Exchanging contract for a new build due to complete in a year

lilaczoey

libf wrote: »

We didn't actually exchange until a week ago... The salesperson said that because of how early they were being put up for reservation it wasn't an issue to wait until ~6 months before so as not to have to mess around with extending mortgage offers.

I got the first letter demanding exchange in August, then another in September, and then one threatening to re-market if I didn't exchange by October 16th. I just kept the salesperson up to date on the issue (firstly that the developers solicitor hadn't sent the required paperwork, and then that although my solicitor was ready to exchange, theirs wasn't responding despite the HTB being about to expire...)

They did mention exchanging but with some sort of caveat that it didn't count if I didn't get a mortgage offer, but at that point I was just waiting for the offer paperwork anyway.

That's very good to know! I wonder if our developer (Bellway) will be fine with that though!

lilaczoey

I just talked to a mortgage broker and he said that they can help get us a mortgage with Santander that will be valid for 6 months with the potential to extend for another 9 months (!) with another valuation. He said that the only issue is that we might not be able to extend the mortgage offer if and when that product is taken off the market.

I still have to find out about the rates, but the 6-month offer plus 9-month extension should be long enough to cover us until completion (anticipated mid/late 2016). But is it still too far in advance to sign any contract?

fashionvictim

I could be wrong but you reserve with a small fee and then at 6 months before build is complete they send the contracts to exchange within 28 days. To expect you to exchange further than 6 months in advance will be really difficult in terms of mortgage. I don't see how you can exchange without a mortgage offer in place and most will only be 6 months.

I am doing it now with TW but we reserved 4 months before build is due on on a later release, so the 6 months thing is what happened with a friends new build.

We applied for the mortgage and the surveyor will go visit the development and the show homes to do valuation. Apparently if valued ok we will then exchange with a retention on the mortgage subject the being revalued when it's built.

I have found the lack of real info has stressed me out and the sales staff seem to put a lot of pressure on.

Just ask them if they send the paperwork 6 months in advance? If they say no then ask for it in writing from head office for clarity before you reserve.

Also in my limited experience so far when they give the two month window for the build being done it will mostly run to the later time. And it can run much much later !!

My only advice is that new build flats are often need more than 10% deposit so worth researching this.

I wouldn't let them pressurise you

chappers

I would do as Richard has suggested and find something either finished or closer to completion or wait until this development is closer to completion, don't be bullied into committing by the developer. Anything could happen with a development so far from completion.
You mention a mortgage with a possible extension to the offer, I wouldn't take the risk, there are talks of possible interest rate rises in the near future and it is highly possible that lenders could well shake up the products they offer, not to mention that products are continually being withdrawn and added all the time.
I would recommend that you talk to an independent mortgage advisor and solicitor and not anyone involved with the developer.