Freehold on completion - help

kp1200

Hi All,

We have recently found our property we are purchasing is a freehold upon completion of the sale of the house.

However, my mortgage lender won't approve the mortgage due to it not being freehold - is there a way round this as it seems like i'm stuck in what happens next?

eddddy

I think that either there has been a misunderstanding, or there is a more subtle problem that you haven't explained.

Are you doing the following?:

• Buying a leasehold house from a 'standard' seller - which is unmortgageable due to the lease terms
• Buying the freehold of the house from a freeholder

If so, your solicitor needs to merge the freehold and leasehold titles on completion - so you will end up with a 'standard' freehold house on completion. And that should be mortgageable.


But some people don't bother merging the freehold and leasehold titles - because it costs extra legal fees. But you have to, in order to get a mortgage.

So could it be that your solicitor isn't planning to merge the titles, or your solicitor is a 'pure play' conveyancer who doesn't have the expertise or desire to merge titles?

kp1200

I think that either there has been a misunderstanding, or there is a more subtle problem that you haven't explained.

Are you doing the following?:

• Buying a leasehold house from a 'standard' seller - which is unmortgageable due to the lease terms
• Buying the freehold of the house from a freeholder

If so, your solicitor needs to merge the freehold and leasehold titles on completion - so you will end up with a 'standard' freehold house on completion. And that should be mortgageable.


But some people don't bother merging the freehold and leasehold titles - because it costs extra legal fees. But you have to, in order to get a mortgage.

So could it be that your solicitor isn't planning to merge the titles, or your solicitor is a 'pure play' conveyancer who doesn't have the expertise or desire to merge titles?

According to the estate agent, the sellers are purchasing the freehold through the sale of the property. Once its sold to us it will become freehold.

However, I can't get an agreed mortgage as it isn't freehold from our lender - just to make it more complicated so I don't know how we move forward with anything.

Im concerned it will be a risk going through the process if I can't get a mortgage again in a months time.. as a first time buyer this is more stress than I thought

user1977

kp1200 said:

I think that either there has been a misunderstanding, or there is a more subtle problem that you haven't explained.

Are you doing the following?:

• Buying a leasehold house from a 'standard' seller - which is unmortgageable due to the lease terms
• Buying the freehold of the house from a freeholder

If so, your solicitor needs to merge the freehold and leasehold titles on completion - so you will end up with a 'standard' freehold house on completion. And that should be mortgageable.


But some people don't bother merging the freehold and leasehold titles - because it costs extra legal fees. But you have to, in order to get a mortgage.

So could it be that your solicitor isn't planning to merge the titles, or your solicitor is a 'pure play' conveyancer who doesn't have the expertise or desire to merge titles?

However, I can't get an agreed mortgage as it isn't freehold from our lender - just to make it more complicated so I don't know how we move forward with anything.

I suspect you're confusing matters by telling them it isn't currently freehold - what your lender cares about is what you/they are getting at completion, which will include the freehold.

EssexHebridean

kp1200 said:

I think that either there has been a misunderstanding, or there is a more subtle problem that you haven't explained.

Are you doing the following?:

• Buying a leasehold house from a 'standard' seller - which is unmortgageable due to the lease terms
• Buying the freehold of the house from a freeholder

If so, your solicitor needs to merge the freehold and leasehold titles on completion - so you will end up with a 'standard' freehold house on completion. And that should be mortgageable.


But some people don't bother merging the freehold and leasehold titles - because it costs extra legal fees. But you have to, in order to get a mortgage.

So could it be that your solicitor isn't planning to merge the titles, or your solicitor is a 'pure play' conveyancer who doesn't have the expertise or desire to merge titles?

According to the estate agent, the sellers are purchasing the freehold through the sale of the property. Once its sold to us it will become freehold.

However, I can't get an agreed mortgage as it isn't freehold from our lender - just to make it more complicated so I don't know how we move forward with anything.

Im concerned it will be a risk going through the process if I can't get a mortgage again in a months time.. as a first time buyer this is more stress than I thought

Ask your solicitor to speak with either your broker, or the lender directly assuming they are acting for both you and the lender? They should be able to explain the situation to the lender so that they understand. If they cannot, or are not willing to, ask them to pass your case over to another fee earner in their firm who would be willing/able to do so, or contact the supervising partner in the firm - you should have been given details of this person. 

kp1200

I think that either there has been a misunderstanding, or there is a more subtle problem that you haven't explained.

Are you doing the following?:

• Buying a leasehold house from a 'standard' seller - which is unmortgageable due to the lease terms
• Buying the freehold of the house from a freeholder

If so, your solicitor needs to merge the freehold and leasehold titles on completion - so you will end up with a 'standard' freehold house on completion. And that should be mortgageable.


But some people don't bother merging the freehold and leasehold titles - because it costs extra legal fees. But you have to, in order to get a mortgage.

So could it be that your solicitor isn't planning to merge the titles, or your solicitor is a 'pure play' conveyancer who doesn't have the expertise or desire to merge titles?

According to the estate agent, the sellers are purchasing the freehold through the sale of the property. Once its sold to us it will become freehold.

However, I can't get an agreed mortgage as it isn't freehold from our lender - just to make it more complicated so I don't know how we move forward with anything.

