Bank Removes Mortage Loan Approval

stuchyg

Bit of help/advice needed. I have a solicitor and broker but both seem useless.

Back-ground
Myself and partner put deposit on house in may pending mortgage approval on house costing 210000. Approval received in July and first set of contract committing to buy were signed in September with loan approval of 92%.

We were meant to receive our mortgage cheque on Friday to sign for house today. On Friday I received a call from my Brokers to say AIB were sending out another valuer on Saturday just to finalise everything.

This morning i received a call from my brokers to say the new valuation placed the house value at 185,000 and therefore we would not receive a mortgage cheque for the 210,000.

Can AIB remove our approval considering contracts were signed in September with their approval for the 210,000. Any help greatly appreciated as we are trying to be in for xmas

Thoie

Check the letter of approval you originally got from them. They often say something like "offer valid for 30 days".

Unfortunately if something like that is there (or it might be phrased as "draw down within x days"), then yes.

If it is there I'd ask your broker why it wasn't drawn to your attention, and I'd also ask what was the delay between signing the contracts in September, and drawing down the mortgage in December.

stuchyg

we were also waiting for the builder to receive permission from his bank to sell as he is in trouble like most which took maybe 4 weeks or so but we were told on wednesday that the house insurance was the last obstacle which was gotten immediately.

if there was no draw down date on the approval than i presume AIB cannot withdraw their mortgage offer

phormium

Practically all loan offers will have a 'valid for' time on them, usually 3 months, used to be up to six months but not sure if any lender does that anymore.

Bank issued loan offer in July, they wont have known you signed contracts in Sept and next they heard was request for drawdown in December.

gogo

Well within their rights Im afriad, There is no way they will give you 210k for a house thats only worth 185k. If they did - they would automatically put you in negative equity. Also if you defaulted they would be unable to get their money back as the house in not worth the 210k they borrowed you.

Also if you read your offer letter you will see that the loan drawdown is dependant on the valuation coming in at 210k - its not so therefore your not meeting the conditions set. If you had completed the loan when the house was worth 210k youd be fine. But regardless of whos to blame for delay in signing contracts, there is no way the aib will give you 210k for a house thats worth 185k.
Your probably also going to be out of pocket, your still going to have to pay the solicitor and the valurer.
Why did you delay finishing the mortgage if you signed in September? You need to get on to your solicitor, doubt it will achieve anything tho.

Thoie

I wouldn't assume that. Talk to the broker and ask him exactly what's going on - do you have copies of everything you signed?

gogo

stuchyg wrote: »

if there was no draw down date on the approval than i presume AIB cannot withdraw their mortgage offer

Offer can be withdrawn at any time, your mortgage offer is subject to you meeting the conditions precedent - your not meeting those conditions anymore. read your offer letter again, your solicitor should have went through it with you in detail, its a legal document. Thats what you pay him for, so many people dont bother asking the solicitor to explain the offer letter.

gogo

Thoie wrote: »

I wouldn't assume that. Talk to the broker and ask him exactly what's going on - do you have copies of everything you signed?

Seriously, what bank is going to borrow 210k against a house worth 185k - goes against credit policy and happens quiet often actually when people delay drawing down their cheques.

stuchyg

phormium wrote: »

Practically all loan offers will have a 'valid for' time on them, usually 3 months, used to be up to six months but not sure if any lender does that anymore.

Bank issued loan offer in July, they wont have known you signed contracts in Sept and next they heard was request for drawdown in December.

Bank have been well aware of all stages since September as they have been in constant contact with the Brokers. An initial valuation was completed on behalf of AIB in August prior to the signing of contracts in September

stuchyg

gogo wrote: »

Seriously, what bank is going to borrow 210k against a house worth 185k - goes against credit policy and happens quiet often actually when people delay drawing down their cheques.

We have not delayed in drawing down the cheque at any stage, vast majority of delay has been on the part of AIB as admitted by their mortgage issuing department

Thoie

stuchyg wrote: »

if there was no draw down date on the approval than i presume AIB cannot withdraw their mortgage offer

Thoie wrote: »

I wouldn't assume that. Talk to the broker and ask him exactly what's going on - do you have copies of everything you signed?

gogo wrote: »

Seriously, what bank is going to borrow 210k against a house worth 185k - goes against credit policy and happens quiet often actually when people delay drawing down their cheques.

I was replying to the OP's assumption that AIB can't withdraw their mortgage offer (ye were just faster ).

I agree that it's highly unlikely a bank will offer a mortgage of 210 against something valued at 185.

gogo

stuchyg wrote: »

We have not delayed in drawing down the cheque at any stage, vast majority of delay has been on the part of AIB as admitted by their mortgage issuing department

Regardless who caused the delay, they wont proceed with this mortgage.
They cant proceed, you no longer meet they conditions they approved it under.

One question that does come to mind is you used the term "another" valuer, did they get two valuations? What they did get a 2nd one, if you only signed in Septmeber the first one would still have been in date, a nd there would have been no need to get a second one?

Advice for you, go back to whoever selling you the house - auctioneer, and advise them of whats happened, tell them you will be able to get the 185k (I assume you'll get this as youve already been approved 210k). Ask them can you get the house at a lower price? You never know, they might take the lower price than the nothing at all. - Edit, you now know its only worth 185k anyway, so you shouldnt want to pay 210k for it, valuations are in your interst as well as the banks, might be you'll get the house cheaper?

stuchyg

@ gogo

AIB required a valuation to issue the mortgage approval in September, this valuation was completed in August and forwarded into AIB.

I also appreciate the fact that we would get the house at a lower price but we initially thought we would be in this house by October, this is our first house and we wanted more then anything to be in for Xmas so to have it taken away is farly upsetting as imsure you could understand

Marcusm

stuchyg wrote: »

@ gogo

AIB required a valuation to issue the mortgage approval in September, this valuation was completed in August and forwarded into AIB.

I also appreciate the fact that we would get the house at a lower price but we initially thought we would be in this house by October, this is our first house and we wanted more then anything to be in for Xmas so to have it taken away is farly upsetting as imsure you could understand

Why would you get the house for less because the mortgage lender has pulled out? If you have exchanged contracts and are simply waiting on completion, you are liable to pay €210k irrespective of the new mortgage valuation. F you ultimately don't complete, the seller can seek to sell elsewhere and can take what you've paid already and sue you for any further shortfall. Your solicitor should not have allowed the completion date to fall outside the mortgage approval period.

stuchyg

The mortgage lender hasn't pulled out, they will still issue a mortgage but for less money as the house is now valued at less then before due to delays

Supercell

stuchyg go back to the vendor and tell them that you can only give them the 185 as that is all the bank will give you. Do you have a revised offer letter of the 185 from AIB to back you up?, if not then you need to get one.

Forget about this xmas , your not going to be in at this stage but you might be in next xmas and 25k of a loan better off which is probably going to be worth 50k over the course of your loan with interest added.
You need to think about the long term here, there will be more xmas's and if AIB did give you the 25K you might as well be throwing money into the fire for all the good it would do you.
They are doing you a favour, hard as it might seem to realise now.

MagicMarker

OP, I appreciate the annoyance, but isn't this ultimately a good thing? Now you won't spend 25k more then the house is worth.

uberwolf

MagicMarker wrote: »

OP, I appreciate the annoyance, but isn't this ultimately a good thing? Now you won't spend 25k more then the house is worth.

I guess that would depend on the status of their deposit.

Marcusm

MagicMarker wrote: »

OP, I appreciate the annoyance, but isn't this ultimately a good thing? Now you won't spend 25k more then the house is worth.

If he has exchanged contracts, it won't be his choice,