Bank asking me to liquidate my shares before issuing loan offer

ipwnyounooblet

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Hi,

I am currently going through the process of getting the loan offer issued by the bank. I have gone through a broker and as a final hoop to jump through the bank want me sell all of my shares that I am holding. I have sale agreed on a property for over 2 months and have been jumping through hoops presented by the banks as long, questions on my partners nationality, (Irish but a non-Irish name) despite me being a single applicant have also proven to be a sticking point.

In cash currently I have enough to cover the remaining deposit amount, any other outstanding costs and enough to support myself financially for a few months. Each month I purchase Scottish mortgage investment trust and BRK.B in a 70%/30% split. As such I have a reasonable holding in each.

My question is, is this even legal for the Bank to request this? My solicitor hasn't been able to advise on this as of yet. Is it a requirement for me to sell my shares, doing so would incur some tax obligations which I would prefer to avoid, not to mention exposure in holding cash until this mortgage process is complete.

If any further context is needed let me know. Any advice or help would be appreciated.
 
While it does seem odd, the question of legality is not relevant. Of course the bank cannot force you to sell your shares, but equally they do not have to lend to you.
Thanks for your reply, this makes sense. I suppose my frustration is coming from how needless I perceive this. I guess I will have to bite the bullet and do as I'm told.
 
A very unusual request.

However...

It's in your own interest to liquidate the shares. Otherwise you are borrowing money at the mortgage rate to buy shares. This is just not a good idea.

Would the proceeds of sale bring you into a lower Loan to Value category and get you a lower mortgage rate overall?

I assume you are borrowing at a fixed rate? If so, you should probably get a move on before the fixed rates rise.

Brendan
 
Thanks for your reply, this makes sense. I suppose my frustration is coming from how needless I perceive this. I guess I will have to bite the bullet and do as I'm told.
You don't have to , but I would get a detailed explanation from the bank as to why they are insisting on this.

You said you have the deposit, try another bank.
 
If you can evidence that you have the balance of funds to complete the purchase and associated costs without encashing the shares it should not be an issue - perhaps at the time of initial assessment this was not the case...?
 
If money from the share holding is required to cover your part, it is perfectly reasonable for the bank to to ask you to liquidate your positions, especially in this volatile market. If you do not have to sell any shares to cover your part it is wholly unreasonable for them to ask you to liquidate any shares.
 
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