Mortgage offer that lasts for a year

sidthekid

Hi,

Me and my wife currently live in a flat with a mortgage on it which has about 110,000 worth of equity in it. Now we have seen a house we like which is off plan and won't be complete till about September next year. Now my plan is to keep the flat and rent it out with a consent to rent from the mortgage company and use our savings for a 10% deposit on the new house. As we are unsure of exactly when the house will be finished we don't want to put the flat up for sale to early and have nowhere to live or to late and end up paying 2 mortgages. Now my questions are can we have 2 residential mortgages at once if we have a consent to let on one or do we need a lend to buy? As we have been quoted a rate of 4.49% by the developers mortgage consultants which I think is quite high, could it be because the mortgage offer needs to last nearly a year?

Hope that makes sense, all help appreciated.

kingstreet

There are only one or two lenders offering 90% on a newbuild house, and AFAIK none offers a mortgage with a twelve month offer period.

I would not be willing to apply for a mortgage and exchange contracts until you are within six months of the build ending. We represent several builders and they accept and understand this, as this is in the best interest of our client.

sidthekid

Thanks Kingstreet,

The developer is Taylor Wimpey and they said they had to have a call from a mortgage advisor saying we had a mortgage in place before we could put a deposit on it. The lender is Halifax and I was told they have an agreement with Taylor Wimpey for year long mortgage offers. I am worried about signing a mortgage agreement this early, is this normal on new builds that are off plan?

StuC75

Would the builder not be doing a part exchange? Sounds like you'll have a lot your plate - committed to the purchase and the deposit with uncertainty of when to sell... What if your circumstances change a lot in that 12 months.. Since in theory the lender could reconsider (say based on credit file within that time - back out and you would be scuppered)...

sidthekid

The builder won't do a part exchange as I'm not buying an expensive enough house, the house has to be at least 30% dearer. Surely the lender can't back out if we pay the lending fee? I admit a year is a long time and a lot can happen, but I see it as the only of not being homeless for a month or 2 or paying 2 mortgages while I sell the flat. It does seem that Taylor Wimpey and Halifax are in cahoots in needing a mortgage offer a whole year in advance and the only one to offer it is Halifax!

kingstreet

Some of the national builders do have lender agreements for 90% newbuild with Halifax, however, I can't comment on the "offer valid for twelve months" issue, as I've never seen it.

The standard Halifax newbuild products have a 31/5/14 drawdown deadline.

sidthekid

Hi Kingstreet,

Sorry to sound a bit naive but in your experience how does it usually work? ie. I would put down a deposit say £2000 now and six months before the house is completed get the mortgage in place?

kingstreet

That would be down to the builder.

Deposit, or reservation fee?

Only they can answer what they are asking you to do.