Unusual legal technicality of mortgage

[PersilOrAriel]

We want to buy an investment holiday let and are in the lucky position of being mortgage free on our main home. We want to take out an offsetting mortgage on that to finance the purchase, and our bank agreed an offer in principle last week of £252k (our house is worth (£850k so only a small ratio being borrowed).

We are interested in 4 apartments in a new block, all at slightly differing prices, and will also be using savings as well as the mortgage on our house. Despite agreeing in principal that we can have the £252k, they won't proceed to the underwriters to guarantee until we can get our solicitor to write a letter guaranteeing that we haven't got a mortgage on the flat we want to buy.

As we don't know how much they'll lend, we don't know how much we can offer, and they are all different prices. Surely a solicitor won't say we don't have a mortgage on a flat we don't already own. I'm confused.

Has anyone come across this before?

The Land registry office copies which confirm your ownership of the property also confirms if you have a mortgage. You could try sending that to them (available easily from the Land Registry online).

I think I can't have been clear. The bank want the solicitors to supply a letter that we don't have a mortgage on the property we want to buy. We don't own it yet, and can't own it until they give us the mortgage. And they can't give us the mortgage until they have have the letter, so a catch 22.

Surely it's a simple case of 'I confirm that POA currently owns outright and holds no other properties, with or without mortgages.'

It shouldn't be hard to do?

The solicitor can confirm that you are buying the flat from the £252k and savings. For example, if the flats are £300k, the solicitor can confrim you have £48k in savings and are not applying for a mortgage on the new flat.

Thanks for the replies. They seem so reasonable, but I think my head is so full of 'what ifs' that I can think straight.

It's complicated further that there are 10 flats, four have sold at between 6-8% discount and the remaining 6 have been on the market since September. Ideally we would like to make a cheeky offer on one of the more expensive ones, but I'm worried they'll reply saying no, but obviously you can buy one of the cheaper ones with no discount.

So we don't know which one to offer on. And because the bank won't confirm how much they'll lend without a letter, it's making my head hurt.

You're replies have cheered me, so thanks. I think the best thing is to speak to a solicitor tomorrow and instruct them if necessary.

We did the same -remortgaged to buy a holiday home a few years ago. Don't recall any complications at all, in fact it was dead simple. Could you get another mortgage offer from somewhere else?

It sounds like they just want you to confirm that you will not be seeking external financing from elsewhere in order to top up what you wish to borrow from them. If you were to seek other forms of finance this would affect how much they could lend you as you would have another monthly cost (loan or mortgage) that would need to be factored into affordability.