Mortgage lenders and indemnity policies

[Propertypurchase]

Hello all, I am after some advice please.

I am a first time buyer and am about to exchange on a house purchase. I thought everything was going through ok. My solicitor has advised however, that my mortgage company is raising questions about indemnity policies the seller is purchasing for me. I’m not sure exactly which policy they are questioning as there are a few policies being setup, or what the issue is exactly.

Apologies if this is a bit vague, but I couldn’t get hold of my solicitor today and am going off an email I received yesterday.

I have been panicking the last 2 days that this is going to fall through and I’ll lose my dream home.

I guess what I’m asking, is has this happened to anyone else and was it all ok? Or did the lender refuse your mortgage? TIA!

indemnities are quite common place so I wouldn't think they would be a reason for your lender to decline your mortgage unless the majorly devalued the house. A possible example could be that planning permission or building regs wasn't obtained by the seller and you're getting a policy to cover the risk of enforcement action. tbh I wouldn't have thought the lender would be informed of that, but maybe. if the lack of permission means your house isn't as valuable and you're already at the top of an ltv bracket, maybe your lender would drop their valuation and move you to another ltv bracket.

I'm sure your solicitor will fill you in tomorrow

So there were a couple our seller were going to purchase, one was for lack of planning permission to pave a garden, and I can’t remember what the other was. Possibly moving internal walls.

The problem our conveyancer had was that as far as he was concerned, they weren’t fit for purpose. They were some generic guff that the Purple Bricks lawyers rolled out as standard. But he told me why he didn’t think they were fit for purpose. Maybe yours isn’t as switched on and presented them to the lender without sense checking them? In which case, your sellers just need to purchase better policies.

They are really not all that expensive, so if that is the issue, shouldn’t solve too many problems.

The purchase fell through so we didn’t get past the “not fit for purpose” phase.

Indemnity policies are very normal. It can take a few days to set up as it’s back and forth between solicitor and insurance broker agreeing the terms of the policies. All the best!

Perhaps it is the number of policies
It's worth bearing in mind, the policies are not supposed to be purchased in place of legal compliance. They are there to cover legal fees and the potential devaluation in the home as a result of the situation coming to pass.