Mortgage Offer expired: new conditions unaffordable

F

FiaRua

Guest
While waiting for a house in a new development to be completed a year has passed and our mortgage has expired
The new lending terms and conditions have changed radically and we do not have the extra cash to cover the new LTV rate
The higher interest rate doesn’t help also Im not sure the mortgage is affordable
A new valuation has been mentioned so I imagine that the lender will be offering us 90% of the new valuation of the house while the developer will want the agreed sale price
The developer is refusing to budge an inch on the sale price

The punchline is that we borrowed the deposit which was supposed to be merged into the mortgage when it was drawn down and that needs to be repaid in full if we do not draw down

We are in a no-win situation. Does anyone have any advice or opinions?
I cant imagine that the developer will give us any of the deposit back when we inevitably have to get out of the contract
 
Yes - all communication with the developer and the lender has gone through the solicitor so far
He is keen to get try to get the lender to reconsider changing the conditions so drastically - but the answer has been no three times already
To be honest I dont think that the solicitor has faced reality yet
 
The solicitor is working for you. You should be asking him to outline your options here.
 
I don't think you should leave it to the solicitor, arrange to meet the developer in person and outline your problems if he sees your still keen to buy the property you should be able to make a compromise.
 
If things are so tight you should be asking yourself if you can genuinely afford this purchase even if the developer was to budge. Maybe if you posted more details about your overall financial circumstances, the mortgage on offer, the property price etc. people could comment. Just because you might be able to kludge a purchase together doesn't mean that you should.
 
As per Clubman. I keep meaning to do a Stick/FAQ on this question. As it, and different permutations of the same question keep on popping up.

Basicly, the builder will have to accept a lower offer. He maybe saying no, trying to get a bit more, but once sooner or later he will have to see the writing on the wall. Just remember that while you can be sued for non performance of contract (which will cost him a lot of money and you cant get blood from a stone), he probably has the banks breeding down his neck ready to take the shirt off his back. There are a number of rumours saying the banks are telling the developers to take the lower offers. The banks work on the principle that is better to have 20 people owing 200/300k than owing them over 3M etc.
 
Thanks all

The agreed sale price was 300k, we opted to take 280k mortgage.
Of the 20k cash - we paid 7k to the developer in the beginning and we have been saving the 13k since then for draw down.
The deposit to the developer was 35k – 28,000 of which was a loan

Unless the developer lowers the price down to between 200k and 250k we are priced out due to the raising of the 10% cash
The monthly repayments would stay the same for us if the price was lowered as the rate has gone up so we would be in the same position from that point of view
I will try the developer again regarding the price but my feeling is to just try to get out of the contract
 
I hope they are hopeful predictions of what you could get rather than what is necesary for you to be able to afford a mortgage. If that kind of cut is needed you were never in a position to buy in the first place.
 
Is the house built yet? Is the scheme its in built? Some developers seem to be insisting on keeping the deposits even though they are not going ahead with the scheme.
 
Is the development sold out or does the builder have empty houses on his hands? He is being very optimistic looking for prices from the peak of the boom in the current environment!
 
webtax said:
Is the development sold out or does the builder have empty houses on his hands? He is being very optimistic looking for prices from the peak of the boom in the current environment!
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he doesn't have to be optimistic since the OP has signed a contract. He can force completion. if the OP can't complete and he sells the property for a lower amount they are liable for the difference.
 
MrMan said:
I hope they are hopeful predictions of what you could get rather than what is necesary for you to be able to afford a mortgage. If that kind of cut is needed you were never in a position to buy in the first place.
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Exactly

The punchline is that we borrowed the deposit
Click to expand...
 
sandymount said:
he doesn't have to be optimistic since the OP has signed a contract. He can force completion. if the OP can't complete and he sells the property for a lower amount they are liable for the difference.
Click to expand...

Isn't there a chance the builder won't be able to go ahead with a scheme if theres no possibility of selling all the properties in the development?
 
The house is fully built - the first phase of the development is almost ready. Out of the first phase they have sold about 7 out of 40 houses although they wouldnt admit that if you asked them.

Yeah Im not expecting that much of a reduction in the price I was just giving a ball park of where we are financially

Losing the deposit and not being sued is looking like the best potential outcome at the moment
 
Your original mortgage offer was 93% and from your own resources you had to find 7% not 10%. What is the LTV now, what was your original repayments supposed to be, and what are they going to be now? If you lose the deposit you will have to pay back the loan of 28K. Have you saved the 13K? The builder can sue you to enforce the contract and this is more likely if you have a permanent job and other assets, if you were unemployed it is highly unlikely he would waste the money to sue you. If most of the units are unsold have you checked out the price they are currently being offered for sale at, might give you some negotiation pointers for dealing with the builder, at the end of the day he needs to sell them to repay his bank. You have to give more figures on here such as your salary to work out if you can make the repayments now because it really looks like losing the deposit only would be actually a good situation to be in.
 
In relation to the builders keeping the deposits even if not going ahead, of course they are going to do this, they have contracts, they are in business not charity and they are sitting on land that is unviable to build on, plus they probably have borrowed to buy the land in the first place. Me personally I think the banks have a lot to answer for and the legal profession who let people sign contracts with no get out clause or at least a clause that if the mortgage offer was not the same when drawdown took place as initially that the purchaser could get out of the contract. I really hope that this practice has changed.
 
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