Im concerned it will be a risk going through the process if I can't get a mortgage again in a months time.. as a first time buyer this is more stress than I thought

Ask your solicitor to speak with either your broker, or the lender directly assuming they are acting for both you and the lender? They should be able to explain the situation to the lender so that they understand. If they cannot, or are not willing to, ask them to pass your case over to another fee earner in their firm who would be willing/able to do so, or contact the supervising partner in the firm - you should have been given details of this person. 

It was the mortgage lender valuation that had concluded it was leasehold - I was none the wiser until I was told through the report (which I wasn't happy about).

Ok great - ill try and get in tough with my solicitor as I assume they will be aware now as they have swap contracts and property title documents. 

kp1200

user1977 said:

kp1200 said:

I think that either there has been a misunderstanding, or there is a more subtle problem that you haven't explained.

Are you doing the following?:

• Buying a leasehold house from a 'standard' seller - which is unmortgageable due to the lease terms
• Buying the freehold of the house from a freeholder

If so, your solicitor needs to merge the freehold and leasehold titles on completion - so you will end up with a 'standard' freehold house on completion. And that should be mortgageable.


But some people don't bother merging the freehold and leasehold titles - because it costs extra legal fees. But you have to, in order to get a mortgage.

So could it be that your solicitor isn't planning to merge the titles, or your solicitor is a 'pure play' conveyancer who doesn't have the expertise or desire to merge titles?

However, I can't get an agreed mortgage as it isn't freehold from our lender - just to make it more complicated so I don't know how we move forward with anything.

I suspect you're confusing matters by telling them it isn't currently freehold - what your lender cares about is what you/they are getting at completion, which will include the freehold.

I didn't mention to the lender - the valuation company they sent out concluded it was leasehold at the moment 

JM68

We had a similar thing with our buyers as our lease is extended but still not showing at Land Registry so their mortgage valuer said no as we had short lease.  Our solicitor confirmed through their mortgage broker new lease AND that it would be registered with LR BEFORE completion (this can be done pre-exchange by expediting application with LR once mortgage offers are in etc.).  I am told that this is important because the lease extension takes no legal effect until it is actually registered with the LR.  A thing you therefore may need to check if there is a similar thing you need to check with the freehold title i.e. does it actually need to be registered with the LR BEFORE exchange and, if so, who and how is going to make that happen.  Good luck!

eddddy

kp1200 said:

I didn't mention to the lender - the valuation company they sent out concluded it was leasehold at the moment 

So you're saying that when you applied for the mortgage, you said you were buying a freehold house.

But the valuer overruled what you said - and said that you are buying a leasehold house.

That seems very unusual - that's not something a valuer would normally do. Normally they would only know what you told the mortgage lender.

But even then - leasehold houses are mortgageable. (Unless perhaps they have a short lease or onerous ground rent.)



So are you sure that you didn't tell your mortgage lender that the house was leasehold, and tell them a ground rent and lease length?

What exactly did the mortgage lender say when they refused your mortgage application?

kp1200

eddddy said:

kp1200 said:

I didn't mention to the lender - the valuation company they sent out concluded it was leasehold at the moment 

So you're saying that when you applied for the mortgage, you said you were buying a freehold house.

But the valuer overruled what you said - and said that you are buying a leasehold house.

That seems very unusual - that's not something a valuer would normally do. Normally they would only know what you told the mortgage lender.

But even then - leasehold houses are mortgageable. (Unless perhaps they have a short lease or onerous ground rent.)



So are you sure that you didn't tell your mortgage lender that the house was leasehold, and tell them a ground rent and lease length?

What exactly did the mortgage lender say when they refused your mortgage application?

The valuation must have look at the land registry as it’s technically still leasehold but being sold to us. It’s coming to the end of the its lease.

no I didn’t tell them anything as I didn’t know when we submitted an agreement offer..

Our mortgage offer hasn’t been refused they just won’t submit us a formal offer until the property is freehold. Which won’t be until we exchange as they want to buy the freehold from the sale

eddddy

kp1200 said:

The valuation must have look at the land registry as it’s technically still leasehold but being sold to us. It’s coming to the end of the its lease.

no I didn’t tell them anything as I didn’t know when we submitted an agreement offer..

It really sounds like there's been some misunderstandings here.

When you applied for a mortgage, the application form would have asked:

• Is the property freehold or leasehold?
• If leasehold, how many years are remaining?

Who filled in the application? If it was you, what did you put as an answer to those questions?

Or was it your mortgage advisor. If so, it sounds like they misunderstood the situation.

kp1200 said:

Our mortgage offer hasn’t been refused they just won’t submit us a formal offer until the property is freehold. Which won’t be until we exchange as they want to buy the freehold from the sale

You're correct in saying that the property won't become freehold until the completion date.

But that's unlikely to be the problem with the mortgage offer. The mortgage lender will be interested in what you get on completion, not what exists now.

If there's a problem, it will probably be something else. 

For example, there's some specialised legal work involved (merging a freehold and leasehold title).  It could be that your solicitor is unable to do that kind of work.

(How did you find your solicitor? What type of firm are they? e.g. online conveyancing specialist?)