Bank "reserving right to revoke loan offer before draw down"

Wondering if anyone can give advice. I'm told this is a standard condition on a formal loan offer for a house on which we are sale agreed. Our solicitor is advising us to sign our contracts with the condition that circumstances outside of our control do not cause the bank to revoke the loan offer to protect us in case the bank does so between contracts being signed and when we draw down the mortgage on completion. Purchase is to close in June which is requested by the vendors. The vendor's vendors (ongoing purchase in a chain) will not accept a condition on their contracts and so the purchase cannot go through unless we sign binding, unconditional contracts. We are essentially being held to ransom which I am uncomfortable with. We can either take the risk and hope nothing bad happens or we can draw down the mortgage before closing and pay rent and mortgage together for a month or so which is an expensive option. Do all banks include this condition? What do people buying houses usually do with this condition? Our solicitor says parties usually all agree to the conditions on the contracts. We feel stuck between a rock and a hard place. Essentially though, if we refuse to either take the risk or pay the double and the vendors pull out of our purchase, we will probably lose in legal fees what we would have paid in extra rent and mortgage.

You can't draw down the mortgage before closing as the bank will not permit it, unless the loan is secured by a different property!! I'm not sure whether that clause is commonly acceptable in sale contracts. I have my doubts as it can lead to complications for the vendor. however your best bet is to contact another solicitor and ask his/her opinion. Someone you know can surely recommend one!

OK thanks for the advice.

According to our solicitor this is a common practice and just protects the buyer against something going wrong with the mortgage or the bank withdrawing their offer for some unforeseen reason. Our solicitor told us they always insist on this clause and it's very rarely an issue. I don't think you should put yourself at risk by omitting the clause and having a unconditional commitment. Remember this clause is for "circumstances outside of your control" it's not an escape clause for you (although nothing is binding until contracts are signed).

I think a phone call from one solicitor to the other should sort it out. There were some issues when we were buying and the paperwork would go back and forth but usually a phone call from our solicitor sorted out the problems / misunderstandings quickly. It's likely everyone in the chain of buying / selling is keen to proceed so when the clause is explained I'd expect everyone to agree.

Its the problem with the "chain" situation. If one person falls out, the whole thing collapses.

House buying / selling is not at all conducive to the way most people live their lives. The easiest transaction is an empty house in an executor's sale where you're selling to a cash purchaser.

The hardest is when a family is selling their family home to another family who are also selling their family home and the first family are buying a family home from someone who themselves are buying another family home. Everyone has a mortgage and wants to sell and buy ( and move in) on the same day so that they don't have to rent/camp out with family. But each person in the chain needs to know the funds are going to come through in each link.

And if everyone has a loan approval clause, then no-one has any degree of certainty until almost the day they are to move out/move in.

The answer? Sell first, store furniture, move home to mother and be ready to buy in a few months time. The concern? Prices may go up. Loan approval may be withdrawn

And on. And on.

There is no quick fix solution.

mf