New build flat - 6 months between exchange and completion

tony_hanson82

Hi there,

First time poster and nervous first time buyer looking for a bit of advice...

I'm looking to buy a new build flat in London and have run into a bit of difficulty.

I have got a mortgage in principal under the newbuy scheme and reversed a flat... I need to exchange contracts by the start of April.

The problem is, the completion date is early October which is only just inside the 6 month period of mortgage validity... I'm worried that completion may slip and a mortgage offer may expire.

I was hoping to get some advice from members on what my options are?

I have 2 ideas to "solve" this problem:

1) Exchange without a mortgage offer and agree a mortgage 4-6 weeks after exchange. Quite a scary prospect though as the market may move adversely.

2) Exchange with a mortgage offer and then reapply with the same lender to start a new 6 month window... This will cost me money as I will have to pay 2 products fees.

Any advice would be gratefully received!


Tony

kBHX

How come you need to exchange contracts in April and not closer to the completion date?

franklee

Option 3, tell the builder he must wait for exchange.

Option 4, walk away.

Option 5, Run!

Seriously do not exchange with any risk you won't get a mortgage.

People did this in a rising market and enough got into serious financial difficulty when the market turned.

You have the advantage of knowing there is a recession on. Don't take the risk!

kingstreet

I would be very surprised if a solicitor accepted your instruction to exchange without a mortgage offer in place.

Check the drawdown deadline for the product. Many lenders have longer deadlines for newbuild products.

If still six months, establish the terms for requesting an extention. Speak to your solicitor. He will be aware of the lenders' usual practices.

tony_hanson82

kingstreet wrote: »

I would be very surprised if a solicitor accepted your instruction to exchange without a mortgage offer in place.

Check the drawdown deadline for the product. Many lenders have longer deadlines for newbuild products.

If still six months, establish the terms for requesting an extention. Speak to your solicitor. He will be aware of the lenders' usual practices.

Thanks kingstreet...

I've checked with my mortgage broker and have looked on the nationwide intermediary website and it says offers are valid for 6 months... If there a distinction between offer period and the drawdown deadline you speak of?

In terms of process - is is possible to reapply for a mortgage with the same lender whilst the existing offer is in place? i.e - obtain a mortgage offer to exchange and then reapply in order to extend the period for which the mortgage is valid?

Cheers,

Tony

tony_hanson82

kBHX wrote: »

How come you need to exchange contracts in April and not closer to the completion date?

I guess the builder wants to get committed sales ASAP. Really annoying...

tony_hanson82

franklee wrote: »

Option 3, tell the builder he must wait for exchange.

I guess I could try and delay exchange. Less hassle for them to put back exchange a few weeks than put the plot back on the market and have to go through the trouble of selling it again...

thank you...

kingstreet

tony_hanson82 wrote: »

Thanks kingstreet...

I've checked with my mortgage broker and have looked on the nationwide intermediary website and it says offers are valid for 6 months... If there a distinction between offer period and the drawdown deadline you speak of?

In terms of process - is is possible to reapply for a mortgage with the same lender whilst the existing offer is in place? i.e - obtain a mortgage offer to exchange and then reapply in order to extend the period for which the mortgage is valid?

Cheers,

Tony

Nationwide offers are valid for six months - valuation and product. They do have an extention process in place which your solicitor will be able to confirm.

Builders predicate their sales on a 28 day exchange. This controls the price they offer and the fitting out schedule, which is based on your requirements. It's normal to have a long period between exchange and completion to give the builder chance to set its plans.