When buying a house (first time) what happens if you are made redundant?

Ryco

Hi,

My wife and I are looking to buy are first property. We have a 25% deposit for up to a max value on a house of £175,000.00

My work is looking to make people redundant. I will find out in the next few weeks if I am on the at risk list.

My question is this. What happens if I am made redundant before the mortage draw down?

If I tell the mortage provider I was made redundant I think they would stop the draw down which would make me losse the house I am trying to buy and all fees paid to date.

The other option is I could not tell them but I think that is against the contract.

Being able to pay it back would not be a problem as we could live and pay off the mortage on my wifes salary alone. We just can't get borrow enough on my wifes salary. The bank would never belive we could afford it but wew are both avid money savers and know what we can afford (Spreadhseets are us!)

So should I go for it and buy anyway and not tell the bank if made redundant?
Should I wait until I see if I am on the risk list?
Should I go for the hosue even if put on the risk list?
Should I wait until I have a new job if made redundant (risk of eating into savings or not getting a new job)?

anselld

Does it say anywhere in the docs you need to inform them if you personal circumstances change?
Even if it does you would nt need to do so until you personally are formally notified of redundancy as it is all hypothetical speculation up to that point.
Once the mortgage is drawn down your only obligation is to keep paying.
Having said that you need to be sure you want to take this on (sounds like you are).

Ryco

Thanks for the reply.

Yes my wife and I have been saving for 7 years and can't wait to buy a property. We currently pay £650.00 pcm in rent and a mortage would be a lot less per month (even with the extra bills, house insurance etc) about £200.00.

I have worked out the non refundable fees would come to £1268.00.

Thats the size of the risk.

poppysarah

Are you covered if interest rates went up?

Ryco

Yes I would be covered at I am looking to do a 2 year fixed. I have a pending large amount of inhertiance coming which could be used to reduce the mortage substantially after the 2 years are up.

barnaby-bear

Ryco wrote: »

Thanks for the reply.

Yes my wife and I have been saving for 7 years and can't wait to buy a property. We currently pay £650.00 pcm in rent and a mortage would be a lot less per month (even with the extra bills, house insurance etc) about £200.00.

I have worked out the non refundable fees would come to £1268.00.

Thats the size of the risk.

If the mortgage company found out between exchange (comitting to pay 10% deposit and value of the house) and completion can you afford to lose the deposit and do you have the funds to pay the 10% to the vendor.

Mini_Bear

Sounds like your are in a tricky situation OP. It also depends how quickly the redundancies are made, some firms give people 3 months, others the stautory 1 month, so its up to you when or if you tell the mortgage company.
Also, how likely is it that you will be able to pick up another job? If you are confident that there are jobs for you out there then i wouldnt worry too much. But if your industry is contracting in this economic slowdown - as many are i would question whether its worth the risk. You seem to be in a good financial position with a decent deposit and a potential inheritance windfall. Good luck.

anselld

barnaby-bear wrote: »

If the mortgage company found out between exchange (comitting to pay 10% deposit and value of the house) and completion can you afford to lose the deposit and do you have the funds to pay the 10% to the vendor.

Could they really do that? Surely there would be more horror stories of people out there losing deposits if that was a possibility.

thepeachyone

Under what circumstances do you lose your deposit?

mlz1413

have you taken out insurance for redunancy?

Many of these policies have to be inforce to be vaild and you may well have clauses about notification of being under threat of redunancy - if you don't have insurance IMO you need it and if you do have it read the policy.

I gather you want to continue the purchase because this is the perfect house, but would waiting 6 months to ensure your job is safe be time well spent?

Remember in rented all the problems are fixed and paid for by the LL, when you own a house all these problems are yours, so you may be able to save with a fixed sum for outgoings but are you sure you can cope on one wage if repairs need doing?

silvercar

anselld wrote: »

Could they really do that? Surely there would be more horror stories of people out there losing deposits if that was a possibility.

Once contracts are exchanged, the buyer will lose the 10% deposit if they fail to complete.

They aren't that many "horror stories out there" because the time between exchange and completion is short ( from hours to a month). There are horror stories of people exchanging on new builds months ahead of completion and then not being able to secure a mortgage because the property has dropped in value.