First Time Buyer- We need advice/help from experienced buyers!!!

[Trinity90]

I'll try explain what's happened in a very short summary..

Me and my bf are first time buyers and we're going for a house that is priced at 128.5k.
From the beginning we stated that we would like to pay 125k (to avoid stamp duty) and pay the 3.5k difference, for fixtures and fittings.

It's right near the finalisation - we have been told we could have the keys by the 21st of July but we need to reapply for the mortgage so that it will cover the extra 3.5 as apparently the sellers have NEVER heard of this offer before?!.

We made this offer from the beginning and we were led to believe it was agreed that is what would happen on both sides!
It even states that we're paying 3.5k in fittings and fixtures in our mortgage confirmation package we received and now our solicitor is claiming their solicitor is disagreeing/never heard of it.

I then rang the estate agents who advertised the house, who confirmed that they knew the offer was for 125 plus 3.5k fixtures and fittings and they have recorded conversations with our solicitor that also confirms she knew about it and said everything was going 'fine/well'.

Soo my question is.. Should we refuse to get a new mortgage drafted and say to them, take it or leave it or should we pay the stamp duty?
( We can afford the stamp duty but it would make money tight for us, we are early 20s, first time buyers and don't have a lot of spare money! )
the sellers have moved out of their house already, so it's in their interest to sell it asap

ADVICE FROM EXPERIENCED BUYERS WOULD BE GREATLY APPRECIATED !

Tell them to take it or leave it. You have in the great position here - first time buyers, no chain, mortgage agreed.

Who exactly has told you that you need a new mortgage? I wonder if the vendors have applied for their new mortgage based on a sale price of £128.5k.

I agree with pp - call their bluff. Write to the agent listing your evidence of the previous arrangement and stating that you will withdraw the offer if the sale cannot complete by 21 July. Then wait. You do risk losing the house and you will need a contingency just in case but your position is strong, especially if they're in a chain.

Are the fixtures and fittings actually worth £3.5k. Can you prove that .

If not , I would not do the kind of arrangement you are thinking of . It could come back to bite you . There are people on here who have much better knowledge than me but transactions near the stamp duty limit could be looked at and if you are basically trying to negotiate a reduction on the house price then you may be on the other side of what HMRC / whoever looks at stamp duty etc finds acceptable.

Do ask someone knowledgable . However as a lay person I can understand not wanting an offer of stamp duty threshold plus fixtures . Unless the Fixtures and fittings are so obviously worth it , it doesn't sit right.

Just am opinion and by the way I do wish you well - just giving you my thoughts .

I've just done this with a house I'm buying. My offer is £250k plus £1k f&f. It is clearly stated on the sale documents submitted to both sets of solicitors by the estate agent. The agent sent me a copy and, I assume, sent the vendor a copy too.

I would talk to your solicitor, let them know that you are not changing your offer. Hopefully they can persuade the other solicitor to talk to the vendors and help them understand.

I think £3.5 k sounds a lot for fixtures and fittings bearing in mind the cost of the house. What are they actually leaving you? Can you actually justify the sum or are you just trying to avoid paying SDLT? I'd just pay it if I were you. It seems like you might have been a bit naive and it's a shame no one mentioned to you before now that you can't just apportion the purchase price to avoid SDLT. Go back to your solicitor and unless you can point to fixtures and fittings unite getting worth £3.5 k then you need to cough up.

Sorry - it should read 'that are actually worth' above. Predictive text had a funny moment.

The Inland Revenue are looking very closely at transactions close to the stamp duty thresholds. You may have to "prove" that the fixtures and fittings are worth £3,500, in order to avoid paying stamp duty.

You are in a great position, i.e. first time buyer, mortgage in place and a fair way through negotiations. I would be inclined to insist the purchase price is reduced to 125k rather than "128k" anyway and only pay a sum equal to what the fixtures and fittings are actually worth (if you want any that is!).

I am positive your vendor would rather sell to you than go through re-marketing the property once again and there is no guarantee a new buyer would offer over the stamp duty threshold unless prices in the area have gone up considerably since you had your offer accepted.

