Exchanging on a P/X New Build when New Build is 12months off completion

cheshirelady_2

Hello, we are in the process of part exchanging our house for a new build. The house is not due to be completed until Spring 2012. The problem is the builder is looking for an exchange within 28 days - with mortgage offers lasting a maximum of 6 months we wondered whether anyone had any experience of this in the recent past?

Our solicitor has suggested a clause so that if we are unable to obtain the mortgage offer nearer completion then we will be able to walk away with our small (3k) deposit.

As it is a new build our broker has suggested Nationwide as we can cover the 15% deposit but I am not sure whether they would consider extending the offer if we confirmed with them the timescales to completion upon application?

Any advice gratefully received!!

CloudCuckooLand

On the surface, the solicitor's suggestion about a "cannot obtain mortgage" clause sounds reasonable. I'm not sure it goes far enough though.

What if your finances change to the point where you'd prefer not to proceed, but can technically still obtain the mortgage..?

What if you need to move to keep a job, and the new place is in the wrong dierection..?

A year is a long time to predict what clauses you might need...

As for getting the date next year agreed with Nationwide - you cannot, as it is just a guess at this point. I bet if you asked the developer, they would be unable to offer a guaranteed date. So, if they cannot, how can you? The developer knows that another harsh winter will put them behind schedule...

Just 'reserve' the plot and don't agree to Exchange, would be my suggestion.

With prices dropping in many areas, the developer wants to avoid having to follow suit a year from now. Take the year to sell your place - if it doesn't sell, you can always ask for P/Ex later - then going in as a 'cash buyer' will get you a better deal...

SilverSix

I am/was in a similar scenario to yourself.

I reserved my plot back at the end of February with completion in October. Draft contracts were drawn and lots of other papers signed as necesary and a few of the land surveys/check done by the solicitor etc.

My mortgage offer like yours is only valid for 6 months so I made the developer & solicitor aware of this verbally and in writing. I was supposed to exchange within 28 days....

I spoke to my mortgage advisor and we had the application lined up and relevant insurances secured but did not send the application off for processing until the very end of April, my build is due to complete at the beginning of October. Giving us till the middle of October should it fall behind.

I was chased the week before last by the developer, well more enquired as to how much longer it would be for my offer as they were wanting my deposit. Paying the deposit wasn't a problem as that was sat in my account waiting to go but the solictors would not take/accept it until the mortgage offer had been received by them.

It came through at the beginning of last week and I paid my deposit on Thursday

It's occured to me that should the build over run and my offer expire I may find myself in a sticky situation. I should probably get the developer to agree to pay any extra charges or fees incurred by the build completion being delayed.

Long storey short, you may have to wait until you're within six months of the completion.