Help to Buy, Equity loan (New Build) - Completion date after Mortgage offer expiry?

Golf07

In the process of buying a new build thro help to buy – equity loan (Scotland).

We have successfully got our mortgage offer and also the loan acceptance from the government for the 20%. We are contributing 5% depositon a 75% LTV deal with Halifax.

Everything so far has been very smooth, however we ran into our first issue this week…

Builder called me to say the planned completion date of early May 2014 has now been pushed to mid June 2014. The issue is that our mortgage has an expiry of 31st of May 2014 so therefore isn’t going to be valid at the time of completion.

Had numerous phone calls this week with both my broker and solicitor as my solicitor was very reluctant for us to sign the missives this week when our mortgage offer wasn’t going to be valid at the time of completion.(rightly so).

My broker has spoken to Halifax today and they informed us that the “offer” to lend is in fact valid for 12 months for a new build,however the reason for the 31st May date is because the property would be subject to a new valuation and the product may also require to be refreshed at this time, obviously leaving me open to a change in rate etc…(My solicitor has asked for this in writing, but not sure they will provide it)

Broker says there are many people in the same boat currently reserving new builds not due until say next autumn on the basis they really want to reserve the house and are willing to take the risk that things won’t changea significant amount in the next 6 months…

He went on to say that because we are on a 75% LTV equitysharing product it’s unlikely our product will change much if at all in this time but said that’s it’s obviously our call as nothing is guaranteed in the housing market (as we all know…)

I am trying to see if the builder can do anything in terms of getting the completion date moved back into May again but can’t speak tothem now until Thurs – just wondered if anyone else is in the same situation or can offer any words of advice?

Thanks.

Golf07

Made that a bit clearer to read - anyone got any thoughts on this instance?

kingstreet

Change the product?

Current Halifax products have a drawdown deadline of 31/08/2014.

Golf07

@ Kingstreet,

thanks for the reply, appreciated.

I don't think we can change the product as I'm told the Halifax only has this product type that runs with the halp to buy equity loan scheme.

I spoke to an adviser at the Halifax and he said the likely scenerio is this product will expire at the end of May and just be re-named internally, so I would likely end up with exactly the same deal but on a differnet Halifax product code. Of course the caveat of that was they can't say that for certain.

My solictor says he is probably being over cautious but that it's his role to do this for us (which I'm grateful for)...

kingstreet

Products are replaced regularly and when that happens the end dates are changed. You can change product by a simple amendment.

I realised you wanted the Affordable Housing/Shared Equity product, I deal with such cases several times a day.

For example, "HTB Shared Equity Fixed at 3.04% until 31/12/2015" was product code FAD624 and the drawdown deadline was 31/05/2014.

This has now been replaced by FAE039 "HTB Shared Equity Fixed at 3.04% until 31/03/2016" with a drawdown deadline of 31/08/2014.

As the product fee (if any) is usually added to the loan, changing products is a simple process and the case should be re-offered immediately. The only problem is if you paid the product fee upfront.

Golf07

That's very interesting, it's the FAD624 product that our offer is based on with the 265 fee added to the loan.

You say the process of switching to the newer product is simple, what is involved?

kingstreet

From your point of view, nothing.

You simply tell the person representing you, you want to change.

From our point, we go into the case, go into quote, change the product, produce a new KFI, validate the new quote and resubmit and a new application summary, customer confirmation and revised offer are available to download in the documents box...

I can't think of any obvious reason you can't do this and we do it all the time for clients when rates get better.

Perelandra

Kingstreet's response is also interesting with regards to the fixed end dates.

Assuming that the new product is on the same rate as the old one, you may prefer the new product anyway- as you'd be fixed on that rate for an additional 3 months?

Golf07

@ Kingstreet,

I asked my broker to check out this option, so yes'day he called Halifax to verify we could do this and that the product was identical apart from the later expiry, he put it through and got an instant update as you suggested.

I've not seen it for myself yet but it should be sent to us today.

Hopefully it will be good to go - can only thank you very much, saved us a fair bit of worry over the next few months. :T