Non-Completion Nightmare

IsThatTheTime??

Hello, newbie here, first post, hope I get it right!

Well this is a horror story for you, but all my own fault I'm afraid. I had a BTL mortgage lined up on an off-plan property that I exchanged contracts for last summer. I can get the deposit OK and the rental will cover the valuation etc etc but the mortgage company have moved the goalposts (or possibly I was misinformed by my broker, who has now stopped working) and I now need an minimum income just to get the mortgage. The reasoning is to cover the repayments in the case of it not being rented out, but they won't accept a family member guaranteeing the payments (not that I could ask a family member anyway). It has to be an earned income. It looks like I won't get a mortgage in any way now on my own.

The only solution I can see is to try to find someone to have a joint mortgage with me but I don't know anyone who would want to do that.

Can anyone suggest a way out of this? To fail to complete doesn't bear thinking about, as the builder will charge penalty interest rates and sell the property for whatever they can get for it, and can sue for damages and pursue the debt for 12 years according to my solicitor. My present home is worth far less than the new property so I stand to lose it and might have to go bankrupt as I would owe £200,000 plus all the penalty charges etc etc.

The developer will not let me try to sell the property before completion, so they have me over a barrel.

Please can you all put your collective thinking caps on and help me find a creative solution!

It's a good property in a good position, and hasn't lost any value (according to a local estate agent) so will be an excellent investment for somebody - just not me! As for me, I'll be glad just to be saved from debt and learn my lesson

Thanks

chappers

You need to find another lender noit sure what rate you may pay you need to speak to a decent broker and maybe one who deals with commercial mortgages, I can put you in touch with one who deals with problem lending.
It maybe enough to get you in and sold up and out, You never know it may be ok an happy days.

IsThatTheTime??

Thanks Chappers, I'll pm you for the details.

silvercar

I think your solicitor may have some explaining to do, allowing you to exchange with no formal mortgage offer! Ask for details of his complaints procedure.

You could line up a sale for immediately after completion. You would need a closed bridging loan to tide you over the time between your completion on purchase and your completion on sale (possibly only 24 hours), but if you have exchanged on your sale before you complete on your purchase this should be no problem.

You may want to try another forum, singingpig.co.uk. There are some self styled experts over there for things like buy-to-sell and some "imaginative" brokers. They all wear rose-tinted glasses so keep your head screwed on!

Dan_Collins_2

I hate off plan, it shoud be banned! We will see a lot of this, with mortgage criteria changing buyers could find them selves without mortgage offers.

Not all lenders need a min income. UCB and a few others may help but I would get your self a broker, I cant see why your would want a commercial broker though, commercial rates are way higher than a standard BTL rate.

Not sure why you would want a commercial

loopylu36

it is not uncommon now to exchange contracts for such a property with no formal mortgage offer. the lawyers advise would always (SHOULD always) be not to, but if a client insists, it is at his risk. The reason for this is that offers are only valid for 3 -6 months (usually 3) so if you are buying off plan and completion is likely to be 18 months away, the offer will be invalid anyway and they won't just keep extending it - you will have to reapply and if your circumstances have changed, you may not get the mortgage.

the silver lining (possibly) to all of this, is that you can "assign" your contract to someone else. Basically if you can find someone else willing to buy the property, you can assign the contract to them and they will complete the purchase instead of you. The builder shouldn;t have a problem with this becasue as long as he gets his money everyone is happy, but you would need to ask your solicitor to check this out. i am a property lawyer and have seen this done before (not that I recommending this as formal advice of course, but it is something to think about).

