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

barnaby-bear

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.

Go to the mortgage board and read them - the mortgage company can pull out between exchange and completion especially if new information comes to light... exchange is the buyer personally commiting to complete - the mortgage company only commits when release the funds.

barnaby-bear

thepeachyone wrote: »

Under what circumstances do you lose your deposit?

Errr if you commit to buy i.e. EXCHANGE of contracts and then fail to complete... e.g. because your mortgage company finds out you don't have the job they agreed to lend on and you can't find another mortgage compnay to supply the cost of the house..... at COMPLETION.... EXCHANGE is COMMITING to buy, how to get the money to do so is your problem....

barnaby-bear

silvercar wrote: »

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.

Yes there aren't many because of the timescales there's one who had the mortgage company pull out 2 days before completion when they did some final checks and revealed new info....

anselld

barnaby-bear wrote: »

Go to the mortgage board and read them - the mortgage company can pull out between exchange and completion especially if new information comes to light... exchange is the buyer personally commiting to complete - the mortgage company only commits when release the funds.

Fair enough. I have been through 4 house purchases and I never new I was taking on that potential risk.

ginvzt

Ryco wrote: »

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

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.

Sorry, if you have 25% deposit of £175k, that means you would still need to borrow £130k. How do you work out that mortgage would be much less than £650? Are you sure you checked your numbers? How long mortgage are you taking out? If it is 25 years, at 3.5%, your repayment would be ~£657.

Richard_Webster

Remember if your solicitor finds out that you have been made redundant he effectively has a duty to tell the lender.

Ryco

Just want to say thank you for all the replies, some good info here.

I did not know about the legal responsiblity of the soliciter to inform the mortgae company nor the risk of loss of deposit.

I have just found out those at risk will be notified next Monday or Tuesday by letter. A two week indivdiual consulation would then start with a notice of redundacy for those selected being given on the 12th March. I would then have a 4 week ntoice period to work if it's me.

I do have income protection insurance but it has a 120 day cool off period where you cant claim. I can cliam after the 14th June.

I was looking at a mortage of £131,250 at 3.44 over 35 years (before retirement age).

Work might be willing to look at work share/part time/ reduced hours or even a sabatical.

If selected it might work in my favour to take a 3 & 1/2 sabatical and during that time buy. When I come back if I was made redndant my insurance would be valid and then pay out.

I am going to wait until next week to see what happens and what my options are then.

ginvzt

Ryco wrote: »

I was looking at a mortage of £131,250 at 3.44 over 35 years (before retirement age).

So that would be ~£537 for mortgage, plus you have to get the insurances and bills on top. It wouldn't be that much cheaper than £650 if at all! 35 years is very long term and only 2 year fix is worrying to me - will you be able to afford the mortgage in 2 years when the higher interest rates? You would have only repaid £4000 in 2 years, so if the house prices dip much further, you might be in a difficult situation, once your LTV goes up from 75%. I would always suggest to see if you can afford the mortgage when interest rates are 10% (it is not ridiculous, it can easily happen). Think seriously if you want to risk.

Don't get me wrong - I understand the wish to have your own house. I am desperate for it, but trying hard to sit out and keep money safe.

jay3_2

Hi all. My advice is: you must inform them. Forget legalities, whether you can afford it or not, it is surely the right thing to do! Imagine if you were lending the money to another person (yes I know, chance would be a fine thing!) - but wouldn't you expect them to tell you?

(Steps off moral highground...!)

anotherpaul_2

The OP did say "I have a pending large amount of inhertiance coming which could be used to reduce the mortage substantially after the 2 years are up.", so I think they consider that it is covered, yes.