Mortgage offer pulled 3 days before completion

propertyrental

Sadly you have identified your options

* persuade the original lender to lend (with broker's help)
* find another bank/lender (with broker's help)
* find a non-bank lender (eg family)
* default on Completion and bear the consequential costs
* negotiate with seller to defer or cancel the purchase

Troy_af

user1977 said:

Flugelhorn said:

sometimes there can be a significant gap between exchange and completion with new properties, is there anything written into contracts these days about people not being able to go through with it owing to financial problems, redundancy etc ?

No. The expectation is that the buyer is in control of their own financial circumstances and needs to bear the risk. From the vendor's point of view, it would be a bit too easy for a buyer to engineer a situation where they don't have a mortgage offer by the completion date, enabling them to walk away.

This is the one thing that I really don’t understand when it comes to house buying. I don’t see how it acceptable for a buyer to be put in a situation where they can lose their deposit and possibly made bankrupt, even have their lives absolutely ruined, due to a lender pulling an offer after exchange of contracts.

This seems totally corrupt to me. Why doesn’t the lender carry out all of their ‘final checks’ before exchange, not before completion. Or at the very least, there should be a clause in the contracts which states that the buyer is only able to purchase the property if and only if they have a valid mortgage offer in place. If they no longer have a mortgage offer, how can they possibly be expected to still proceed?

If the offer is pulled before completion then I really don’t understand how the buyer is expected by law to still be committed to the purchase. It is my biggest fear when house buying. I know it doesn’t happen often but that is not the point.

Yes, I agree house buying comes with risks. But this should not be one if those risks. 

user1977

Troy_af said:

user1977 said:

Flugelhorn said:

sometimes there can be a significant gap between exchange and completion with new properties, is there anything written into contracts these days about people not being able to go through with it owing to financial problems, redundancy etc ?

No. The expectation is that the buyer is in control of their own financial circumstances and needs to bear the risk. From the vendor's point of view, it would be a bit too easy for a buyer to engineer a situation where they don't have a mortgage offer by the completion date, enabling them to walk away.

This is the one thing that I really don’t understand when it comes to house buying. I don’t see how it acceptable for a buyer to be put in a situation where they can lose their deposit and possibly made bankrupt, even have their lives absolutely ruined, due to a lender pulling an offer after exchange of contracts.

This seems totally corrupt to me. Why doesn’t the lender carry out all of their ‘final checks’ before exchange, not before completion.

Because there could be a lengthy period between exchange and completion - are you saying the lender ought to take the risk of, say, the borrower taking out a bunch of additional borrowing which they hadn't declared in their application? Or starting to default on their other loans? Lenders aren't in the habit of withdrawing mortgage offers on a whim.

Or at the very least, there should be a clause in the contracts which states that the buyer is only able to purchase the property if and only if they have a valid mortgage offer in place. If they no longer have a mortgage offer, how can they possibly be expected to still proceed?

Like I said above, it would be very easy for the buyer to have no mortgage offer if they wanted to.

If the offer is pulled before completion then I really don’t understand how the buyer is expected by law to still be committed to the purchase.

It's the contract which says it, not "the law". You are free to try negotiating different terms if you want.

Part of the issue seems to be losing the contractual deposit, which may be out of all proportion to the loss (if any) suffered by the vendor. We don't bother with deposits in Scotland - the buyer is still liable if they breach the contract but only for whatever loss the vendor can actually evidence, they don't simply lose the 10% as a starter.

Yes, I agree house buying comes with risks. But this should not be one if those risks.

It's not possible to eliminate the risk, you're just talking about passing it around to the other parties, whether the vendor and/or the lender.

elsien

Troy_af said:

user1977 said:

Flugelhorn said:

sometimes there can be a significant gap between exchange and completion with new properties, is there anything written into contracts these days about people not being able to go through with it owing to financial problems, redundancy etc ?

No. The expectation is that the buyer is in control of their own financial circumstances and needs to bear the risk. From the vendor's point of view, it would be a bit too easy for a buyer to engineer a situation where they don't have a mortgage offer by the completion date, enabling them to walk away.

This is the one thing that I really don’t understand when it comes to house buying. I don’t see how it acceptable for a buyer to be put in a situation where they can lose their deposit and possibly made bankrupt, even have their lives absolutely ruined, due to a lender pulling an offer after exchange of contracts.

This seems totally corrupt to me. Why doesn’t the lender carry out all of their ‘final checks’ before exchange, not before completion. Or at the very least, there should be a clause in the contracts which states that the buyer is only able to purchase the property if and only if they have a valid mortgage offer in place. If they no longer have a mortgage offer, how can they possibly be expected to still proceed?

If the offer is pulled before completion then I really don’t understand how the buyer is expected by law to still be committed to the purchase. It is my biggest fear when house buying. I know it doesn’t happen often but that is not the point.

