Mortgage offer on new build

djdan00

Ive just bought a new build house but won't be built until the end of the year.
I need a mortgage in principle to complete within a month of the reservation. But do all lenders mortgage in principle last only a few months?? Do I have to re-apply nearer the time?? Confused because financial advisor said its not an issue and can extend the principle to last 7 months or so.
Thanks

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MrandMrsWoo

Sounds amazingly familiar to our own situation.

Our advisor has said that the initial mortgage approval lasts for 3 months however this can be extended providing no changes in circumstances between the 3 months.

Every situation is different but I am surprised the builders allowed you to reserve without a mortgage in principle.

There are some great points raised in my post which I hope you would consider, see my post

Trollfever

Caveat Emptor.

From The Times

March 6, 2010


New-build dreams turn sour

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article7051479.ece

Cannon_Fodder

The financial advisor was recommended by the developers, I'd bet...?!

They just want a sale. And are not protecting your interests, or providing the best deal.

Snippa

Be really careful, as you may find you're stuck in a contract that you can't get out of. The builders just want a sale, and once they've got you in a contract, it's your problem whether or not you can complete. If you can't, you could be in breach of contract.

By the time it's finished, you could find all kinds of problems, like the mortgage lender won't lend you the amount agreed, or values it lower.

You need to get a good solictor, and see if you can put an offer in "subject to mortgage finance". The builders may say no to this - almost certainly will. But take good legal advice: don't just do what the salesmen tells you, and don't believe it'll all be fine.

Leon_W

The golden rule is never exchange contracts on a property if your mortgage offer end date does not cover the completion date. As others have said, you are leaving yourself absolutely wide open if you do otherwise.

Your financial adviser is a liar.

djdan00

Yes advisor was suggested by the developers. Don’t want to use one really as I know what I want.
So is there lenders out there that will validate the principle for 7 months??

Maybe I should go and try get Santander to agree to this. They say their rates will last till August, I can agree to accept new rates is agrement stays.

I have to exchange 30days after the reservation. I was OKed by a financial advisor before being allowed to reserve.

Snippa

Even if you could get a mortgage in principle to last as long as you'd need, it's still not a guarantee of a mortgage. A mortgage in principle is just that - they've said in principle, it's OK. But even if you're exchanging tomorrow, they could still turn round and say no. They still have to go through all the paperwork and move forward to a proper mortgage offer before you can be certain you have the money.

That's why it's really important not to complete on a contract until you're certain you can get a mortgage. If you're thinking of going ahead, go and see a mortgage adviser - a proper one, not one attatched to the builder and see what he/she says. And before you sign anything speak to a solicitor - again, not one tied to the building company.

When I put an offer in for my flat recently, the solicitor put an offer in subject to mortgage finance. As long as that clause was there - right up to the week before completion - I could back out any time. Without it, if the contracts had been signed, if I hadn't found a mortgage, I'd have been liable to pay and in breach of contract.