Turned down for mortgage after vendor agrees to reduce price

rainingagain_2

Can anyone help with this please?

I had my first time mortgage application approved with a 5% deposit. After getting everything in place, I then had a builder's survey conducted on the property which revealed a couple of issues, one of which was the possibility of asbestos. The buyer paid to have testing done, which revealed a much smaller amount of asbestos (one ceiling out of 5) than could have been the case.

We agreed on a reduced price to cover the cost of removal and also a contribution towards a minor area of damp where a bay window had been put in. The vendor and I had reached the point of agreeing an exchange date within a month.

I went back to my mortgage provider, who then declared they needed to re-process the mortgage application because of the new reduced price to me, but was told that I had failed the underwrite!

I am now asking to borrow less money, the LTV remains the same and my financial and personal circumstances have not changed so how can this be???

Please help - I am completely flummoxed and devastated as to why I have been turned down when I thought it was a done deal!

GrumpyDil

Have you asked them? When was the original underwriting done and does reprocessing your application mean you will move to a higher interest rate? 

propertyrental

Is the lender aware of WHY the agreed price is reduced? They could be concerned about the asbestos which they did not know about before.

rainingagain_2

Thank you for these posts! The original underwriting was a couple of months ago and was valid until March 2024 and, I understand concern about the asbestos, but it is less of a problem than it could have been and the lowering of the sale price covers its removal.

housebuyer143

rainingagain_2 said:

Thank you for these posts! The original underwriting was a couple of months ago and was valid until March 2024 and, I understand concern about the asbestos, but it is less of a problem than it could have been and the lowering of the sale price covers its removal.

You will really need to ask them why. Have their policy and attitude to risk changed in the months since you got the offer?  Are they now worried about the asbestos as before they had no idea. 

This is the problem when you renegotiate the price because in some cases it's a whole new underwrite and you put your original offer at risk.

Unfortunately if they have refused you now it will be very hard to get them to change their mind unless they have made a mistake. 

First point of action is to go back to them and find out exactly why it's now been refused.

rainingagain_2

Sorry - in my first post I said the buyer (me) paid to have testing done - meant to say that the vendor paid!

You can probably tell much about my general confusion about the situation from this ...

rainingagain_2

Thank you housebuyer143 - yes, it's a question of why! I can only think it's because they obvously did a 'hard credit search' first time round, and we all know that affects your credit score. But surely, if they are the ones who did the search initially, they can't then use that as a reason... can they?

GrumpyDil

The credit score is a made up number of no relevance to anyone but the companies who make them up. 

Have you taken out any additional finance since the initial underwriting as that could spook them. If not then the only answer will be to contact them and see if they will give you more info, which might be unlikely. 

Doozergirl

There could be a silver lining to this cloud in that mortgage rates seem to coming down slightly.  Are there better offers out there for you? 

rainingagain_2

Thank you GrumpyDil and Doozergirl  - no additional finance taken and yes, hopefully mortgage rates are coming down, but unfortunately too late for my house purchase in which I have already invested large sums of money on the usual solicitor's fees, building survey etc. I need to wrap my head around why they have reneged (renaged?) on this. 

The whole mortgage application system seems full of inconsistencies in my experience and I really feel there should be greater consistency, more transparency and better guidance for first time buyers like myself.

I have absolutely no appetite or money available for putting myself through this again in the foreseeable future.

bolwin1

rainingagain_2 said:

Thank you GrumpyDil and Doozergirl  - no additional finance taken and yes, hopefully mortgage rates are coming down, but unfortunately too late for my house purchase in which I have already invested large sums of money on the usual solicitor's fees, building survey etc. I need to wrap my head around why they have reneged (renaged?) on this. 

The whole mortgage application system seems full of inconsistencies in my experience and I really feel there should be greater consistency, more transparency and better guidance for first time buyers like myself.

I have absolutely no appetite or money available for putting myself through this again in the foreseeable future.

I'd suggest contacting a mortgage broker. They'll be able to advise on who would be likely to lend to you & (probably more importantly for you) how quickly they'd be able to get an offer in place. Some charge a relatively low one-off fee & others are 'free' & the mortgage provider pays for them.