HELP mortgage nightmare...any advice please lovely Mumsnetters

[Jayfee]

First time buyer son and dp had a free valuation survey from the building society who had agreed their mortgage in principle.
First question:
Why won't the building society let them see the valuation?
The bank then made them get a structural survey done as a result of the valuation survey they had not seen. This came back clear apart from a small amount of optional cosmetic work.
Now the bank want a £2000 retention and have down valued the property by £10,000.

Son and dp are distraught. They are waiting for written confirmation from the bank. They have been using an independent mortgage advisor who has gone on holiday and told them to deal with it directly with the building society. No idea what to do.

Any advice most gratefully received lovely Mumsnetters

The report done by the building society will be a report for the lender's purposes only. This is usually the case if you go for a "basic" valuation, even if you pay for it. Some lenders will send the borrowers a copy, others (e.g. nationwide) won't.

The only thing to do is to push the lender regarding the retention - DS can insist that they tell him why it is being held - otherwise how us he supposed to resolve it?

But with regard to the downvaluation, the only likely option would be to change lenders and see whether a different valuer gives a different figure. If DS does this, it might be worth paying extra for your own survey as well....

Yes it is Nationwide. Thank you so much. I had a sleepless night last night on their behalf! I am hoping when they finally get something in writing from Nationwide it will have some clear explanation. What has made it worse is that one minute the mortgage advisor is saying it is all going well, then something changes, then something else changes. And there are some legal issues too. It has been/ is a nightmare.

I would suggest they try a different lender - I appreciate they've probably already paid fees to the nationwide though. When is the mortgage advisor back? They should be able to suggest an alternative.

If it's a free valuation via Nationwide they shouldn't have paid any other "upfront" fees. It might be worth trying another lender but chances are they'll use the same valuer (IIRC Nationwide use Countrywide Surveyors, as do Santander and several other lenders) so chances are it'll still be downvalued. Nationwide are able to put into writing the reason for the retention though (whether they're willing to is another matter, try escalating to a manager - this will probably get the desired result). If a structural report has been carried out and not identified any structural issues, did it identify anything to do with the guttering/drainage/electrics/damp? These are often seen as cosmetic by the vendor and purchaser, but the mortgage lender will often view them as potential resale issues if not resolved.

I would try to renegotiate the purchase price with the vendors as it would appear that the property is overpriced. Your son and dp will have to cover the additional £2000 retention until the work is completed. They should talk to the bank or mortgage advisor for further advise.

I think it is over priced but buyng your first property is very emotional. I did think of advising them to try to renegotiate the price but as they were misinformed about the lease on the flat, the solicitor is negotiating with the vendor about that at the moment.
Thankyou Julie, Wasp and Fab... very focused and helpful info. Ok

dont know where the ok came from...hate this keyboard

I have just been through exactly this with nationwide.
I applied direct rather than through a mortgage broker.
Firstly came back as unsuitable for mortgage without structural engineers report. Gave them one of those. It then came back with a retention of £10k and a valuation lower than what we offered. We went back to vendor and renegotiated. Agreed a new price closer to the mortgage valuation.
Imho a low mortgage valuation is quite a strong bargaining point, more so than one you have commision seperatly as it directly impacts what you can borrow / pay.

Alternatively... and if haggling gets you nowhere you can appeal the valuation with NW. You will probably need your brokers and the estate agents help for this. Essentially you need to send them some comparable sales. Info on appeals is at the bottom of this page on the "nationwide for brokers" website (which I found pretty useful for info when I applied direct online):

www.nationwide-intermediary.co.uk/lendingcriteria/property_and_construction/valuation

Thanks Tulips..I think they are scared of losing it and the agent is very pushy. I am going to talk son and dp later and will tell them what people here have experienced / advise.

Looks to me like a case of a bad lender. In my recent quest to become a homeowner I had two valuation surveys carried out by Santander. First one downvalued the property and suggested retainer. I got a copy of this one incl brief explanation. Then found a other property which was valued at offer price and again received copy. They were free as well.

Our mortgage was with the Nationwide and we never had any problems. I personally would avoid a bank!

Thanks for the advice.Very helful

i wouldn't hold out any hope on a valuation appeal - I worked in mortgages for 25 years and only ever had one appeal that was successful.

Presumably your DS has paid a fee to the mortgage broker? They should be sorting this out for him - or a colleague if your broker is still on holiday.

Julie will nationwide tell them why it has been downvalued? if it is the lease issue, and the vendor sorts it out perhaps they will alter the valuation? we are thinking of taking some savings out to help them ( we already have helped a fair bit)

Why do people seem to think that in the event of a lender down valuing a property (which is becoming almost routine) that renegotiating the price with the vendor isn't an option or only an option of very last resort?

