We may need to get an extension on our mortgage offer, but not our fault

beckstrous

Hello,

My boyfriend and I are buying a house and the mortgage offer expires on May 11th. We applied for our mortgage very quickly because the seller initially pressured us to complete within a 6-8 week timescale.

However, there have since been delays at their end - there is something wrong with the rights of way to/over the property. It is quite complicated, but our solicitor says that the vendor was aware of this when she bought the property and it could take 3 weeks to sort out if it is done properly. Alternatively the vendor can pay for some sort of indemnity policy, which our solicitor says is not ideal, but will save a lot of time.

We are going on holiday from May 9th-16th and had expected, from what the vendor initially said that we would have completed way before then (our offer was accepted in early February).

From doing a search on here, I am not 100% sure we can get an extension - the product no longer exists and it ceased to exist the day after we applied for it.

We have an 8-week notice period and cannot afford to pay rent and mortgage for the same month. We made the EA aware of this from the start. The solicitor thinks we *may* exchange at the end of this month, but has told us not to give our notice in yet because she does not think that the other end is advanced enough, and there is uncertainty over the rights of way.

Therefore, we could end up either having to pay rent and mortgage in the same month if we cannot extend the mortgage. The solicitor has suggested we ring the EA and say that if this happens, we should ask the vendor to contribute to the rent. I have an OK relationship with the EA and he said he understood our position but I am a bit worried abou the whole thing and not sure I explained everything properly. So I wondered whether or not I should follow up the phonecall with a letter, which I can copy to our solicitor also.

Has anyone else been in a situation like this?

Sorry this is such a long post!

Beck

Edit - I should also add that we have phoned the lender to make them aware, but they have not said either way whether or not they can extend.

silvercar

You have to complete by the time the mortgage offer expires. Its not just a question of having to pay rent and mortgage at the same time. If your completion date is after 11th May you will not be able to take that mortgage (unless the provider agrees to extend the offer). Your solicitor will not want you to exchange contracts without a valid mortgage offer for the date you will complete.

beckstrous

silvercar wrote:

You have to complete by the time the mortgage offer expires. Its not just a question of having to pay rent and mortgage at the same time. If your completion date is after 11th May you will not be able to take that mortgage (unless the provider agrees to extend the offer). Your solicitor will not want you to exchange contracts without a valid mortgage offer for the date you will complete.

Thanks, but yes, I know that. The thing is, all these delays have not been our fault, and I am a bit annoyed that the vendor knew about the right of way problem and did not mention it. Had we known about the delay we would not have applied for our mortgage so quickly. We firmed it all up as soon as the offer was accepted because they were pressuring for this quick timescale - which, in reality, they were not able to stick to themselves.

So it seems as if we may be forced to pay rent and mortgage, but I really feel the vendor ought to contribute to these costs, as the solicitor has suggested. Should we therefore put something in writing? I did phone the EA and he was OK about it but I feel I should have it all down in a letter too, and copy that to our solicitor.

LeanneF

I was in a similar situation in terms of a mortgage offer running out.

We got a Nationwide mortgage offer on 3rd August 2006 for a property which we subsequently pulled out of on solicitor's advice. I was very pleased to find out we were able to use the same offer for a 2nd property without having to pay a 2nd arrangement fee (new valuation, of course). Thus we also kept the original interest rate which was lower than the one we would have been offered if we'd started again. In terms of time, the offer was valid for 6 months, however we exchanged & completed in the 7 month. Our mortgage advisor told us that the offer time period was somewhat flexible & could be extended if necessary.
The only way to know for sure is to call whoever arranged your mortgage. Whilst you're on the phone if you're worried about costs in the 1st month, ask for an estimate of when you might be expected to make mortgage payments. We got stung with 2 in the first month.
Good luck with the rent/mortgage problem. We had a letting agency who wouldn't let us give notice between November & April so we had to move in my mother-in-law-to-be for a few weeks!

Just rereading your post...we pulled out of the first flat due to right-of-way problems. The vendor did not want to sort the paperwork out & would only sell 'as is'. Our solicitor told us to walk away because it would be very difficult to sell.

beckstrous

Crikey, Leanne. I hope our vendor does want to sort the paperwork out! I don't really know the difference between the indemnity policy and sorting it out properly, but our solicitor did not advise against allowing them to take out the indemnity policy (at their own cost) so I presume it would be OK. However, the vendor apparently made some steps to fix the paperwork 7 years ago but never actually finished it. And this could mean we now have to wait for that to be finished, which is what threatens our deadline.

Anyway, the good news is that the lender said they would be prepared to extend it. They have put a note on our file but I forgot to ask whether or not that would be extended exactly as is (i.e. with the better interest rate). When I know more about the situation (should find out at the end of the week) I will ring them and ask again.

silvercar

An indemnity policy covers you for loss of value due to the paperwork not being in place. The vendor's would be covering you from losing out by the paperwork not being there.

They are very common, my chain involves 4 properties, 3 of which solicitors have advised that indemnity policies be taken out. (Actually in one case they advised walking away but the buyer decided to get an indemnity policy instead).

beckstrous

Thanks. I did not really understand what it meant, even though the solicitor did explain it. My head is getting a bit full and I think it went in one ear, and out the other.

I presume it's not something that is inadvisable seeing as the solicitor seems to think it's OK? She said when we sell the house it may mean us having to update it and that this could cost a hundred pounds or so.

silvercar

I presume it's not something that is inadvisable seeing as the solicitor seems to think it's OK?

Exactly, your solicitor wouldn't suggest going ahead if it wasn't sensible. The indemnity just covers you in case a theoretical possiblity occurs. In practice you expect to live in the house with the same freedoms etc as the current owners.