Renegotiating price after mortgage offer

dchandaria89

Good Morning

I am in the process of buying a house and have a mortgage offer. I had a survey done and found a few issues, some which are more costly. So I am negotiating the house price to reflect this. Given the recent market turmoil, I am worried about the mortgage offer - my offer was from before the recent increases in mortgage rates. If I keep the loan to value ratio the same, but with a lower purchase price, would this affect the mortgage rate I was offered?

Thanks

Luke765

Hello, 

I was recently informed by my broker that a couple had tried to take £2k off the price of a property they were buying with a £450k mortgage. This mortgage was originally agreed before the mini budget and not far away for completion. The bank took this as an opportunity to reassess the mortgage and cancel the offer.

I believe this is happening a lot to rates agreed before the budget for even the smallest changes. However should you renegotiate it would be best to make it worth the risk and drop the price by a good amount in my opinion.

Cheers

K_S

dchandaria89 said:

Good Morning

I am in the process of buying a house and have a mortgage offer. I had a survey done and found a few issues, some which are more costly. So I am negotiating the house price to reflect this. Given the recent market turmoil, I am worried about the mortgage offer - my offer was from before the recent increases in mortgage rates. If I keep the loan to value ratio the same, but with a lower purchase price, would this affect the mortgage rate I was offered?

Thanks

@dchandaria89 The impact (if any) will depends on the individual lender policy and your specific circumstances.

If your worry is about losing the rate/product simply because of the change in purchase price and change in market conditions, I've not heard of that happening.

However, some lenders will reassess affordability based on their current calculator. This is likely to be stricter than whatever calculator was used when you first submitted the application. So if you applied a long time ago and were already borrowing close to your capacity, this might mean that the lender comes back saying that you can now only borrow a max of xx. 

The lender will have a policy on this, so do make sure that you speak to your broker or lender (if direct) to understand what impact (if any) a reduction in purchase price and a reissue of the offer might involve.

dchandaria89

K_S said:

dchandaria89 said:

Good Morning

I am in the process of buying a house and have a mortgage offer. I had a survey done and found a few issues, some which are more costly. So I am negotiating the house price to reflect this. Given the recent market turmoil, I am worried about the mortgage offer - my offer was from before the recent increases in mortgage rates. If I keep the loan to value ratio the same, but with a lower purchase price, would this affect the mortgage rate I was offered?

Thanks

@dchandaria89 The impact (if any) will depends on the individual lender policy and your specific circumstances.

If your worry is about losing the rate/product simply because of the change in purchase price and change in market conditions, I've not heard of that happening.

However, some lenders will reassess affordability based on their current calculator. This is likely to be stricter than whatever calculator was used when you first submitted the application. So if you applied a long time ago and were already borrowing close to your capacity, this might mean that the lender comes back saying that you can now only borrow a max of xx. 

The lender will have a policy on this, so do make sure that you speak to your broker or lender (if direct) to understand what impact (if any) a reduction in purchase price and a reissue of the offer might involve.

Thanks @K_S

The mortgage offer was not from too long ago, just 13th September, with HSBC. In terms of borrowing capacity, I do have headroom and should be ok if they re-assess the affordability. Just losing the rate they offered is worrying me. 

dchandaria89

Luke765 said:

Hello, 

I was recently informed by my broker that a couple had tried to take £2k off the price of a property they were buying with a £450k mortgage. This mortgage was originally agreed before the mini budget and not far away for completion. The bank took this as an opportunity to reassess the mortgage and cancel the offer.

I believe this is happening a lot to rates agreed before the budget for even the smallest changes. However should you renegotiate it would be best to make it worth the risk and drop the price by a good amount in my opinion.

Cheers

thanks @Luke765.

Do you know the reason for cancelling the offer? Was it affordability as K_S suggests?

ACG

I can not speak for HSBC as I do not have access to them but if you alter the purchase price there are potentially a few outcomes:
1) Nothing changes bar the figures involved. 
2) The lender may re-score your application which may or not cause a problem. 
3) The lender may redo the affordability on current stress rates and/or ONS figures, which may or may not cause a problem. 
4) You may need to choose a new product. 

As for which may affect you, you need to speak to your broker or HSBC if you went directly to them. 

K_S

dchandaria89 said:

K_S said:

dchandaria89 said:

Good Morning

I am in the process of buying a house and have a mortgage offer. I had a survey done and found a few issues, some which are more costly. So I am negotiating the house price to reflect this. Given the recent market turmoil, I am worried about the mortgage offer - my offer was from before the recent increases in mortgage rates. If I keep the loan to value ratio the same, but with a lower purchase price, would this affect the mortgage rate I was offered?

Thanks

@dchandaria89 The impact (if any) will depends on the individual lender policy and your specific circumstances.

If your worry is about losing the rate/product simply because of the change in purchase price and change in market conditions, I've not heard of that happening.

However, some lenders will reassess affordability based on their current calculator. This is likely to be stricter than whatever calculator was used when you first submitted the application. So if you applied a long time ago and were already borrowing close to your capacity, this might mean that the lender comes back saying that you can now only borrow a max of xx. 

The lender will have a policy on this, so do make sure that you speak to your broker or lender (if direct) to understand what impact (if any) a reduction in purchase price and a reissue of the offer might involve.

Thanks @K_S

The mortgage offer was not from too long ago, just 13th September, with HSBC. In terms of borrowing capacity, I do have headroom and should be ok if they re-assess the affordability. Just losing the rate they offered is worrying me. 

@dchandaria89 Given what you've said above I wouldn't expect there to be any issues as such if you'll still be in the same LTV band.

I've had two clients in recent months where I had to get the HSBC purchase offer re-issued with a new security property (which almost definitely would be considered a material change) and both went through smoothly with no issues even though rates had moved on significantly since the initial offer. As long as you aren't moving LTV bands and there aren't any affordability or re-scoring issues, I can't think of any reason why HSBC would require you to pick a new product/rate.