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Original poster

Selling house: purchaser turned down for mortgage

34 replies

Version893 · 19/10/2021 22:00

Hope this is the right place to come. I haven't sold a property for 15 years and things have changed a lot, so wondered if anyone here can advise.

I had three estate agents round to assess my property and was just about to put it on the market with one of them when I was contacted by a woman who lives two streets away and who'd heard through the grapevine that I was selling. Her DD and SIL have been looking for a property in the area for some time. I told her what I wanted for the property (it was the middle valuation) and they came round that evening and offered to buy on the spot for the price I'd asked. It should have been quick: they wanted to complete in five weeks and they gave the impression that they already had a mortgage approved. Six weeks on and they've just let me know that they have been turned down and are begging me to hold on while they find another lender.

Do many people who get turned down for a mortgage with one lender manage to obtain a mortgage with another lender or does this effectively mean they can't afford to buy?

OP posts:

Helga55 · 19/10/2021 22:23

Was this through an estate agent? Usually they make sure any buyers are in a position to proceed before submitting offers to a vendor. IME if the buyers are not in a position to get a mortgage with one lender, it's unlikely another will, although there are brokers out there that can play with the info to get one for them.

If it was a 'private' sale, then there would have been no way I'd have accepted an offer without seeing proof of a mortgage in principle from their lenders, one for the learning curve..

LCDP · 20/10/2021 08:04

It depends on why they were turned down? It would not be out of the ordinary to find one with a different lender. Different lenders have different conditions such as types of property they will mortgage, or conditions attached to employment. Without a broker you might not know these small print details. Some lenders are also becoming acutely more strict with recent events and some people even with MIPs might be finding they can’t borrow what they were advised.

MyOtherProfile · 20/10/2021 08:06

This is why it's best to go through an estate agent. It's unlikely they will be able to buy it now so I would get it on the market with an agent.

Chronicallymothering · 20/10/2021 08:08

I’d be putting it on the market ASAP.

whymewhyme · 20/10/2021 08:15

Get it back on the market, they wont get another mortgage. Also 5 week turn around, good luck with that lol 😆 our process was 15weeks and it was straight forward

GiltEdges · 20/10/2021 08:20

Well it obviously depends why they were turned down? In your shoes, I'd be clear with them that the house is going on the market in X days, but if they manage to find an alternative mortgage in the meantime, you're still happy to proceed with them.

CocaColaTruck1 · 20/10/2021 08:41

They can get another with a different lender it happens all the time.
But I think it just depends if your willing to wait for them, I'd be putting it on the market and telling them to get MIP by x and you'll still go ahead.

Henlie · 20/10/2021 08:44

I’d stick it on with an estate agent now. You’ll probably find you’ll get a lot more for it than you thought. It’s still very much a sellers market out there with buyers paying over the asking price.

Clymene · 20/10/2021 08:48

This is why you pay estate agents to do the due diligence. Giving the impression that they have a mortgage in place isn't the same as actually having one.

Put it on the market properly

AlbertBridge · 20/10/2021 08:56

I think I'd say that you've waited 6 weeks already. You'll put it on with an estate agent. If they get a mortgage and want to buy it, fine. They'll get first refusal - but warn them the house will probably be a bit more expensive now.

Then tell your estate agent you already have one interested party and get it written into the contract that you won't have to pay the EA fees if you end up selling it to that person.

Then see what happens.

EdgeOfTheSky · 20/10/2021 09:03

An EA would be asking for evidence of deposit etc and to see the AIP. In fact an EA would have advised that they didn’t have a mortgage potential in place so it was not a proceed able offer.

Personally I would tell them that you will now put it on the market but they should come back to you as soon as they have a proceed-able mortgage in place.

You could just wait, but it is a gamble. Do you have vendors waiting on you? Or any other time pressures?

It’s always a gamble, of course, but these two clowns clearly don’t know what they are about if they thought they could complete in 5 weeks with no mortgage AIP even in place.

EdgeOfTheSky · 20/10/2021 09:05

Then tell your estate agent you already have one interested party and get it written into the contract that you won't have to pay the EA fees if you end up selling it to that person

Why would an EA accept that? It costs a lot of money to list on RM etc. Plus the work on sale progression.

TakeYourFinalPosition · 20/10/2021 09:11

@EdgeOfTheSky Yes, it’s a pretty standard clause. Most EAs will have a part of the contract for you to declare interested parties in. They have to do the same if you switch from another EA to them; as at best, they’d only get shared commission from anyone the old EA introduced.

@Version893 Did you see an AIP?

It’s possible they’ll get a mortgage from another lender - either another mainstream one, or a subprime one, although they tend to take longer as they assess on individual circumstances and need more evidence… but as someone who waited 11 weeks for a buyer to get a mortgage this Autumn, who then eventually said they couldn’t get enough.., I wouldn’t be waiting. Her the door open, if you want, but that’s all.

