Time between mortgage offer & completion - what can go wrong?

geek1981

littlesparkles wrote: »

We have a mortgage offer from Nationwide (confirmed in August and valid until January). We are buying a new build which should be complete by December (and our contract allows us to back out if we cannot get a suitable mortgage if after this date).

I'm part exchanging for a new build completing in December but can't find the clause on my contract which allows me to backout if I can't find a mortgage after expiry. My solicitor said TW didn't agree with that, are you buying with TW too?

Thanks!

littlesparkles

I haven't exchanged yet but the documentation from my solicitor states: "the contract has the facility to allow you to proceed to exchange contract subject to receipt of satisfactory mortgage and search. This will allow, subject to certain conditions, the contract to be rescinded and deposit refunded if adverse entries are revealed on the search results or if a mortgage offer can not be obtained."

The solicitor is the one recommended by TW and they are paying the fee so I assumed this was standard. I am close to exchange and will be speaking to the solicitor next week so I will double-check!

geek1981

Thanks for your reply. Do you have this wording on the 'Contract for Sale' document? I'm also using TW recommended Solicitor and can't find the clause on my contract. I'm also close to the Exchange and filling up the Pre-Exchange query form sent by the solicitor.

Worrying this is i have this : "If the Seller (TW) terminates this contract as a result of the buyers failure to complete, then any payments the buyer has made to the seller will be retained by the seller". I have mortgage offer till end of Feb and TW is saying they'll finish in Dec/Jan, but just thinking about the worst case.

littlesparkles

I do have a draft contract and mine specifies:

"If the seller terminates this contract as a result of the buyer's failure to complete then any payments the buyer has made to the seller in respect of Options will be retained by the seller...."

So mine has that extra bit about options payments (in bold) being retained rather than all payments.

I have asked the solicitor to write in a clause about the satisfactory mortgage offer and searches - but it was him who suggested this in the first place so I would be very surprised if TW wouldn't agree to this! I am due to hear back about all enquiries I put to TW next week so I will update then.

rach83

If you are concerned about a mortgage offer being pulled between exchange and completion wouldn't the answer be, if at all possible, to exchange and complete simultaneously?

littlesparkles

Not possible on an off-plan new build purchase I don't think.

geek1981

Same with me - I got 2-3 months between Exchange & Completion. There must be some legal protection for buyer to pull out if something happens which is not his fault.

littlesparkles

Are you ready to exchange now then? When did you reserve? I reserved at the beginning of July and it's likely to be mid-October before I exchange. I put in a few enquiries to TW solicitors through my own and they have taken ages to get back to me (expecting replies next week but only after lots of pushing and chasing by me, solicitor and sales rep!). So you could delay the exchange if you have enquiries that have to be sent to the TW legal team. For info my enquiries are genuine ones and I did not think it would take quite so long for them to be answered! It does mean that exchange and completion will be slightly closer together.

Also my solicitor has been talking about putting a long stop date in the contract. He said that he would always put this in for when the mortgage offer expires.

Just be careful not to negatively affect your mortgage offer in any way. I am putting off getting a new car and buying new furniture so that I don't have anything in the way of a loan or credit card balance. I have heard of mortgage offers being withdrawn because someone's financial situation has changed.

I will update when I eventually get my final contract through to sign.

geek1981

Thanks littlesparkles, i reckon we are in the same boat. I reserved end of July and the expected completion is December. I have no idea how long they will take for exchange as the "recommended" solicitor is so slow. However I think it's very unlikely there will be a delay in completion cos they are doing the second phase of electric/plumbing work and we've already chosen out kitchen as they said they would be putting it last week. My mortgage expires end of Feb and as per TW we can move in Dec/Jan.

I can see there they are not too pushy about my exchange deadline because we are part exchanging and there is no deposit money involved as they cancel each other. So there is a chance my exchange will move towards end of october as I'm sending the pre-exchange query form this week and they will probably take 2 weeks to come back.

Also do you mind if i ask you what other queries you asked them? I'm newbie in the property market and it will be really helpful if you can share your concerns as we use the same builder. Are you part exchanging as well?

cheers!

harvey115

Just get your solicitor to confirm if their is any buyer pullout clause in the contract with a full refund of the deposit money. This will secure your deposit money if you were unable to secure mortgage at the time of completion.

NewBuilds would not allow you to exchange and complete at the same time.

Hope this helps.