Employer in Administration - due to be buying house in 2 wks
Discussion
Hi all
Quick question, if a person had a mortgage offer and was in the process of buying a new house that was due to complete in 2 weeks, but their employed entered administration, what would happen? The mortgage offer would be based on the salary stated, but this wouldn't be revived any more until a new job were found. Would the mortgage likely be withdrawn?
The loan to value ratio is pretty low (about 45%), so there is plenty of equity in the property, and there are savings that can cover repayments for a minimum of 6 months. Should the mortgage company be informed, or keep quiet as there is not an issue with payments being made?
All hypothetical questions of course ;-)
Quick question, if a person had a mortgage offer and was in the process of buying a new house that was due to complete in 2 weeks, but their employed entered administration, what would happen? The mortgage offer would be based on the salary stated, but this wouldn't be revived any more until a new job were found. Would the mortgage likely be withdrawn?
The loan to value ratio is pretty low (about 45%), so there is plenty of equity in the property, and there are savings that can cover repayments for a minimum of 6 months. Should the mortgage company be informed, or keep quiet as there is not an issue with payments being made?
All hypothetical questions of course ;-)
You are obligated to tell them, the mortgage offer was issued on the basis of the employment details you gave them.
Telling them will almost certainly result in them withdrawing the mortgage offer. If you don't tell them and complete on the mortgage your completing mortgage fraud.
You could complete, find a new job and no one would be none the wiser, which is what 99% of people would do I'd guess.
But if you complete, struggle to get a job and your savings run out, once you start to default on the mortgage they will investigate the reason, find out what you did and throw the book at you.
Telling them will almost certainly result in them withdrawing the mortgage offer. If you don't tell them and complete on the mortgage your completing mortgage fraud.
You could complete, find a new job and no one would be none the wiser, which is what 99% of people would do I'd guess.
But if you complete, struggle to get a job and your savings run out, once you start to default on the mortgage they will investigate the reason, find out what you did and throw the book at you.
mickymellon1 said:
Wouldn't tell them and wouldn't worry about it, you've got 6 months 
best of luck
When we bought a much longed for house a while back, my wife was messaging me that the signatures had all been completed, mortgage all sorted, and the solicitor was just about to exchange. The CEO of the company then appeared (which was unusual in itself) to tell us that they were going to close the company down. I pinged my wife back with this news and said "get it all signed and exchanged ASAP"!!! best of luckI had 1 month's notice, then spent a month looking and luckily found a new job. I did a lot of DIY and decorating in this time!
No way was I going to tell the mortgage company I was losing my job. Had I not found a suitable job in 3-4 months my plan was to do anything to just keep money coming in. Luckily Mrs P was also earning so we could at least cover the mortgage if we completely cut back. It was a calculated risk that paid off, if it happene again I woudl do the same.
MHB said:
Hi all
Quick question, if a person had a mortgage offer and was in the process of buying a new house that was due to complete in 2 weeks, but their employed entered administration, what would happen? The mortgage offer would be based on the salary stated, but this wouldn't be revived any more until a new job were found. Would the mortgage likely be withdrawn?
The loan to value ratio is pretty low (about 45%), so there is plenty of equity in the property, and there are savings that can cover repayments for a minimum of 6 months. Should the mortgage company be informed, or keep quiet as there is not an issue with payments being made?
All hypothetical questions of course ;-)
On that low LTV, could you rent it out and cover the mortgage payments?Quick question, if a person had a mortgage offer and was in the process of buying a new house that was due to complete in 2 weeks, but their employed entered administration, what would happen? The mortgage offer would be based on the salary stated, but this wouldn't be revived any more until a new job were found. Would the mortgage likely be withdrawn?
The loan to value ratio is pretty low (about 45%), so there is plenty of equity in the property, and there are savings that can cover repayments for a minimum of 6 months. Should the mortgage company be informed, or keep quiet as there is not an issue with payments being made?
All hypothetical questions of course ;-)
If so, that is the worst case scenario really.
