Mortgage drawdown on site used as security

SkilpTDI

Hi folks,

I have mortgage approval since March of this year with AIB and it has a 6 month expiry, the site we are building on is part of security of a a relative’s farm loan that is 80% paid off, the security is 80 acres and we are looking for 1 acre.

The problem is that our solicitor will not request funds because there is currently a mortgage on the site however I have been in contact with the bank and they more or less say they flat out don’t care and they only need solicitor to request funds. My relative has had to start a partial release request from the bank and requires 3 years of accounts and a farm statement of some sort.

The problem is the accountant hasn’t finished the accounts yet and the drawdown deadline is coming very fast where we will have to completely reapply for mortgage. Our solicitor is adamant they will not request funds until this is sorted, is there anything at all we can do?

TIA

Lenar3556

https://www.boards.ie/discussion/2058360972/mortgage-drawdown-on-site-used-as-security

If the bank were consenting to release unsecured funds, on the premise that they will be secured on a property at a later date, I imagine your solicitor would be quite happy to draw them down.

But the reality is that the bank wont consent to that, and your solicitor would leaving himself wide open if he attempted to deceive the bank by drawing down funds in such circumstances.

Do you currently own the site in question? Is it registered in your name?

SkilpTDI

https://www.boards.ie/discussion/comment/122414257#Comment_122414257

Hi thanks for the reply,

The site is in a relative’s name and I received a gift letter from same saying that they are gifting the site to myself and the bank were satisfied with that. One of the conditions of the letter of offer is that the site is either in my name or in the process of being transferred to my name, the latter of which I would argue is our current situation but solicitor doesn’t see it that way and maybe I’m wrong in that case, I’m not great with legal matters.

My relative has also been placed on the urgency list for the application to release the land from security and even that can take 15 days they’ve been told. Reality is we’ve only got a month and a half before this approval runs out and we’re getting desperate for a solution at this point.

Lenar3556

In the process of being transferred is one thing, in the process of being transferred by someone who isn’t in a position to transfer it because another lender has a change secured against it is another matter entirely. I think it will have to run its natural course. But by the sounds of it that should happen.

Is it that big a deal to apply again, largely a formality? They have all the details already.

SkilpTDI

https://www.boards.ie/discussion/comment/122414335#Comment_122414335

Unfortunately we had a lot of heartache in the process with the nature of my partner’s work with differing hours and overtime every week with income as far back as 2021 scrutinised, to think about going through that again is just mental torture, I think you’re right though and it’ll just have to run it’s course, we’ll just have to hope for the best. Thanks for the replies!

JVince

The approval can be extended very easily unless your circumstances have changed dramatically

No new application. Simply ask for extension of current approval. Happens very regularly as house completions are always facing delays

Marcusm

https://www.boards.ie/discussion/comment/122414315#Comment_122414315

whoever you are speaking with at the bank is being stupid. If the land was unencumbered (ie no existing mortgage) and your relative had formally begun the process of transfer, ie executing a transfer instrument then I could see that the solicitor might be in a position to give the undertaking to the bank to register its mortgage for the new money. At this stage, you have no ability whatsoever to get the other bank to release the existing mortgage nor to facilitate the transfer.

Your solicitor should make this clear to you; especially if the bank is limiting the drawdown period.

Jim2007

https://www.boards.ie/discussion/2058360972/mortgage-drawdown-on-site-used-as-security

Your solicitor is correct, it would be illegal for them to request funds using an asset that is already pledged and not even in your name! It is technically fraud and could result in a criminal complaint, so no solicitor is going to go down that road.

It doesn't matter who you spoke to in the bank, all this stuff has to go through legal and risk management before the funds would be released and nobody is going to sign off on it. On top of this you are relying on the good will of the bank to grant you the loan, if you present yourself a sketchy person who would try something like this, then they may just decide not to do business with you, it is not as if they are stuck finding customers wanting to get a mortgage.

Your solicitor has done this stuff a few times now and is the only one who has a legal obligation to act in your best interests, even if you don't agree with them. So follow their advice.