Change in Circumstances Between Exchange and Completion

SmallTownGriff · 10 June 2017 at 3:35PM

Hi all,

My wife and I are in slightly unusual circumstances I would love some advice on. We are looking to buy our first home (using help to buy) and have found a property we like, it is a brand new build looking to be completed in November.

Currently we both have full time jobs, I work in quality and my wife is a teacher. We have done an affordability assessment for the property we are interested in and under our current circumstances everything looks to be well within our limits

This is where things get tricky, my wife is now looking at either moving schools or leaving teaching at the end of the school term (August) and currently doesn't have another position lined up. This unfortunately falls between the window between the exchange (which we ideally would have done in a few weeks) and the completion which would be November. In terms of the mortgage we would be easily able to make the monthly repayments even if she was out of work but I don't know legally what impact that would have on our affordability assessment. If we could delay it we would but the builds are moving quickly and it would be a real shame to miss the opportunity.

Can I ask if anyone would know what impact this would have on our potential to put an offer on this new property and what else we would need to consider? Happy to give other information if it makes things easier

Many thanks,

James

G_M · 10 June 2017 at 4:06PM

You need to declare any material changes in your circumstances.

This would be a material change.

But given thr financial consequences of having your mortgage withdraw after Exchange and before Completion I'd probably.......

How long is the time-gap?

nimbo · 10 June 2017 at 4:08PM

Well that depends on your wife's contract.... I thought a teacher In a permanent position had to give a terms notice. (My sister is a teacher - but I suppose this could vary from different local authorities etc but I don't imagine it would vary by much). Giving notice just before summer doesn't give the school time to get a replacement.

I'm fairly certain giving too little notice would be bad for her reference.

What are the current options? Because if she is swapping one teaching job for another on a really similar pay scale then it's more of a moot point.

2357 · 10 June 2017 at 4:46PM

I'm fairly sure it's standard in teaching to have to give notice prior to May 31st if you want to leave at the end of Summer term. The next opportunity to end your contract is End of the Autumn term (Dec 31st) for which notice must be given by Oct 31st.

yoshiyella · 10 June 2017 at 6:49PM

As others have mentioned, if she is genuinely a teacher then she has to now wait until 31st October to give notice.

Obviously if she is leaving the profession for good then what will be will be but pretty poor form to leave a school in the lurch and at such short notice.

SmallTownGriff · 10 June 2017 at 9:56PM

Hi everyone,

Thanks for the replies so far, firstly let me apologise, reading it back 'looking at' is quite an ambiguous term, she IS leaving her school in August and is yet to secure another contract.

She is currently applying for other positions but I wanted to know if in worst case scenario (that being that she is unemployed come the end of August) what impact that would have.

In terms of financial consequences whilst it would be a loss the projected mortgage and utility costs for the new property would be less than we are currently paying in rent (it's a little silly I know) and we know from previous experience that we can still live comfortably within these limits with her out of work.

I have no intention of doing anything under the table I was just curious as to what stage the lenders would get involved and whether we should continue looking or hold off until she finds another position and lose this house.

I think I have my answer but any further clarity would be very welcome

James

cte1111 · 10 June 2017 at 10:13PM

I think you need to redo the affordability calculation with your wife's income at zero. Otherwise you face not being able to complete on the property. You will effectively be applying for a mortgage in October / November with only 1 income, unless your wife gets another job, and it seems quite possible that it might be turned down.

Have you exchanged on the property, if not when is the exchange scheduled?

SmallTownGriff · 10 June 2017 at 10:22PM

Currently we have not made any moves on the house, we came very close today but held off until we had a better understanding of how the system worked. If the house was available to move into in August I don't feel we would have an issue but as the property we were interested in cannot be completed until November when the house is built we have the period between when we would have exchanged (likely in a few weeks) and the completion date in November which falls after when we could only be on one income. I will schedule another meeting with our financial advisor and get a mortgage calculation from my income alone.

Thank you again

James

mouthscradle · 10 June 2017 at 11:35PM

As part of the mortgage application you'll be asked whether you're aware of any expected changes in income. So you would have to declare it and I imagine lenders would assess affordability on your income alone.

Cakeguts · 10 June 2017 at 11:53PM

Owning a house is often a lot more expensive than renting. It isn't the mortgage repayments. They may be cheaper than your current rent but when you own a house you have to pay for everything else. Plus there are no benefits that will pay a mortgage. You might get the interest paid for a short time. It is a good idea to have enough money saved to pay the mortgage for several months if neither of you are working. It sounds as if you would be able to pay the mortgage on your own but not save enough to cover the mortgage if neither of you are working.

martindow · 11 June 2017 at 11:24AM

Unless you are earning heaps of money and would be able to to satisfy the mortgage company you are not in a position to buy until your wife gets a new job. Realistically you will now the situation in the next few weeks before schools break up in mid-July.

Another issue could be the contract your wife gets - fixed term or open ended - and how the mortgage company would view this. Did you get your mortgage via a broker? If so I would talk to them.

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Change in Circumstances Between Exchange and Completion

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