Bank valuation of house leaves mortgage shortfall.

R

ruth10

Guest
Hi
I suppose I am looking for advice here on what to do next. At the final stages of house purchase. The mortgage is ready to draw down however there is one major problem.
Our new build was supposed to be finished in late November however due to the usual builder delays, it was only finished last week. Due to the long delay and the fact the builder has reduced the next phase, the bank valuer has reduced the price of the house by 15,000. As we are drawing down a 92% mortgage we are at the limit of our borrowing.
On speaking to the builder, we were refused in no uncertain terms that there would be no reduction of the price.(not suprisingly)
Our solicitor has said he is willing to take on the case and pursue the builder, (who is in deep trouble and probably about to be nama'ed)
We have put a few thousand ourselves into upgrading kitchen etc so walking away probaby not the best option.Any legal case obviously will take a long while.
My parents are willing to loan me the shortfall which I could pay back.
Essentially my question is this what would you advise?
Thank you for reading, all help will be appreciated.
 
"Our solicitor has said he is willing to take on the case and pursue the builder"

What for?

"My parents are willing to loan me the shortfall which I could pay back."

Isn't this the answer? You have a legally binding contract.

mf
 
Due to the long delay and the fact the builder has reduced the next phase, the bank valuer has reduced the price of the house by 15,000.
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The house has devalued since you signed the contract, there is little you can do about this apart from pull out of the purchase however the builder can then pursue you for breaking the contract. The builder is not under any obligation to revise the purchase price in your favour.
Look at it another way, If you had completed the sale before the valuation reflected the devaluation by 15000 the house would have still reduced in value and you would now have a higher LTV mortgage than as it currently stands at 92%.

What do to ? you can pull out of the contract, loss your deposit plus the money you invested in the kitchen upgrade and face the builder persuing you for breach of contract or borrow the money you have been offered and complete the sale once you are aware that you may end up with a property falling into negative equity within the next few months ( if the builder decreases the prices again) Frustrating yes but unfortunately thats the reality of house purchasing at the moment.
 
Thanks for your advice.
I know that realisticaly going to court for 15,000 is not the best option long term. I suppose to put it into perspective the house next door to us sold for 200,000 more 2 years ago.Its greed on my part.
Just really wanted some impartial advice. At the moment everyone I have spoken to has a vested interest in the issue.Solicitor, bank etc
 
ruth10 said:
I know that realisticaly going to court for 15,000 is not the best option long term.
Click to expand...

Have you read MF1's reply?

You have no grounds for going to court.

If you don't complete the sale, the builder will go after you to complete it.

Brendan
 
ruth10 said:
... I know that realisticaly going to court for 15,000 is not the best option long term. ...
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I don't understand this. What is it you intend doing :

  • Sue the bank to increase its valuation in line with the builder's expectation of price?
  • Sue the builder, who at this stage has a valid contract, to reduce his price to the bank's valuation?
IMHO neither avenue will do you any good or change the unfortunate circumstances you find yourself in..
ruth10 said:
... At the moment everyone I have spoken to has a vested interest in the issue.Solicitor, ...
Click to expand...
Hopefully your solicitor is acting in your best interests. If you don't believe so , maybe you need to sit down with him/her.
 
Honestly this is why I posted this question. I really am clueless in the situation, both the bank and the solicitor told me to pursue the builder. I didnt think that was an option at the start as we had signed contracts agreeing the price.However my gut instinct is just to pay the shortfall, we can easily afford the loan.
Many thanks
 
Perhaps bank and solicitor where suggesting to go after the builder for not completing on time. Although I would doubt you would get anywhere with this?
 
Brendan said:
Have you read MF1's reply?

You have no grounds for going to court.

If you don't complete the sale, the builder will go after you to complete it.

Brendan
Click to expand...

Not what mf1 said.

OP would be better to take advice from their solicitor who actually has the terms of their contract in front of her/him. The contract which may or may not have a condition or clause regarding delay, the contract which may or may not have a condition regarding loan approval.

And above all else, terms of contract aside, negotiation is always possible.
 
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