Yes, I agree house buying comes with risks. But this should not be one if those risks. 

Corrupt is a very strong term to use. 

I don’t disagree with much of your post, but in what way is it corrupt for a lender to want to carry out further checks before handing out large sums of money, given the current economic climate and how quickly things are changing. They are not making any money from doing this so there’s no incentive to be pulling the rug out from under people without good reason.

MobileSaver

Troy_af said:

user1977 said:

Flugelhorn said:

sometimes there can be a significant gap between exchange and completion with new properties, is there anything written into contracts these days about people not being able to go through with it owing to financial problems, redundancy etc ?

No. The expectation is that the buyer is in control of their own financial circumstances and needs to bear the risk. From the vendor's point of view, it would be a bit too easy for a buyer to engineer a situation where they don't have a mortgage offer by the completion date, enabling them to walk away.

a buyer to be put in a situation where they can lose their deposit

In the OP's case they haven't been put into this position but have (possibly/probably) put themselves in this position by taking on further debt when they were already struggling with affordability issues (based on previous posts from the OP.)

For the avoidance of doubt this isn't a dig at the OP but a salutary warning that it's always risky signing up to even more finance/debt when you are in the process of getting a mortgage.

TadleyBaggie

Has the OP deleted some of the their recent posts, I'm seeing quotes but not the original post?

So they have bought a new car, albeit a cheaper one. So they probably had to clear the finance on the old one and take new finance on the new one. So at least one heard search. Then there was credit (form unknown) for the mobile phone, so probably another hard search and new account. Starting to see why the lender has got spooked.

Boat_to_Bolivia

TadleyBaggie said:

Has the OP deleted some of the their recent posts, I'm seeing quotes but not the original post?

So they have bought a new car, albeit a cheaper one. So they probably had to clear the finance on the old one and take new finance on the new one. So at least one heard search. Then there was credit (form unknown) for the mobile phone, so probably another hard search and new account. Starting to see why the lender has got spooked.

Looks like they have?

silvercar

propertyrental said:

Sadly you have identified your options

* persuade the original lender to lend (with broker's help)
* find another bank/lender (with broker's help)
* find a non-bank lender (eg family)
* default on Completion and bear the consequential costs
* negotiate with seller to defer or cancel the purchase

Problem could also be that another lender may charge more. After all this lender was chosen for a reason.

if I was a betting person I would put my money on it being a Barclays loan as they often have the lowest rates on ‘2 borrowers, 1 owner’ mortgages.

cymruchris

TadleyBaggie said:

Has the OP deleted some of the their recent posts, I'm seeing quotes but not the original post?

So they have bought a new car, albeit a cheaper one. So they probably had to clear the finance on the old one and take new finance on the new one. So at least one heard search. Then there was credit (form unknown) for the mobile phone, so probably another hard search and new account. Starting to see why the lender has got spooked.

It appears that some of the OP's posts have been removed by them, which is a shame, as no doubt the issues raised would potentially have affected their mortgage application, and if left in place could have steered other forum users away from taking on extra credit before mortgage completion. To the OP though - hopefully your broker will be able to work a path through, and there's a positive outcome.

Sarah1Mitty2

elsien said:

Troy_af said:

user1977 said:

Flugelhorn said:

sometimes there can be a significant gap between exchange and completion with new properties, is there anything written into contracts these days about people not being able to go through with it owing to financial problems, redundancy etc ?

No. The expectation is that the buyer is in control of their own financial circumstances and needs to bear the risk. From the vendor's point of view, it would be a bit too easy for a buyer to engineer a situation where they don't have a mortgage offer by the completion date, enabling them to walk away.

This is the one thing that I really don’t understand when it comes to house buying. I don’t see how it acceptable for a buyer to be put in a situation where they can lose their deposit and possibly made bankrupt, even have their lives absolutely ruined, due to a lender pulling an offer after exchange of contracts.

This seems totally corrupt to me. Why doesn’t the lender carry out all of their ‘final checks’ before exchange, not before completion. Or at the very least, there should be a clause in the contracts which states that the buyer is only able to purchase the property if and only if they have a valid mortgage offer in place. If they no longer have a mortgage offer, how can they possibly be expected to still proceed?

If the offer is pulled before completion then I really don’t understand how the buyer is expected by law to still be committed to the purchase. It is my biggest fear when house buying. I know it doesn’t happen often but that is not the point.

Yes, I agree house buying comes with risks. But this should not be one if those risks. 

Corrupt is a very strong term to use. 

I don’t disagree with much of your post, but in what way is it corrupt for a lender to want to carry out further checks before handing out large sums of money, given the current economic climate and how quickly things are changing. They are not making any money from doing this so there’s no incentive to be pulling the rug out from under people without good reason.

Yes, Prudent would probably be a better description.