Delayed letter of offer and hike in interest rates

That's a great idea. Thanks Tarquin. I'll contact the mortgage advisor to see if she can draw down before closure.

Tarquin said:

Our bank allowed us to drawdown before we closed, to avoid an interest hike. One of my friends drew down a month before he closed (this was in December 2005, prior to all the hikes since) to avoid same. Im sure you could contact your bank and request it. In my case, the bank contacted my broker to warn us of the raise hence why we drew down three days before closing.

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That doesn't make a lot of sense to me - the bank gave you a mortgage for let's say 300k which would normally be secured on the property the mortgage is used to buy. No bank would give away that kind of money when the asset that it is meant to be secured against is not in the posession of the borrower. Perhaps you had it secured against an existing property / equity in the house you were moving from ? but the OP here is a FTB and I would be shocked if a bank would do this for her.

Banks started allowing this, or a variation on the same thing, in the UK just before the crash in the 80's. It resulted in a pretty wide spread scam whereby people just legged it with the drawndown mortgage and never completed the sale, or indeed there was never any sale to complete in the first place. I was under the impression that this practice has been completely stopped as a result. The only way it could happen is as CmTaz describes whereby it's secured against a different property.

Not necessarily, it is your solicitor who will draw down the loan cheque and they have an undertaking to the bank- so they could draw down a few days early and hold the money in the client account until needed for closing- the client will have to start to make repayments on a mortgage for a house they may not be in occupation of though.