To my mind it's the first and most obvious thing to do, rather than looking at all and any alternative ways to make up the shortfall between the independent and unbiased market value given by a professional qualified chartered surveyor and the vendors personal opinion of what their house is worth.

They're not using John Charcol by any chance are they? We used them to broker for us as we're old and self-employed. They were rubbish. If your DS's situation is straightforward, they don't need a broker and would be better going direct.

Jayfee they should - but I expect they will need to push to get the information. I had a similar case, and eventually I got someone to read the valuation report to me over the phone, they wouldn't put anything in writing at all.

Sall74 the difficulty is that the lender won't let them see a copy of the valuation report, so they have no evidence as to the downvaluation. Most vendors won't just take the seller's word that it's been downvalued.

LittleWitch that's true, if you're a relatively straight forward case and fairly savvy on mortgages you don't need a broker. But most brokers charge an up front fee - so in Jayfee's DS case the firm should be sorting this out for their clients, not telling them to sort it themselves with the lender!

So, IMO, plan of action:

1. Ring the brokers and insist that someone helps - or that they refund any fees that DS has paid if they expect you to sort it yourself.
2. Ring the lender and ask for the full information on the valuation report. This make take time, and you may need to get stroppy.
3. Once you have the reasons it's been downvalued, go back to the estate agent and renegotiate the price.
4. If 2 or 3 don't work, look at another lender. Despite your bad experience with a broker I would be inclined to use a broker again, simply because they will probably be able to find out which lenders don't use the previous valuer. Of course, that's no guarantee that it won't get downvalued by a different valuer if it is overpriced.

Well, the mortgage offer finally came through today for son and his dp. It is all figures though, with no explanation at all. They offered £372000 for the property but the value on the mortgage offer is £360000. They had 90%mortgage agreed which should be £324000 but they have been offered £322000.
The broker (before he disappeared on holiday) had spoken with bs and said £10000 under valuation and £2000 retention (£12000 not 14 thousand). Very confusing. Would the bs have made a mistake in the calculation. This leaves son and his dp with a shortfall of £14000 towards the price at the moment plus they have to pay £3000 to upgrade the lease as they were told it was longer, so were misinformed. The vendor has agreed to start procedure to extend lease but not offered any price reduction. The solicitor has advised son and his dp not to proceed unless they can get the price reduced. I have always thought the price too high, but a pushy estate agent and desperate to buy son and dp. Now there is £17000 extra to find somehow.

So not at all sure how to advise them.

Contact the building society about the £2000 differential?
And ask the solicitor to forward a carefully worded letter asking the vendors to reduce the price. What sort of reduction?
Speak to the estate agent (think they are intimidated by him. He is a pushy salesman.)

Once again lovely mumsnetters, advice welcome.

They need to go back to the vendor and explain that the bank will not lend the required amount and offer what they can now afford..

A house is only worth what someone will (and can) pay for it. Are there others prepared to buy at that price? If not, your son should push for a reduction explaining that the BS have down-valued the property. The vendors will hopefully realise they have over-valued and that this is a problem they are likely to face with any other potential purchasers too. Your son and dp are willing buyers, ready to proceed ... just at a slightly lower price. Good luck.

Thanks that is what I will advise them to do. They have to brave the estate agent. Someone pulled out before, so I am hoping it is because it was down valued then and the vendors know that. This property buying lark is soooo stressful, especially in London.

It"s really easy to sit here and say this,but try not to let your ds heart rule head In their desperation to buy, it is all to easy to make poor financial decisions which may come back to haunt them.

It must be very stressful but really the best thing to do is try to renegotiate the price. The vendors will not want to lose a second buyer. Your position may be stronger than you think.

Sod the agent. All he cares about is his commission. He is not paid to act in your ds interest.

And above all, remember, however much they love this flat, there will always be another. Hopefully it won"t come to it but there will always be another flat if they have to walk away.

Both Nationwide and the solicitor are effectively saying the price is too high. Take heed!

17k is a lot of money. They really need to renegotiate. I wonder what stage the last buyers pulled out. If it was after the lease extension would have become apparent, this suggests that the sellers knew about it and that would seriously affect my good will.

How sure are they of the value? I'd seriously consider getting a second survey or valuation. I know the costs often put first time buyers off but it is a huge investment and they need to do their due diligence. If it comes back at the low end they will be able to take it back to the vendors.

This property buying lark is soooo stressful, especially in London.

Gosh. Depending on the area, there are a lot of price reductions in London happening...which the EA will know full well. Nationwide certainly knows it and I wouldn't be surprised if this is the reason for a lower valuation than expected.

They should definitely go for a price reduction.

www.telegraph.co.uk/property/house-prices/third-homes-sale-london-have-asking-prices-slashed/