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  • FIRST POST
    • MiseryChastain
    • By MiseryChastain 16th Oct 16, 6:35 PM
    • 7Posts
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    MiseryChastain
    First time buyer - paranoid about job loss
    • #1
    • 16th Oct 16, 6:35 PM
    First time buyer - paranoid about job loss 16th Oct 16 at 6:35 PM
    I am new to the forum so hello.

    I am a first time buyer and have been employed by my employer for three years. I am using the help to buy scheme to purchase a new build which will complete in summer of next year. Exchange is like to be in January. Based on my current salary, the help to buy application was accepted and the bank has made a mortgage in principle for me and this together will finance the acquisition.

    However, things have been quiet at work for the last few months (and getting worse) however there have been no discussions about redundancies, the 'feel' of the place just seems odd lately and I am not sure how sustainable it is to have a declining work stream and workers not really doing much. What I am saying is that whilst there haven't been confirmations of redundancies, I wouldn't be surprised if in the near future they either manage people out or into different roles or make cuts, but I could just be being paranoid.

    I have to pay the 5 per cent deposit to the sellers within the next month and have already instructed lawyers to take on my case.

    I would be grateful if someone could explain the situation for me in the following scenarios:

    1. I am made redundant prior to legal exchange;
    2. I am made redundant after legal exchange but prior to completion;
    3. I am made redundant after completion.

    Also, aside from the job loss issue, when will the formal mortgage offer be made to me? Is that going to be shortly before exchange or at exchange as I understand this can't be more than 6 months before completion. There is going to be a 6 month gap between exchange and completion.

    I am also completely aware of my duty to inform a lender of a change in circumstances, although through savings and family help would be able to keep up with mortgage payments at least for a year. Would it be better to simply to take out mortgage protection when the mortgage offer is made (if by then there are still no confirmations of redundancies)?

    Would it be best to just find another job now and have something more secure?

    Sorry panicking as the ball is roiling now and exchange is in the next 2 months.

    Thanks
Page 1
    • G_M
    • By G_M 16th Oct 16, 7:22 PM
    • 37,089 Posts
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    G_M
    • #2
    • 16th Oct 16, 7:22 PM
    • #2
    • 16th Oct 16, 7:22 PM

    1. I am made redundant prior to legal exchange; The lender will not offer you a mortgage
    2. I am made redundant after legal exchange but prior to completion; The lender may offer you a mortgage. However
    a) it is likely to only be valid for x weeks/months after which it will expire and you'll have to re-apply
    b) it is likley to be withdrawn due to redundancy, leaving you contractually obligated to buy, but without the funds to do so. There will be penalties.
    3. I am made redundant after completion.
    You may struggle to meet the monthly motgage payments on your new home.

    Also, aside from the job loss issue, when will the formal mortgage offer be made to me? Is that going to be shortly before exchange or at exchange as I understand this can't be more than 6 months before completion. There is going to be a 6 month gap between exchange and completion.
    1) you'd be mad to Exchange without a firm mortgage offer
    20 you'd be mad to agree a Completion date later than the expiry date of your mortage offer

    ..... Would it be better to simply to take out mortgage protection when the mortgage offer is made (if by then there are still no confirmations of redundancies)?
    This may or may notprotect you. Read the terms very carefully.

    Would it be best to just find another job now and have something more secure?
    A secure job is always better than an insecure job!
    Originally posted by MiseryChastain
    I'd be very worried about that long timescale.
    • MiseryChastain
    • By MiseryChastain 16th Oct 16, 7:25 PM
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    MiseryChastain
    • #3
    • 16th Oct 16, 7:25 PM
    • #3
    • 16th Oct 16, 7:25 PM
    Thanks for the reply - why would you be worried by the time scale? A lot of new builds have a gap of six months between exchange and completion. I can't really do anything about it.

    Is the safest bet here to find alternative employment or negotiate an internal transfer before making the formal mortgage application?
    • MiseryChastain
    • By MiseryChastain 16th Oct 16, 7:39 PM
    • 7 Posts
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    MiseryChastain
    • #4
    • 16th Oct 16, 7:39 PM
    • #4
    • 16th Oct 16, 7:39 PM
    I'd be very worried about that long timescale.
    Originally posted by G_M
    See above I omitted to quote you
    • G_M
    • By G_M 16th Oct 16, 8:20 PM
    • 37,089 Posts
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    G_M
    • #5
    • 16th Oct 16, 8:20 PM
    • #5
    • 16th Oct 16, 8:20 PM
    Thanks for the reply - why would you be worried by the time scale?
    Originally posted by MiseryChastain
    Because your mortgage offer is likely to expire and may not be renewed when you re-apply.

    As explained.
    • MiseryChastain
    • By MiseryChastain 16th Oct 16, 9:09 PM
    • 7 Posts
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    MiseryChastain
    • #6
    • 16th Oct 16, 9:09 PM
    • #6
    • 16th Oct 16, 9:09 PM
    Because your mortgage offer is likely to expire and may not be renewed when you re-apply.

