Advice re mortgages and Redrow exchange times

blt

Could someone help and give some much needed advice?

My partner and I have seen a house with Redrow that we would like to purchase - asking price is fine for us (£218,995) and we have found 3 mortgages which require a 15% deposit which we have. All would seem fine wouldn't it!

Redrow have told us that after reserving the plot we want (which isn't built yet and which isn't scheduled for completion until Feb 2011) we would need to exchange contracts within 28 days. The obvious problem is that the mortgage offer would only be valid for 4-6 months! Hmmm....

Originally we were happy with paying the £500 reservation fee and then applying for a mortgage October/November time.....hoping of course that the LTV didn't rise. We just saw it as a £500 'gamble'.

Can Redrow do this? Surely most people will need a mortgage to buy a house but you can't exchange without a mortgage but then the mortgage offer would expire before completion. Then we'd need to pay the mortgage arrangement fee again etc etc

Any help much appreciated - we have our heart set on this home

VIGILANT22

Quote Any help much appreciated

Speak to a mortgage advisor...who who will explain/guide

kaych

isn't it standard practice for new development to exchange contract 21-28days after reservation? We have to exchange within 21 days but our flat is not completed until June. But we were able to postpone it for a week because of some problems with our mortgage document.
I would be a bit worried myself if i have to exchange contract almost a year before the development is completed...

Thrugelmir

Obtaining a mortgage on the property shouldn't be an issue. The major questions for yourself and your partner should be whether you will be able to complete next February, ie a change in personal circumstances, and can you find additional funds if the property is valued at a significantly lower value (as your mortgage will be lower).

blt

Thank you to those who have tried to make a constructive comment - we have actually been to speak to a mortgage advisor but they said that exchanging contracts on a property can only take place with a mortgage offer in place that is valid for when the property is built.

That is where the problem arises. We CAN get a mortgage, are in pretty secure jobs (teaching) and it is well within our budget. The problem of course is that it is £995 mortgage arrangement fee but this is only valid for 6 months. This means that if we reserve now, then we exchange, but before completion our mortgage offer has run out and we have to apply again?!

The financial advisor told us that after we had exchanged contracts, pulling out would mean that Redrow could sue us for 20% of the property value!

blt

VIGILANT22 wrote: »

Quote Any help much appreciated

Speak to a mortgage advisor...who who will explain/guide

We have seen one thank you. I was on here to try and get a perspective from people who may have been through this process themselves, that's all.

brit1234

blt wrote: »

The financial advisor told us that after we had exchanged contracts, pulling out would mean that Redrow could sue us for 20% of the property value!

Stay clear, lots of people are being sued by developers at the moment due to no real fault of their own.

Don't buy a new build from them and get a better quality second hand home instead. Bigger rooms and more solidly built.