Mortgage Approved, Part Drawndown, now bank changes deal?

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Starbuck

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I got mortgage approval last year for a sum of 600K to finance the purchase of a site, and the build project (new house).

With that arrangement in place I drew down 200k to purchase the site.

I then went into the Planning process and got my Planning Permission last month.

When I went back to the bank to advise them I'd be looking for the rest of the money, I got a load of evasive waffle from the young woman in charge of the homeloans department. Basically the message was - we won't loan the money, we'd prefer you to use your own resources to build.

Now it so happens I can do that (you Property Pin folk can get out your hankies) but on the other hand, I might not wish to.

If I want to make an issue of it with the bank do I have a case?
Other threads on AAM have touched on this issue, and usually the concensus is that if you haven't drawn down the loan they can change the terms. However in this case I have actually part drawn down the loan. Not only that - I also entered into a purchase on the strength of the loan offer I negotiated (i.e. part drawdown now, the rest later).

So, whaddya think? Worth taking them on and hiring a solicitor?
 
Fighting a bank is probably a waste of money in most cases and if check the small print there's probably a get out clause in your loan offer for them. Why don't you try another bank. Alternatively build your house as you can afford it and then get a mortgage. Are you sure that the site plus house will equal 600K as times have changed.
 
I'm presuming the concern the bank has is that in the current market, the value of the completed house is not sufficent to secure the loan. However unless you talk to the bank, you'll never know

Suggest you ask the bank to explain, in writing, the reason why the facility is being withdrawn and request a meeting with the relevant branch manager and not just the mortgage advisor in the bank. If you are not satisfied with the response you get there should be a formal complaints process for you then to follow and after that, if you still have not got resolution to your satisfaction, there is always the ombudsman, but he normally will only deal with a complaint once all other options with the bank are exhausted

On the basis that you have the finance to complete the build anyway, that might be a cheaper approach initially then getting a solicitor involved
 
Simply check the date of drawdown and that is not in the small print. The O.L. may be out of date.
If the offer letter is within the time period for drawdown I would then speak to a solicitor. As you would have used a solicitor to sign the offer letter in the first place (and deal with the tranche payments), speak to him/her again and ask if this is a breach of contract. Afterall, they are getting paid to make sure a legally binding contract exists and is enforceable.
If the contract doesn't mention a get out clause for the bank, you may have estoppel to fall back on. You can claim that the actions of the bank led you to believe you have a contract. Slim chance though.
 
Hi again. Thanks for those responses. Just to let you know whats been happening - I contacted the bank and surprisingly they seem to have relaxed a bit since Feb. They now say they can offer me the money to fund the build. Rather a different tone from before!
Has the credit crunch eased a bit?
 
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