Selling house: purchaser turned down for mortgage

[Version893]

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?

This is why it's better to go through an estate agent. Hopefully they can filter out the worst of the time wasters. No way would
I put the house sale on hold.

You could at least ask an EA (or maybe more than one) to come and give you an idea of what they would market it for. That doesn't commit you to anything, but you'd have some idea of what they thought they might get for you.

Give them a deadline - if they used a broker they should get one in a matter of days. If not, get an agent.

@Version893

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.

Oh gosh no, get it on the market! Tge MIP is the most they may be able to borrow and would depend on them telling the truth on the application. They could have all sorts of debts they didn’t put into the MIP application that the lender can see.

Not saying they are a credit risk but they’ve clearly overstretched themselves massively.

I don’t think this stuff is really that unusual, there’s always a hiccup in the process somewhere. If you’ve seen solid evidence of their savings then why doubt them? It sounds like the AIP has expired (normally do after 6 months or so). We also had a lender withdraw as they decided late in the day that they didn’t lend on a certain type of income, our broker just went to another lender who did and we had a new AIP within days it may not be a big issue at all. I’d give them 7-10 days to get a new AIP and recommend they use a free broker. It’s worth it from your side for a motivated buyer paying asking price and to save estate agent fees. It also seems the good/kind thing to do given they’re so desperate to buy it.

I’d put it on market. Tell them they can sort a mortgage before anyone who is proceedable matches their offer. If they use a broker they should get a quick answer.

If you’re happy with the price, and not in a desperate hurry, I’d given them another chance, but with a time limit.

We had similar issues with the first lender we went to - we had an AIP through a broker, but the lender decided they didn’t like us being self employed despite consistent high salaries and an enormous deposit (nearly 50% in London).

It happens, and the next lender was happy to take our business.

It’s not unusual and you could save £££ in fees.

My AIP lasts 3 months so that was not valid. Market it again. Every house will sell for the right price. If the first buyer gets a new valid mortgage you can make a decision then.

Maybe give them another couple of weeks but tell them they need to go through a whole-of-market mortgage broker?