Sarnie said:
You are obligated to tell them, the mortgage offer was issued on the basis of the employment details you gave them.
Telling them will almost certainly result in them withdrawing the mortgage offer. If you don't tell them and complete on the mortgage your completing mortgage fraud.
You could complete, find a new job and no one would be none the wiser, which is what 99% of people would do I'd guess.
But if you complete, struggle to get a job and your savings run out, once you start to default on the mortgage they will investigate the reason, find out what you did and throw the book at you.
What crime has been committed then in your opinion?Telling them will almost certainly result in them withdrawing the mortgage offer. If you don't tell them and complete on the mortgage your completing mortgage fraud.
You could complete, find a new job and no one would be none the wiser, which is what 99% of people would do I'd guess.
But if you complete, struggle to get a job and your savings run out, once you start to default on the mortgage they will investigate the reason, find out what you did and throw the book at you.
If the applicant has answered all the banks questions truthfully and to the best of his ability then what's the problem?
There would have to be a clause compelling him to inform them of a change in employment circumstances. (Similar to the one which might compel you to inform your insurer of convictions.) I wasn't aware that a mortgage contract would have such a clause.
I suggest the OP have a look at the contract, because that will give him the answer he needs.
mrmr96 said:
If the applicant has answered all the banks questions truthfully and to the best of his ability then what's the problem?
There would have to be a clause compelling him to inform them of a change in employment circumstances.
I suggest the OP have a look at the contract, because that will give him the answer he needs.
^^This^^There would have to be a clause compelling him to inform them of a change in employment circumstances.
I suggest the OP have a look at the contract, because that will give him the answer he needs.
mrmr96 said:
What crime has been committed then in your opinion?
If the applicant has answered all the banks questions truthfully and to the best of his ability then what's the problem?
There would have to be a clause compelling him to inform them of a change in employment circumstances. (Similar to the one which might compel you to inform your insurer of convictions.) I wasn't aware that a mortgage contract would have such a clause.
I suggest the OP have a look at the contract, because that will give him the answer he needs.
The clause will be in the Offer document and will say something along the lines of:If the applicant has answered all the banks questions truthfully and to the best of his ability then what's the problem?
There would have to be a clause compelling him to inform them of a change in employment circumstances. (Similar to the one which might compel you to inform your insurer of convictions.) I wasn't aware that a mortgage contract would have such a clause.
I suggest the OP have a look at the contract, because that will give him the answer he needs.
'This offer is issued on the basis of the details submitted in your application. If there are any material changes to these details before completion, you are required to inform us immediately.'
Kudos said:
What will they do? Tell you to pay the mortgage back?
There are procedures for dealing with evicting clients when they are in default.Lenders will actually do everything they can to help you stay in the property (it's in their interests to do so) such as extend the term, capitalise your arrears, revert your mortgage to Interest only or even give you a mortgage holiday.
However, if they find out that you can't pay your mortgage because you lost your job BEFORE completion and didn't inform them, they will have no sympathy and demand the payments that you agreed to pay. If you don't pay they will quickly move through the motions of reposseion proceedings, evidencing to the courts that you obtained the mortgage in contradiction to their terms and conditions.
I had a Client who told me something very similar to this once. They then added "But don't tell my lender." Forgetting that the Solicitor acts for both, so long as there is no conflict.
Sadly I had to reply "You just did."
Read your offer letter cover to cover and it will answer your question.
Sadly I had to reply "You just did."
Read your offer letter cover to cover and it will answer your question.
Edited by Rude-boy on Tuesday 6th March 15:48
Rude-boy said:
I had a Client who told me something very similar to this once. They then added "But don't tell mt lender." Forgetting that the Solicitor acts so both, so long as there is no conflict.
Sadly i had to reply "You just did."
Read your offer letter cover to cover and it will answer your question.
Exactly my point.Sadly i had to reply "You just did."
Read your offer letter cover to cover and it will answer your question.
I've uploaded a couple of pages from a recent clients Santander Offer:
The first one the very first page of the Offer. It clearly states that any changes to circumstances need to be reported to Santander. I'd be very very suprised if every lender didn't have something to this effect also.
