Buying newbuilt, mortgage offer will expire

Eagle8814j

Hello,
If you could please advice. Am a first buyer, exchanged contract on a newbuilt flat back in March with an anticipated completion date of mid August. My mortgage offer expires end of October so I thought that's plenty of time to allow for delays etc. Now it's transpired that building work is unlikely to finish until end of November and my mortgage lender refused to extend the offer! added on top now the stress of the brexit effect on property prices , what if I apply for new mortgage and the mortgage lender refuse to accept the buying price as prices might have dropped significantly since March?!
I have this crushing feeling that am going to lose my deposit!!!

hazyjo

You didn't happen to use the developer's choice of solicitor did you? Am hearing this more and more. I can't see a 'high street solicitor' allowing exchange on such an open ended purchase. Am surprised the mortgage co agreed too tbh - 5 months from mortgage offer to estimated completion? Crazy.

Unless you can find someone to blame, it's not looking great. Advisable to see an independent whole of market mortgage broker, although you have had one mortgage agreed so it's not going to be easy. Alarm bells will ring with another application.

Any chance in hell it might be completed sooner? Can you camp out on their doorstep, go public, or bribe them?!

Good luck.

Jx

eddddy

Didn't your solicitor give you severe warnings about this before you exchanged?

Normally, you would have a 'long stop' date in the contract to stop this happening.

If you don't complete because you have no mortgage, unfortunately you could lose much more than your deposit...

.. for example, if you back out, and the flat ends up having to be sold to somebody else for £50k less (because of brexit or whatever), the builder could claim that £50k from you.

I guess your best plan is to look for another mortgage lender.

magicpork

Sorry it may sound uncomfortable, but you're legally obliged to purchase the property regardless of the outcome of mortgage application..you can't simply walk away from this by forfeiting your deposit..the developer have all the rights to chase you for all the losses incurred by the termination of contract.

You can try to market for a contract reassignment sale or you'll have to find some way to fund your purchase, even partial mortgage partial loan.. try to talk to some mortgage brokers and see what advise they can offer you... the loss will be very large if you decide to walk away so it's mostly better to carry on with the purchase using money borrowed on a high cost.

Either way, good luck!

G_M

I'm not familiar with buying New Builds, but understand that the process differs from other purchases in that the Completion date is not fixed.

But having said that, it is simple common sense that a buyer cannot commit to a purchase by Exchanging contracts without having certainty about his funding.

So if the mortgage offer on which he depends has a fixed end date, then that must be reflected in the contract - or the contract not entered into.

swishy87

For the people saying solicitor shouldn't allow it, this is common practice for new builds regardless of the solicitor. All I can say is try and apply for a mortgage again. In your contract how many months can your build run over by before you can cancel?

Eagle8814j

Thanks for the replies,

Unfortunately I did use their recommended solicitor which I now regret for obvious reasons, it was first buy so clearly I lacked experience but I didn't even know about this brexit back then when I applied which is now caused the main problem as the property might not be worth as much when I come to reapply. It's a big building project so me mere mortal camping outside a big cats den isn't going to make any difference or speed things up.

swishy87

I don't think Brexit has had enough of an affect for that to be an issue. We reserved a new build before Brexit and had the mortgage valuation about 2 weeks ago and all was absolutely fine.

Eagle8814j

Is it possible to ask the developer for compensation for the cost of new mortgage application etc? in the contract, I think I have until January for the developer to complete before I could pull my deposit out without repercussions. It's looking very bleak. and am losing sleep over this, I feel so stupid for agreeing to the contract without terms to protect my interests

swishy87

But there wasn't much you would have been able to agree really. Just get applying for the mortgage again. If the only thing that has changed since application is Brexit I think you should be fine!

eddddy

Eagle8814j wrote: »

in the contract, I think I have until January for the developer to complete before I could pull my deposit out without repercussions.

So the "long stop" date is in January.

So what you should have done was ensured that you had a mortgage offer that did not expire before January - before you exchanged.

TBH - that's what most people do when buying a new build.

Eagle8814j wrote: »

Is it possible to ask the developer for compensation for the cost of new mortgage application etc?

No. If your solicitor didn't warn you of the risks of having a mortgage offer that expired before the "long stop" date, you may have grounds for a complaint against them - but that's all really.