I’d also prepare yourself for it taking much longer than 5 weeks. It’d be great if you can get it done in that time, but most sales are taking significantly longer right now; even post SDLT holiday,

Bouledeneige · 20/10/2021 09:40

I had something similar happen. Buyers couldn't get another mortgage. Don't hold out for them. My estate agents found another buyer. So getting on the market is the right thing to do.

Bobbybobbins · 20/10/2021 09:50

Def get it on the market. Silly of the buyers to make an offer without having mortgage approved in principle.

Original poster

Version893 · 20/10/2021 10:05

Thanks for the feedback. They showed me a six-month old AIP for £25,000 less than the price I'm looking for. They assured me that there would be no issue making up that £25,000 gap. They showed me bank statements showing they had a 20% deposit in their savings account, too. Clearly, though, that £25,000 is proving a stretch.

My property doesn't have much kerb appeal. I bought it as a doer-upper and have never got around to finishing it. So when a very motivated buyer turned up on the doorstep begging to buy it at the price I named it seemed that for once in my life I'd got lucky.

Interested to discover that it may be possible to put it on the market with an estate agent and also keep the current buyers in the running. I have no doubt they're motivated — they keep sending me messages about how determined they are and begging me not to sell to anyone else.

OP posts:

TheEconomista · 20/10/2021 10:13

I’d give them a couple of weeks to try and get another mortgage tbh, unless you are in a massive rush. If your house is unfinished and doesn’t have much kerb appeal having a motivated buyer is a good thing.

Lending criteria has tightened and it depends WHY their mortgage was turned down. If they aren’t going through a broker it may be a process of trying another lender. Or finding another source of the £25k (borrow from a relative, or something).

Give it a deadline though- assuming no one has instructed solicitors there’s a degree to which you don’t know how realistic it is that they can bridge the gap.

AlbertBridge · 20/10/2021 10:54

Why would an EA accept that? It costs a lot of money to list on RM etc. Plus the work on sale progression.

Because the EA might find another, better, buyer and this clause might be irrelevant. It's already fallen through once. If I were the EA I'd take a punt, knowing I have the means to market it to loads of other people.

The clause would only exclude this one person.

I have done this. It's fine.

TakeYourFinalPosition · 20/10/2021 11:09

They showed me a six-month old AIP for £25,000 less than the price I'm looking for. They assured me that there would be no issue making up that £25,000 gap. They showed me bank statements showing they had a 20% deposit in their savings account, too. Clearly, though, that £25,000 is proving a stretch.

Was it still valid? I can't remember how long ours were valid for...

But mortgage affordability has changed MASSIVELY in the last 6 months. There's been loads of threads and news reports about it. You could borrow much more six months ago than you can now, especially given the predicted rise in interest rates now...

If they were £25k short before; and can't bridge it, I wouldn't consider it a serious offer.

TakeYourFinalPosition · 20/10/2021 11:16

Also, on this... They might be absolutely in love with your house, but that doesn't mean they can afford it. I've just learned this the hard way - As I said, we spent 11 weeks waiting for our buyer to get a mortgage. He was SO keen. But he couldn't finance it, and in the end, his mortgage broker said that he'd keep trying as those were his client's instructions; but that he had no faith that he'd be able to get funding.

It could be different for your buyers, but it could also not, and given the time of year, you probably don't want to wait too long to find out if you're keen to sell.

greedygut · 20/10/2021 11:16

I would be putting it back on the market straight away , I would use an EA and if these people really want it they will find a new lender with some urgency

Meloncurse · 20/10/2021 11:18

It's also worth considering the bank's valuation, if they're right on the cusp of affordability you're reliant on the bank agreeing the valuation price to proceed (or dropping the price)

Outnumbered99 · 20/10/2021 12:03

Its entirely possible they might get a mortgage from another lender, i would be asking for a copy of the AIP directly from their broker within say, 2 or 3 working days and take things from there.

TheEconomista · 20/10/2021 12:50

Are they actually using a broker? If not, I'd insist they do. It'll be clear pretty quickly if they can find another lender or not - brokers have access to the whole market. If they are just laboriously applying to high street names directly they may struggle.

I'd give them a last chance, but give yourself a deadline by which you'll put it on the market if they can't produce an AIP.

Orangecrisp · 20/10/2021 13:24

Put it back on. You can always take it off again if they get a mortgage offer.

Also a mortgage in principle isn’t a guarantee. My first buyers had one but still couldn’t get past underwriting, some AIPs don’t do a credit check. Those that do credit check don’t always interrogate the income until underwriting. My buyers were self employed and it turns out they had invented their income from various sources which the lender wasn’t on board with.

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