Mortgage Conditions - from 2008

anoble66

Hi,

I am hoping someone can help me. Back in 2008 I purchased a site with the intention of building. The site was purchased using a stage payment from the overall mortgage. Since then I did not build due to the economic environment and my own personal situation etc. I now only have 16 months to build and satisfy planning so I have no choice but to make a start.

I approached the mortgage provider in order to look at what I need to provide in order to draw down the 2nd stage payment. They are saying they now need to check with their underwriters to see if the offer is still valid and what new conditions might be attached.

So my questions are:-

1. Since the mortgage was activated in 2008, surely it is now legally binding and the bank cannot now refuse to lend further payments or attach new conditions or can they? If they do break from the original loan offer then can I also walk away?

2. Also one of the conditions mentioned is that before execution of the deeds of the 'to be built' house, I need to re-pay my mortgage in full on my current property. I cannot do this without selling and that's not an option due to negative equity. Plus, my plan would be to rent it out to cover 70-80% of the mortgage repayment. I am lucky that since 2008 my financial situation has improved so keeping this property and renting it would not cause an issue. Back in 2008 the bank probably looked at this and thought it was going to be a problem.

Does anyone have any clue on where I might stand legally on both these aspects?

Thanks for your help!

Stheno

Your probably best seeing a solicitor.

Mortgages usually have a draw down deadline, so it's quite possible that 7 years later is a bit late

anoble66

Thanks Stheno, I will certainly be in contact with a solicitor as well. But do you think the deadline is still applicable when I did already draw down back in 2008? I am effectively just looking for a 2nd stage payment to commence works.

davo10

Op the banks can do this. The financial landscape has changed considerably since 2008, for instance the site you bought may be worth considerably less now then what you paid for it, particularly as planning is running out. Also your current home is in negative equity so you now have less assets to use a collateral for your mortgage. I think you will be lucky to be allowed to drawdown any more unless you can show the bank that the site and your assets/savings provide them with some security for the money they are lending you.

I had a plasterer doing work on my house recently, he was distraught because he had plastered a house a couple of months ago, the home owner had recently lost his job and the bank are now refusing to allow him to drawdown any more of his mortgage until he gets a job, so plasterer didn't get paid.

Rackstar

Are you sure that building this house is a good idea?

If I were in your situation I'd be selling the site.

anoble66

@Rackstar - Yes, if selling was an option I would of done that a long time ago, but it's not. My logic (maybe ill-conceived) is that at least if I can build then we can move in, have the space we need etc and then rent out the current house to cover the majority of that mortgage.

I am hoping to know more from the bank very soon, so I guess time will tell.

Thanks

Mr. Incognito

The answer you require is a very narrow legal one based on the contract you signed and cannot be answered in general terms in a vacuum of information on the internet.

See a solicitor

Marcusm

OP

100% self build mortgages incl site costs would have been very unusual even in the boom. Is it possible that the site purchase costs were an additional drawdown on your existing home loan, ie a top up. That would be consistent with a requirement that you sell the original house and discharge the mortgage on completion of the self build. If that were the case the self build mortgage offer would not have Beene drawn down and I suspect that there would not have been a 7 year undrawn period as the bank's regulatory charges for such a commitment would have been onerous. Most likely it would have had to be drawn at least in part in a short (say 1 year period).

Drag together all the documentation and bring it to a solicitor.