Buying a New Build - Mortgage Offer Expires Before Completion plus General Advice

andylondonuk

Hi There,

My partner and I are first time buyers and have just started the process of purchasing a new build property.

So far we've:

1. Paid the reservation deposit.
2. Had the mortgage agreed in principal.
3. Submitted the mortgage application.
4. Appointed solicitors.
5. Received the contract from the solicitors.

We've been told by our Mortgage Broker that the mortgage offer would only be valid for 6 months. The developer wants us to exchange contracts by the 2nd May and they expect to complete in December. This means the offer will expire about 2 months before we complete. Our Broker has said that extending the offer should not be a problem, but we're now realising it's not a guarantee.

Is there anything we can do to avoid this situation (apart from pulling out)?

Also, can anyone suggest any questions (related to the above, or generally speaking) we should be asking the Developer, our solicitors or Mortgage Broker? Or any other advise with regard to buying a new build.

Getting a little stressed, but mostly very exited and would like to try and keep it that way if we can

Thanks,
Andy.

kingstreet

Which lender?

Halifax, for example, has a completion deadline of 31 January 2013 for its current range of newbuild products.

If you've chosen a standard product you may have to reapply near to the end of the process.

andylondonuk

The lender is Woolwich and the product is "Bellway NewBuy 2yr 4.99% Fixed"

Richard_Webster

Your solicitor should negotiate a term in the contract that if the builder is not able to complete by the date your mortgage runs out the contract is rescinded (brought to an end) and all the money you have paid by way of deposit is refunded. That will encourage the builder to get on with building!

If they won't agree that you delay exchanging contracts until the house is nearly ready and get a fresh mortgage offer for then. if prices have gone down in the meantime you tell the builder he is getting less - they are far too greedy anyway!

andylondonuk

Hi Richard, thanks for the info. We asked for a long stop date, is that similar?

Solicitor has not replied to email from the beginning of the week yet and is always engaged when we call, which is frustrating.

Richard_Webster

Hi Richard, thanks for the info. We asked for a long stop date, is that similar?

Yes, that would be shorthand for what I described.

terrierlady

if u used the advisor introduced by the developer they will have all details on their system and will know the date of which mortgage expires and sort it, the developers wont be keen to issue long stop date but rest assured its year end time and dec is very busy so your property stands good chance of being finished then if not before. do they allow a reservation to exchange till build ready ? i cant remember one ,how are you going to be able to choose a kitchen of your choice, tiles/ extra lights carpets etc if not exchanged.
If you are asked to pay for a revaluation decline, they delayed they build so they will pay if you put enough pressure on.

brit1234

andylondonuk wrote: »

Is there anything we can do to avoid this situation (apart from pulling out)?

Sorry but as it is Newbuy I would opt to pull out and spend sometime saving a deposit for a normal home. I wouldn't wish Newbuy on my worst enemy.

Have you read the small print on the Council of Mortgage Lenders website on Newbuy?

andylondonuk

Thanks for your replies everyone.

Richard_Webster wrote:

Yes, that would be shorthand for what I described.

Thanks, our solicitor has requested one from the builder, so will see what they say.

terrierlady wrote:

do they allow a reservation to exchange till build ready ?

Do you mean; will they hold the reservation until it's ready to complete, i.e. exchange and complete on the same day?

terrierlady wrote:

how are you going to be able to choose a kitchen of your choice, tiles/ extra lights carpets etc if not exchanged

We place our choices on a list, they quote for it and we decide which to go for. We have to pay up front for any of these. So we have to pay before exchange. Although, I think we can leave decisions on finish until fairly late in the process.

terrierlady wrote:

If you are asked to pay for a revaluation decline, they delayed they build so they will pay if you put enough pressure on.

But if the build was not delayed, i.e. our mortgage offer just runs out before completion (which it will), they have not failed in any way.

brit1234 wrote:

I wouldn't wish Newbuy on my worst enemy

Why?

brit1234 wrote:

Have you read the small print on the Council of Mortgage Lenders website on Newbuy?

Sorry which small print are you referring to, do you mean the following?

www.cml.org.uk/cml/consumers/newbuy

danhenshy23

Hi Andy,

What was the outcome of this?

Today I have found myself in a very similar situation.

Thanks
Dan