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This was not my smartest move ever


3 December 2017

Here’s something which happened recently. It’s been one of the most stressful things that I can remember, and I’m lucky my wife hasn’t divorced me for putting us in such a precarious situation.

It started around two years ago. March 2015, to be precise. I thought it would be a good idea to build up our property portfolio, and we signed up to buy an off-plan apartment in North West London. The property was to be built by one of the larger UK developers. We were working with a firm which had ‘helped’ us by – so they said – negotiating a better discount on the purchase, and preparing an appraisal as to financing and rental yield etc. We were all set. We paid the 20% deposit.

In early 2017, a bit more than 6 months before the expected completion date for the block, we started the process of applying for a ‘buy to let’ mortgage to fund the balance of the purchase price. Unfortunately, a number of things had happened between signing up for the property: (1) the Brexit vote, (2) significant tightening up of lending policies of lenders, (3) changes to UK tax laws which restrict the deductibility of interest against rental income. All these factors combined to mean that there was a shortfall in the amount of the mortgage loan that we would need to be able to buy the property. So we thought OK – not a disaster – we can sort that out.

The real cause of stress was the mortgage application process. We had already been notified back in May that our application had been approved in principal, and the lender debited our credit card to cover the cost of their surveyor’s valuation report. Then what happened felt like death by a thousand cuts – one request for information after the other. Extra forms to be signed, which said exactly the same thing as the previous forms. A request for a new fire safety report, with a confirmation that once that report had been provided, everything was in place. After the fire safety support had been provided, a whole load of new requests for information, and an accountant’s certificate etc etc … it seemed never ending.

The result was that the developer’s deadline for us to complete came and went. Thankfully, the developer took a tolerant view and gave us multiple extensions, even though they could have forfeited our deposit. And thankfully, we’ve now managed to complete. But the whole process was incredibly stressful.

Now, I’m not expecting anyone’s sympathy here. We’re grown ups, and we can look after ourselves. And nobody has died or been injured in this story (although at times it felt like I was going to have a heart attack). The point of sharing this is to help other people avoid being in a similar situation.

It would be easy to say “don’t do things you don’t fully understand”, or “make sure you think through every eventuality”. But life’s not like that, and that prescription would lead to paralysis.

It would be even easier to blame the mortgage lender for being truly crap. Which would be hard for them to dispute … but blaming other people doesn’t get you or me anywhere.

For me, there are two main lessons here. The first is the Jim Rohn quote: “casual leads to casualties”. Yes, you can never cover absolutely all the angles – but don’t be casual about things that matter. The second is that it was a great lesson in mastery of the mind: in that situation, you should take action on the things you can do, and let go of the outcome. Yes, it would have been upsetting to lose the deposit, but it would not have affected any of the things I really care about: family, friends, colleagues.

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Article by
Paul Sutton
LCN Legal Co-Founder

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