House purchase delayed for months due to negative equity

uptownworld9315

I'm buying a house and the purchase has been dragging on for months. We still haven't exchanged because the seller needs their mortgage lender's consent to proceed with the sale.

I've been told the lender has been holding things up for several weeks. The seller says they're chasing, but there's still no decision or clear timeframe. My solicitor has chased the seller's solicitor, who says they have no update.

My mortgage offer expires soon and cannot be extended. I've also already incurred substantial conveyancing costs.

I'd appreciate advice on a few things:

• Is it normal for a lender's approval to take this long?
• How would you handle the situation when the seller and solicitors can't provide a clear timeframe?
• If the sale falls through, is there any way to recover wasted legal fees?
• At what point would you walk away?

Has anyone experienced similar delays waiting for a seller's mortgage lender to approve a sale? How did it turn out?

saajan_12

Do you know that the approval is needed because of negative equity? (You mention in the title but not thereafter). If that's the case, then IMO lender approval is not exactly guaranteed or even likely.

Even with the negative equtiy, the lender would be giving up an asset which the borrower has an incentive to keep paying down for a (albeit smaller) unsecured loan which they have a low chance of ever recovering, as the seller's living costs would increase if they had to rent.

Unfortunately for you this likely means a sale isn't going to happen and you're better off cutting your losses and looking elsewhere. To be sure, you could check

• outstanding mortgage balance
• whether the seller has additional funds

uptownworld9315

Yes, needed because of the negative equity, it's what we were told.

gwynlas

If the sale falls through prior to exchange you have no chance of claining any expenses incurred

ACG

Tell them your offer expires on x date. You need the CoT to go in about a week before that, so exchange needs to happen by that date otherwise you will have to pull out as you can not get an extension.

Its on the vendors to then push and do whatever they can.

Nothing you can do to recover the costs.

As for pulling out, whats the point in that? You will lose the money you have spent if you do that.

poseidon1

Re potential aborted costs, I never go into any property purchase without buying a policy for aborted costs.

My last such policy in 2020 repaid £767 in legal fees, against a premium ( at that time) of £45.

However premiums appear to be on the rise, last year similar cover averaged £65, current average is now £79. No doubt reflecting increased probabilities of property deals falling apart for whatever reason, but worth considering next time if this current purchase eventually fails.

doodling

Hi,

The likelihood of the lender approving the sale really depends on the exact circumstances which you won't know.

If the sale is the best deal that the lender will ever get (e.g. the seller is heavily in debt, the mortgage is in significant arrears, reposession is likely and the sale price is at the upper end of what would be expected) then it may eventually be approved.

If that doesn't sound like your transaction then you may be optimistic in expecting the seller to get lender approval

otb666

I wish you were our buyer as we have had 3 fail at exchange week and now on our fourth. I do wonder whats going on with the property market. We are only ever told that our buyers lost their buyers but no reason as to why?? We also fed up with buyers not being honest and leaving us in the dark for weeks until we have to call them out. EA also dont seem on the ball at the games that are played. Our costs are ultilities and 200% council tax because of empty property premium.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82169490#Comment_82169490

We are now in an environment where there are more sellers than there are buyers in a falling property market.

As a result I am seeing more and more empty properties going to traditional auction ( especially those in need of modernisation) , which under normal circumstances would be standard estate agent fare.

Unmodernised properties unless in very favourable location, attract far more caution than in the past due to exorbitant high cost of materials and labour post pandemic and departure of Eastern European skilled labour.

For buyers that means greatly expanded choice to pick and choose the best property they feel fit their criteria, and backing out mid negotiation when something better comes along.

Indeed a poster on the property forum as indicated that they as buyers have two accepted offers on two London flats both selling markedly below what they originally cost 5 to 10 years ago. Clearly one of those flat owners is going to be disappointed.