Buying a property before mortgage approval

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We are a week or two from closing on the purchase of a property (contracts have been signed by both parties and 10% deposit has been paid). Through mostly our own fault (although the bank(s) are to blame as well), we have been very slow in getting our mortgage through the approval process, and are now at the point where the purchase of the house will almost certainly go through before the mortgage goes through.

I am selling an apartment as well, but this is a few months from closing. My parents are giving me bridging finance to cover this window, hence why I don't need the mortgage before completing the purchase of the house.

I am only looking for a 25% LTV mortgage but the banks are baulking at giving us the mortgage. Effectively because I will already own the house when the mortgage is approved, the house will be "unencumbered" as there is no debt against it. The banks are deeming it an equity release rather than a mortgage as I already own the house and are saying they may not grant the mortgage, and if they do, the rate will be higher.

Given it is only weeks between buying the house and securing the mortgage, are the banks right in making it difficult for us? I don't really see the difference given they will have our house as security against the mortgage and the LTV is so small anyhow. I don't want to pay a higher rate either.

Can anyone shed any light on this issue?

jeamimus

It might be worthwhile to try a broker. If your case doesn't conform to their tick box forms, you stymie many of the banks.