Dan_Collins_2

loopylu36 wrote: »

it is not uncommon now to exchange contracts for such a property with no formal mortgage offer. the lawyers advise would always (SHOULD always) be not to, but if a client insists, it is at his risk. The reason for this is that offers are only valid for 3 -6 months (usually 3) so if you are buying off plan and completion is likely to be 18 months away, the offer will be invalid anyway and they won't just keep extending it - you will have to reapply and if your circumstances have changed, you may not get the mortgage.

the silver lining (possibly) to all of this, is that you can "assign" your contract to someone else. Basically if you can find someone else willing to buy the property, you can assign the contract to them and they will complete the purchase instead of you. The builder shouldn;t have a problem with this becasue as long as he gets his money everyone is happy, but you would need to ask your solicitor to check this out. i am a property lawyer and have seen this done before (not that I recommending this as formal advice of course, but it is something to think about).

Hi Loopy

Would you agree that off plan should be banned or a min or max time until building completion to sell be brought in?

loopylu36

well dan, personally i would never buy off plan and similarly (as posted on another thread) I would never buy Leasehold either. maybe that's because i deal with these issues every day and i see the pit falls. Contracting to buy something that is currently a hole in the gound seems ludricous to me, and of course there are then these "issues" as regards mortgage applications etc. In the area that i live there are so many ongoing developments of leasehold properties which are being bought off plan and the "buyer" is then off loading the same before completing (usually in the hope of making a quick buck) which is why i suggested this to IsThatTheTime? However, i would point out that when i say "currently" I should say "was" I am not sure that the offloading with a view to making a profit is happening much any more because of the current state of the market. Currently most new builds are on offer much cheaper than anything resale in the same development because of the recent drop in the market, so if you contracted to buy something that long ago, you could be paying 10 - 20% more than the current market prices.
(another good reason for not buying new build if you ask me)

it is impossible to impose min/max times for builds to be completed because of the number of variant factors involved - ie, labour or material shortages, weather etc. that is why you never get a fixed date from the developer -if they gave you a fixed date and then couldn't honour it they would be in breach of contract, and a developer would never want that to occur.

SouthCoast

and........................

Caveat Emptor.

Dan_Collins_2

loopylu36 wrote: »

well dan, personally i would never buy off plan and similarly (as posted on another thread) I would never buy Leasehold either. maybe that's because i deal with these issues every day and i see the pit falls. Contracting to buy something that is currently a hole in the gound seems ludricous to me, and of course there are then these "issues" as regards mortgage applications etc. In the area that i live there are so many ongoing developments of leasehold properties which are being bought off plan and the "buyer" is then off loading the same before completing (usually in the hope of making a quick buck) which is why i suggested this to IsThatTheTime? However, i would point out that when i say "currently" I should say "was" I am not sure that the offloading with a view to making a profit is happening much any more because of the current state of the market. Currently most new builds are on offer much cheaper than anything resale in the same development because of the recent drop in the market, so if you contracted to buy something that long ago, you could be paying 10 - 20% more than the current market prices.
(another good reason for not buying new build if you ask me)

it is impossible to impose min/max times for builds to be completed because of the number of variant factors involved - ie, labour or material shortages, weather etc. that is why you never get a fixed date from the developer -if they gave you a fixed date and then couldn't honour it they would be in breach of contract, and a developer would never want that to occur.

Good point, bad weather has put a build next door to our office back at least 6 months. Maybe they should be sold until they reach a build stage. So at least the client can walk in the property and get an idea, so maybe when the sparkys or chippys are in.

dunstonh

You may want to try another forum, singingpig.co.uk. There are some self styled experts over there for things like buy-to-sell and some "imaginative" brokers. They all wear rose-tinted glasses so keep your head screwed on!

By imaginative, you dont mean the type that can get the borrowing with a few "white lies" do you?

If so, herein lies the problem. Are they really helping or creating a problem? If they get a mortgage sorted that way, the OP will think they are helpful compared to one that says no. However, when it goes wrong, the roles are reversed. Some will go wrong. Some wont.

I just forwarded an email to my mortgage broker about new C&G deals out and it states on there that C&G will lend upto 85% LTV unless it is New Build flats and in those cases they will only go to 65%.

At least the lenders are now factoring in how poor value new build often is for investment properties.