One question I haven't seen the answer to glancing at this is if the OP has exchanged.
If they have not they would be advised to not do so and chalk it down to experience.
I know someone who has been trying to sort their personal affairs out for a couple of years now but has had to call a halt each time due to changes in the couples circumstances. Pisses them right off and has cost them a good few £k but there is nothing that they can do about it unless they wish to break the law and run the risk of a dishonesty offence against their record, which we all know employers love...
As posted by another if the worst were to happen how many of the people who have said do it on here would be there to help you dig yourself back out other than by providing useful advice on an internet forum?
There are people on here who have risked it all and have come up with roses. There are other that are not posting on this thread who gambled and lost.
Bottom Line – I am a Property Solicitor and there is NFW I would even think of proceeding with the deal if I were not exchanged. If you have exchanged you are up the creek a bit I’m sorry to say and you will need specific advice.
If they have not they would be advised to not do so and chalk it down to experience.
I know someone who has been trying to sort their personal affairs out for a couple of years now but has had to call a halt each time due to changes in the couples circumstances. Pisses them right off and has cost them a good few £k but there is nothing that they can do about it unless they wish to break the law and run the risk of a dishonesty offence against their record, which we all know employers love...
As posted by another if the worst were to happen how many of the people who have said do it on here would be there to help you dig yourself back out other than by providing useful advice on an internet forum?
There are people on here who have risked it all and have come up with roses. There are other that are not posting on this thread who gambled and lost.
Bottom Line – I am a Property Solicitor and there is NFW I would even think of proceeding with the deal if I were not exchanged. If you have exchanged you are up the creek a bit I’m sorry to say and you will need specific advice.
Sarnie said:
Exactly my point.
I've uploaded a couple of pages from a recent clients Santander Offer:
You could have sorted out my typos for me I've uploaded a couple of pages from a recent clients Santander Offer:
Yep, just been looking at Nationwide - it's on page one, usual we may pull this offer if "...there is a material change in your financial or personal circumstances...."
It's all over the place and TBH not that hard to miss if you read your offer when you got it...
[quote=prand]
I can understand your stance, you must see this happen, badly, a lot more times than just for someone like me who this happened to once, but turned out fine in the end.
The way I saw it at the time was that managing a mortgage is a risky business for both lender and lendee at any time, whether in the process of exchanging or having had the mortgage for 5 days or 5 years or more. In either situation we would still need a contingency plan and fund to cover one or both of us losing our jobs (which we do).
So my decision to continue to exchange was made while looking at the risks, and making several assumptions; our age and lack of dependents, the job market at the time adn my employability, level of savings, partner's employment status and income, and so on. If I had felt that the risks were too much, or the climate was different, then perhaps we woudl have pulled out. I would perhaps think harder nowadays, having a family and the economy not being so favourable.
To be honest, I also don't remember reading any "change in material circumstances" part in the mortgage documentation and thinking, "whoops, better not proceed". So perhaps after all I was very lucky that it did indeed turn out ok after what I think was a calculated, low risk gamble.
I can understand your stance, you must see this happen, badly, a lot more times than just for someone like me who this happened to once, but turned out fine in the end.
The way I saw it at the time was that managing a mortgage is a risky business for both lender and lendee at any time, whether in the process of exchanging or having had the mortgage for 5 days or 5 years or more. In either situation we would still need a contingency plan and fund to cover one or both of us losing our jobs (which we do).
So my decision to continue to exchange was made while looking at the risks, and making several assumptions; our age and lack of dependents, the job market at the time adn my employability, level of savings, partner's employment status and income, and so on. If I had felt that the risks were too much, or the climate was different, then perhaps we woudl have pulled out. I would perhaps think harder nowadays, having a family and the economy not being so favourable.
To be honest, I also don't remember reading any "change in material circumstances" part in the mortgage documentation and thinking, "whoops, better not proceed". So perhaps after all I was very lucky that it did indeed turn out ok after what I think was a calculated, low risk gamble.
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