    As explained.
    Originally posted by G_M
    If I get the formal mortgage offer for exchange (January) and it's for six months and they complete in June seems fine? Alternatively, the broker has strongly suggested we look at other providers as there may be a provider that can offer a mortgage over six months prior to completion. Not sure if he's just motivated by commission though
    • davidmcn
    • By davidmcn 16th Oct 16, 9:15 PM
    • 3,882 Posts
    • 3,451 Thanks
    davidmcn
    • #7
    • 16th Oct 16, 9:15 PM
    • #7
    • 16th Oct 16, 9:15 PM
    If I get the formal mortgage offer for exchange (January) and it's for six months and they complete in June seems fine?
    Originally posted by MiseryChastain
    It is if the building is actually complete in June (and you still have a job by then!), but nobody can guarantee that. And you'll want to make sure you're not tied into the contract beyond the expiry of your mortgage offer - which the builder may or may not accept.
    • G_M
    • By G_M 16th Oct 16, 9:25 PM
    • 37,089 Posts
    • 41,048 Thanks
    G_M
    • #8
    • 16th Oct 16, 9:25 PM
    • #8
    • 16th Oct 16, 9:25 PM
    If I get the formal mortgage offer for exchange (January) and it's for six months and they complete in June seems fine?
    Originally posted by MiseryChastain
    What if bad weather, an electricians strike, a problem with the council Planners or one of 327 other possibilities, means they complete in July instead?
    • MiseryChastain
    • By MiseryChastain 16th Oct 16, 9:39 PM
    • 7 Posts
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    MiseryChastain
    • #9
    • 16th Oct 16, 9:39 PM
    • #9
    • 16th Oct 16, 9:39 PM
    What if bad weather, an electricians strike, a problem with the council Planners or one of 327 other possibilities, means they complete in July instead?
    Originally posted by G_M
    Well doesn't everybody who purchases a plot on a new build face these risks?

    I would clearly have found another job by then. What I am saying is should I look for another job BEFORE exchange and hence have that in place before making formal mortgage application (which I accept I will not be able to count the previous 3 years service in the application). If I change jobs AFTER exchange and find a new one, would I have to re-apply for a mortgage or tell the lender and they could withdraw?
    • Sleazy
    • By Sleazy 16th Oct 16, 9:45 PM
    • 2,689 Posts
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    Sleazy
    Well doesn't everybody who purchases a plot on a new build face these risks?

    I would clearly have found another job by then.
    Originally posted by MiseryChastain
    Yes they do and no, you cannot guarantee that you would have found another job by then.


    What if you complete and then lose your job? Everything in life is a risk - either take it or don't.
    *** IF IN DOUBT, BLAME BREXIT ***
    • Hoploz
    • By Hoploz 17th Oct 16, 9:38 AM
    • 3,061 Posts
    • 2,708 Thanks
    Hoploz
    If you're unsure about your job then either start looking for another or think about contingencies.

    The biggest worry is that you'll lose your job after exchange and before completion which could mean you're obliged contractually but your mortgage offer would be affected by your change in circumstances. You are taking a bigger risk than some other people with this because 1) you're choosing a new build where the gap between exchange and completion is unusually long, and could still easily get longer - you have no control over this. And 2) you are financing this alone - at least you haven't mentioned a partner. Therefore you haven't got a second salary to fall back on/cover basic costs if the other salary goes.
    You are confident you'll get another job. That's great. But bear in mind timescales. Your job might go a week before completion - before you've had a chance to get a new one - what then? You might get redundancy pay but will the lender still be prepared to proceed?

    If you lose your job after completion, perhaps there are ways you can tide yourself over eg rent a room to a lodger, or even rent the whole place and bunk in with someone else for 6 months. Therefore less risk.

    My advice would be either find another job ASAP or buy a property which isn't a new build with this 6 month (minimum) lag.
    • steampowered
    • By steampowered 17th Oct 16, 10:05 AM
    • 549 Posts
    • 477 Thanks
    steampowered
    If your mortgage offer expires before completion, and you are made redundant during that period, your bank might not be prepared to renew the mortgage offer.

    If you are unable to find a mortgage at completion, you will be in breach of contract because you will be unable to complete. This may mean that the house is sold to somebody else and you lose your deposit. This happened with a lot of the new builds in London during the 2008 financial crash.

    In the unlikely scenario of a property price crash you would also be liable for the difference between the price you agreed to pay and the price the house was actually sold for.

    Could you refresh your mortgage offer if you are still in your job in say 3 months time?

    If so that would be valid for 6 months from that date (effectively taking you to 9 months from today, which should cover you for completion). If you have lost your job by then, then hopefully the remaining 3 months to completion would be enough time to find another job.
    Last edited by steampowered; 17-10-2016 at 10:09 AM.
    • sheff6107
    • By sheff6107 18th Oct 16, 1:24 PM
    • 188 Posts
    • 134 Thanks
    sheff6107
    Long story short, you need to be in a position to hand over last month's wage slip to your mortgage company. They may even ask for this the day before completion.

    So theoretically you could be unemployed but still be in possession of your latest payslip for the mortgage company to release funds on the day of completion.

    But you're playing a dangerous game with legalities and timescales.

    For you own blood pressure you'd be best knowing you're in safe employment the day you apply for the mortgage.
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