A vendor whose house is on the market close to a stamp duty threshold surely expects that offers just below the threshold are highly probable and if the vendor is trying to convince purchasers to pay over the odds for fixtures and fittings, just to bump up their sale price and save you stamp duty, the Inland Revenue will be all over that like a rash.

Hello - thank you for replies - had another curve ball recently thrown at us

The fittings and fixtures was to avoid stamp duty.
We made it clear from the beginning this was what we wanted to do.

However - I just rang my broker then to see how long it would take to change the mortgage - BEEEP nightmare!!!!!

My partner has recently changed from PAYE to limited company
The mortgage broker said if we reapplied for a new mortgage, being limited company he'd need to show 2 years books - been limited company for a week? [ he does contract work]

So we're now debating saying keep at 125k and we'll pay a personal cheque to 3.5k on completion of mortgage??? as we physically can't go any higher even if we wanted too ??

Also we couldn't really offer only 125 - as the house we are going for was originally on for 139.950 - so it's a big(ish) drop anyway to 128.5k??

STRESSED - and scared at the thought of losing this house, plus then not being able to get a mortgage for a further 2 years and having to live next door to my Jeremy Kyle noisey/screaming/fighting neighbours for another 2 years !!!!!!!!!

So, your options are:

1. Either renegotiate your offer to 125k, take it or leave it (and be prepared to walk away). Might be worth keeping an eye on rightmove to see what else you could buy for this amount.
2. Offer 128.5k and pay the stamp duty of £1,285.
3. Wait two years and apply for new mortgage based on 2 years accounts.
4. Pay 125k, pay £3,500 for fixtures and fittings and hope the Inland Revenue don't investigate.

Hope that helps.

" HMRC have introduced the requirement that Fixtures and Fittings need to be itemised, e.g. you can still charge £5,000 for them, but you will need to list exactly what that buys and the value for each item. If you attach an unrealistic value to any items then HMRC can declare that part of the value should be attached to the purchase price, which would increase your SDLT liability. You may also be fined and/or prosecuted.

HMRC pay close attention to transactions valued around the SDLT thresholds and can investigate up to nine months after a transaction has been declared. This can be longer if there is evidence of fraud. www.hmrc.gov.uk/so for further info
"
www.actlegal.co.uk/faq/buying-house-faqs/19/

how are the f and f worth 3,500 ? what items are they?

pay the stamp duty

Hello Spickle
I wanted to do option two that you listed - but we CAN'T - as it means changing our already agreed 125k mortgage to 128.5, but because my partner is no longer PAYE - the mortgage broker who put in place our first mortgage, said that we will not able to change or amend it anyway?? and the sellers solicitors manager works for inland revenue...
Really don't want to walk away - if they had jut told us this at the beginning we could have thought about it and amended the mortgage then but now we're not in a position that allows us to amend it even if we wanted too!

I don't really want to walk away but it looks as if it's going that way ;/

Hello Spickle
I wanted to do option two that you listed - but we CAN'T - as it means changing our already agreed 125k mortgage to 128.5, but because my partner is no longer PAYE - the mortgage broker who put in place our first mortgage, said that we will not able to change or amend it anyway?? and the sellers solicitors manager works for inland revenue...
Really don't want to walk away - if they had jut told us this at the beginning we could have thought about it and amended the mortgage then but now we're not in a position that allows us to amend it even if we wanted too!

I don't really want to walk away but it looks as if it's going that way ;/

To pay the stamp duty we need to ALSO amend the mortgage - WHICH WE CAN'T DO AS THEYVE LEFT IT 10 DAYS BEFORE BLOODY COMPLETION! - saying pay the stamp duty is ridiculous did you not read my above post that says I rang my mortgage broker to apply for a new mortgage??

although I don't understand why we need to amend the mortgage offer - I thought it was a case if in the worst case scenario that we had to pay the stamp duty- we'd just pay the extra stamp duty in cash??? but my solicitor is the one saying we need to amend the mortgage so it states we're buying it for 128.5 instead of stating 125???

:S

why do we need to apply for a new one? why can't they just take the extra 'stamp duty' in cash on top of it??

