Mortgage Valuation after Exchange?

[crimsonlake]

I have exchanged on a property I am selling with a completion date fixed. Today I have received a message from the buyers stating that their mortgage lender wants to come round and value the property.
I had been given the impression that they did not need a mortgage so I am confused why this is happening at this late stage.
I understand that once exchange has taken place it is legally binding, but am concerned what happens if the mortgage lender undervalues the property. Is it possible they will try to renegotiate on the selling price?

Maybe they've simply decided to have a mortgage on it after all, and free up some cash.

They're legally obliged to buy it at the contract price you've exchanged at.

Thanks, that is what I think, but the niggling thought is still there. There has been a measured survey, a building survey, a structural survey, builders visits and now this issue. Just seems strange that they did not do this initially if they needed a mortgage, although they have always been a bit vague as to how they would raise the money.Just concerned if my property was massively undervalued things might go awry.If they pull out I understand I get to keep their deposit.

Yes that's right, if they pull out you get to keep the 10%, or 5%, whatever you've agreed. Is there long between exchange and completion?

If although if they do need the mortgage because they haven't got enough money they won't be able to complete before they get their mortgage offer. Have you an estate agent you can chase up?

Thanks again. We have had a delayed completion as neither of us were in a hurry as it appeared they did not need to sell and I had nowhere to move to.We are due to complete in the New Year.They tend to contact me directly these days, although of course we both have a solicitor.Just find it odd that they would not have done this earlier so as to have a mortgage agreement in place and ready to go as we said if I needed to go sooner I was just to give them a couple of weeks notice.

They can’t renegotiate, the contract is legally binding. All they can do is fail to complete if they don’t get the mortgage, you will get to keep their deposit.

Problem for you at that point would be whether you needed more than 10% of the funds for your new property and of course you would be left with two properties and potentially two mortgages.

As someone said, they’re probably just getting a mortgage to keep some cash for something else/renovations etc. I wouldn’t worry.

I definitely wouldn't worry with such a long completion in place. They probably just want to free up some cash, and with that timescale between exchange and completion they have plenty of time to get s mortgage through.

Sounds like they might be planning on some renovation / extension works.. maybe they need the mortgage for that. If this is the case, the mortgage lender will value the property and approve a loan for the work.

I would ask them... they have no reason to lie..

I’d also assume they just wanted to keep some cash so decided to get a mortgage for some of the price. I wouldn’t worry.

Whatever the contract says they would be penalised for if they didn’t complete the mortgage company would have to undervalue by more. So if it says ten percent, then the mortgage company would need to undervalue it by way more before it makes sense for them to pull out, as they lose the money anyway.

This survey is jist a formality.

Wouldn't worry me they can't pull out without losing money we changed our minds re financing a flat and took a small mortgage (around 10%) and had to have a mortgage survey it won't make a difference to you. Do you have a final completion by date? When do you want to move?

Could be that or they could have pretended to be cash buyers to secure the property but in actual fact need a mortgage. I'd probably stick to contact via solicitor in case there's any funny business.

Could be that or they could have pretended to be cash buyers to secure the property but in actual fact need a mortgage

No it couldn’t. They need to show proof of funds to exchange.