.

Since the OP has said that they can’t afford to lose the deposit and that they could raisie the cash from friends/family, I’d go straight for that at this point, and then take the time to arrange the right finance with the time to do it properly…

If bought with cash. Once my name is on land registry can I then apply for a mortgage or will have to wait 6 months? 

K_S

london21 said:

MWT said:

K_S said:a

Like you said make sure you have a plan B and C. Good luck!

Personally I’d go straight for plan ‘C’ for  ‘cash’…

This transaction should have started with a bridging loan ready to go, or cash in the bank.

Since the OP has said that they can’t afford to lose the deposit and that they could raisie the cash from friends/family, I’d go straight for that at this point, and then take the time to arrange the right finance with the time to do it properly…

If bought with cash. Once my name is on land registry can I then apply for a mortgage or will have to wait 6 months? 

@london21 Some lender will not allow until 6 months have elapsed, but there are a sufficient number of maintream lenders that will consider.

london21

K_S said:

london21 said:

MWT said:

K_S said:a

Like you said make sure you have a plan B and C. Good luck!

Personally I’d go straight for plan ‘C’ for  ‘cash’…

This transaction should have started with a bridging loan ready to go, or cash in the bank.

Since the OP has said that they can’t afford to lose the deposit and that they could raisie the cash from friends/family, I’d go straight for that at this point, and then take the time to arrange the right finance with the time to do it properly…

If bought with cash. Once my name is on land registry can I then apply for a mortgage or will have to wait 6 months? 

@london21 Some lender will not allow until 6 months have elapsed, but there are a sufficient number of maintream lenders that will consider.

Think Nationwide do just that at present the 4 weeks deadline is tight. I am still waiting the AP1 form from seller’s solicitor. Surely the auction property they are not expecting me to pay for the property without first been transferring to the vendor’s name first. 

[Deleted User]

Think Nationwide do just that at present the 4 weeks deadline is tight. I am still waiting the AP1 form from seller’s solicitor. Surely the auction property they are not expecting me to pay for the property without first been transferring to the vendor’s name first. 

They will expect you to pay for the property by the deadline regardless of any other factors. That's kind of all it comes down to.    Its not uncommon for transactions to take a while to register which is why most will try buy as cash at auction then sort it out later.  The lack of registration and paperwork is only an issue as you have a lender involved you needs everything done cleanly

user1977

london21 said:

K_S said:

london21 said:

MWT said:

K_S said:a

Like you said make sure you have a plan B and C. Good luck!

Personally I’d go straight for plan ‘C’ for  ‘cash’…

This transaction should have started with a bridging loan ready to go, or cash in the bank.

Since the OP has said that they can’t afford to lose the deposit and that they could raisie the cash from friends/family, I’d go straight for that at this point, and then take the time to arrange the right finance with the time to do it properly…

If bought with cash. Once my name is on land registry can I then apply for a mortgage or will have to wait 6 months? 

@london21 Some lender will not allow until 6 months have elapsed, but there are a sufficient number of maintream lenders that will consider.

Surely the auction property they are not expecting me to pay for the property without first been transferring to the vendor’s name first. 

It has been transferred to the vendor, that transfer just hasn't been registered. That's the whole point of subsales. The transfer to the vendor is a link in title which you submit along with your own application to the Land Registry.