Hi OP
Good luck with this tricky situation. I think the sellers are trying it on as they obviously knew from the outset what the score was.
I would tell the agent that they are selling through that your offer is on the table as it was originally for 24 /48hours. Then tell the agent that you would like to arrange a viewing for other similar property's - similar price. Drop in to conversation you have also got further viewings booked for another property with another agent as you think the seller is just messing you around. Hopefully that will focus the minds of the sellers ...

You'd need to amend the mortgage offer so it states the actual selling price of the house. Fine if you want to pay £3.5k of it in cash, but the mortgage offer needs to reflect the ACTUAL PRICE you paid for the house, not just how much you're borrowing.

It's illegal to try to put £3.5 of chattels through separately. It's fraud. Is it worth it?

I'd talk to the sellers and say, if they insist on your changing your mortgage stuff, that you'll lose your mortgage and won't be able to buy it. It's that simple. Explain why.

Yes you can pay the stamp duty £1850 in cash. That'll go to the solicitor who will pay HMRC for you.

I don't see why this means you'd have to get a whole new mortgage though? Can't he adjust the mortgage so it says you're borrowing £125k but putting down a deposit of £3.5k too? It hardly changes the LTV significantly!

Stressful

Have you exchanged as you say it's only 10 days before completion? If so, then you have a binding contract now.

Your lender needs to know the actual price of the property, although your solicitor would advise them of this as a matter of course. The actual price paid would also be shown on the title deeds at Land Registry.

If you can pay the extra £3,500 plus stamp duty in cash, that just reduces the amount you are borrowing. If you can afford it, it may be the only way to avoid changing the mortgage.

I am sorry if my previous post upset you, I was trying to be constructive and helpful. You asked for experienced buyers to help, that's what we are trying to do.

Your solicitor should write to the mortgage lender to enquire whether they are agreeable to a higher purchase price. If the amount you are borrowing isn't increasing, it shouldn't be a problem though it may hold up completion for a few days. Perhaps you need to speak to your solicitor to clarify.

We've signed ' mortgage conformation forms' but my solicitor rang up and said we could have the keys basically within the next 10/12 days if we just changed the mortgage? so I don't think we have exchanged contracts yet - we're only going by what our solicitor tells us - having never bought a house before

We can't just say we're putting down an increase deposit as that wont change the mortgage price, it'll just change our monthly repayments

If only my partner hadn't changed to a limited company within the last week then everything would be solvable ..

do you think it's worth offering the 3.5k to them in cash is it worth speaking to the sellers to see if we can come to an arrangement ??

The EA might have agreed the 3.5k for fixtures but your seller's solicitor will be looking at it from a legal/tax point of view.

If there are 3.5k worth of fixtures and fittings then I would hold strong (you are in a great position as FTB and mortgage in place)

3.5k sounds like a lot for fixtures unless they are leaving appliances, burglar alarm etc. otherwise I expect their solicitor thinks the payment for fixtures is a tax dodge which she/he will advice their client against.

Phone your solicitor and ask them to inform the mortgage lender that the purchase price has increased. I assume you are not having a 100% mortgage, therefore the increased purchase price will not make a difference to the amount the mortgage lender is preparing to lend you.

Ah spickle, good advice and i appreciate you take the time to try and help us find a solution, what you suggested though is we tried to do :( yes we're doing a 10% deposit
so borrowing 90% but our mortgage broker said that we weren't able to draft a new mortgage showing the increased purchase price because of the whole being a contract worker and changing from PAYE to limited??
and It was our mortgage broker that suggested 'making an arrangement' with the seller...

Right tomorrow we're going to insist that the mortgage broker changes the price of the house to 128k aka applying from 112,000 to 115,560
surely they shouldn't need paper work to check that small of an increase?

As it looks like we're going to lose the house anyway - I'd rather take the risk of losing it THAT way - I do still think its been handled badly ( our solicitor should of found out if they;d agree to that from the start rather than leave it so late to tell us that they wont - after repeatedly telling us everything is 'fine' )

wish me luck for tomorrow that it's actually do-able! ( I just can't believe them when they say it's not)

Good luck for tomorrow - let us know how you get on.

From your last post it looks like you are requesting a higher mortgage than previously agreed, £115,560 rather than £112,000.

This is what will cause the problems, can you not keep to the original £112,000 mortgage and pay the extra £3,500 as part of you deposit?