Mortgage Offer - Long Gap between Exchange and Completion

Kingb4

Hello,

Was hoping to pick the brains of some of the mortgage experts. (I have searched the forums and not found this question before – apologies if I have missed it).

My wife and I have made an offer on a house. We have instructed our solicitors (as has the vendor).
We have identified the mortgage we want (Co-op).

The vendors are not able to complete till start of March (they have been up-front about this from the first viewing). This suits us as we have signed our rental agreement till mid March.

My question is: If we exchange early October (current estimated timeline), which requires a mortgage offer in place, could the mortgage product be revoked (by the bank) before we get to completion?

The Co-op advisor said an offer was only valid for 90 days. (I will phone tomorrow to check whether she meant an ‘offer in principle’, or whether she meant an actual loan agreement (which we would sign at exchange).

Any advice appreciated.

Thanks
Ben

luckyfool

Yes. You need to ensure that the lender you choose has a long enough offer and product validity period for you.

Kingb4

Thanks Luckyfool - Quick follow-up question. Is a long gap between exchange and completion likely to cause a problem? Are we better waiting to exchange until nearer the completion date?

Ben

luckyfool

errm, it will if your mortgage offer expires between exchange and completion and for some reason you cannot get it extended by that lender or a new one. Hence people who exchanged on new build properties a year or more before completion with offers that were only valid for 6 months have found themselves in deep deep trouble when trying to get a mortgage on a property valued at maybe £50k or £100k less than they committed to buy it for.

For you, if you can ensure your offer is valid until a couple of weeks beyond the completion date you should be ok. I would try to delay exchange by a month or two though if you can.

Kingb4

Right, I think I will talk to the Co-Op and see if I can get an agreement that is valid for 5 months. Will also look at delaying the exchange slightly.

Cheers

PsiDOC

We had 5 month wait from offer to completion last year with no problems from the lender. Just keep the mortgage company informe. They're usually very good with things like this.

Psi

Kingb4

Thanks for help.
Went with HSBC as they offer mortgages with 6 mth window to complete sale, once offer is given......

Cheers
Ben