Mortgage offer expired- what next?

W

waddles

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We exchanged contracts on a house in July 08. We have had a call from the bank to let us know that the loan offer may not be be valid when we request the funds (loan offer was for 95% of value and will probably be reduced to 90%) or that it may have to be revalued. Either way we won't be in a position to honour the contract due to a lack of funds on our part to make up the difference in LTV or the new valuation.

The builder took alot longer than expected to complete the house (originally we were told we would be in for September) but they are still within the 18 month period stipulated in the contract.

I am concerned about our legal position if we have an inability to pay. Does anyone have any advice?
 
Hi NorfBank,

Thanks for replying. I checked out the posts and have tried using the search facility but they don't really address my problem.
We accept we are in a binding contract and despite the doom and gloom are not too concerned about the possible further downside in price.
We are looking for a home not an investment.
We want to honour the contract and complete the sale but if we cannot secure the funds is it considered a breech of contract?
 
"We want to honour the contract and complete the sale but if we cannot secure the funds is it considered a breech of contract? "

You (a) buying the property and you (b) getting a mortgage to buy the property are two entirely separate ( in legal terms) matters. Whatever prevents you from buying the property, prevents you. Be that for whatever reason.

So - the real question is can you fund the difference between what you were hoping to borrow and what you can now borrow? In my experience, people generally can but prefer not to.

Is it a legal excuse to say to the builder, I cannot complete because I do not have the money? No - but its certainly worth a go as a bargaining tool to seek a reduction in the price.

mf
 
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