Moving to a new build - managing mortgage timescales?

acrebo

Hi all,

I am in a situation whereby there is a new build development underway in my local village. However, the plot we have earmarked won't be ready until Dec'17/Jan'18.

Selling our place ASAP and being 'ready' would obviously ensure we're in as strong a possible as possible when the development is completed. Without any guarantee of selling our house quickly, it seems to make sense to get it on the market ASAP to avoid any timing difficulties. The developer is a private one and, with the greatest will in the world, they're going to hold on to an empty house for us if other buyers are lining up with cash.

My concern is that, once we sell our place and become mortgage-free for the interim period, there's a nagging doubt that the market could change over the next 12 months. We'll obviously go through the process of ensuring we have a mortgage offer in place prior to selling but there'll be no guarantee it'll still be there in 12 months' time.

How have other people who have moved into new builds, with usual delays, managed this from a mortgage perspective? Is it just blind faith that, if you're credit-worthy before you sell and don't do anything stupid, you'll remain credit-worthy?!?

Any guidance would be much appreciated. :think:

lee111s

Most mortgage offers are only valid for 6 months.

Not only that, most builders expect you to exchange contracts within 4-6 weeks of paying the reservation fee.

We're in a position where we're awaiting exchange of contracts (our buyer just waiting for local search result) and our new build should be ready December this year. Our mortgage offer expires at the start of Feb.

If the worst were to happen and the house wasn't ready before the mortgage offer expires, we'd have to apply again as our lender, Nationwide, doesn't allow extensions.

acrebo

Thank you, that's what I expected which clarifies things but also confirms my concerns!

The exchange of contracts wouldn't be too much of a burden once (if) we decide to commit to the move... although I doubt our solicitor would be happy doing work one the basis on receiving their payment 12 months' later!

poppy1010

We sold our house last year in order to buy a new build.

They allowed us a few weeks to try and sell our house and agreed to 'hold' the (very popular in demand) property for us. We did sell very quickly last year and moved into rented accommodation.

Our mortgage is with Halifax as they are one of the best for new builds (and very flexible in extending mortgage offers). Our mortgage offer ran out and we got it extended within a day (they are known for being great for doing this as they know new builds get delayed).

We are now due to complete in a few weeks (a year later!).

Yes it is a risk, but we secured our house at last years price and it's already gone up quite a lot.

Just prepare yourself for delays.......!!!

lee111s

acrebo wrote: »

Thank you, that's what I expected which clarifies things but also confirms my concerns!

The exchange of contracts wouldn't be too much of a burden once (if) we decide to commit to the move... although I doubt our solicitor would be happy doing work one the basis on receiving their payment 12 months' later!

The problem is that you can't exchange without a mortgage offer, which will likely expire before you can complete. You'd then have to "risk" applying for another mortgage closer to completion but should the worst happen and you not be able to get one, you'd still be liable to purchase the property.

Thrugelmir

When is the developer starting to take to reservations?

lcfcstephen

We were first time buyers, so slightly different, but our exchange date was a few weeks before completion (probably two months or slightly more) but we reserved it at the beginning of the year, so they don't always want to exchange soon after reservation

lee111s

lcfcstephen wrote: »

We were first time buyers, so slightly different, but our exchange date was a few weeks before completion (probably two months or slightly more) but we reserved it at the beginning of the year, so they don't always want to exchange soon after reservation

That's why I said, most, not all

lcfcstephen

lee111s wrote: »

That's why I said, most, not all

Apologies must have missed that word when reading. But I'm proof that it's most :rotfl:

acrebo

poppy1010 wrote: »

They allowed us a few weeks to try and sell our house and agreed to 'hold' the (very popular in demand) property for us. We did sell very quickly last year and moved into rented accommodation.

Our mortgage is with Halifax as they are one of the best for new builds (and very flexible in extending mortgage offers). Our mortgage offer ran out and we got it extended within a day (they are known for being great for doing this as they know new builds get delayed).

We are now due to complete in a few weeks (a year later!).

Yes it is a risk, but we secured our house at last years price and it's already gone up quite a lot.

Just prepare yourself for delays.......!!!

Thanks Poppy - this sounds like a similar situation to us. Also, Halifax are one of the lenders on my shortlist so I'll be sure to give them a call and see what they think...

Thrugelmir wrote: »

When is the developer starting to take to reservations?

I've been advised they have taken 1 reservation so far. The agent advised they're happy to take a couple of early ones to get things moving but would obviously have to manage future demand accordingly. I'm not entirely sure whether she was implying that a reservation fee could just be refunded if the developer got a better offer, or that they'd be more strict with reservations once plots started to get taken, but I'll obviously clarify this!

lee111s wrote: »

The problem is that you can't exchange without a mortgage offer, which will likely expire before you can complete. You'd then have to "risk" applying for another mortgage closer to completion but should the worst happen and you not be able to get one, you'd still be liable to purchase the property.

lcfcstephen wrote: »

We were first time buyers, so slightly different, but our exchange date was a few weeks before completion (probably two months or slightly more) but we reserved it at the beginning of the year, so they don't always want to exchange soon after reservation

The info around the contract exchange / mortgage is interesting, thanks. It does make me wonder what the other 'confirmed' buyer who has reserved a plot has done - they could, of course, be a cash buyer but anyone requiring a mortgage would surely be in the same situation, with the first homes not planned to be habitable for 12 months?

The developer is a small private company and the development itself is only for 20 houses, 10 of which will be sold privately (10 through affordable housing). As such, I think they are relatively flexible with regards to timescales. From discussions with the agent, as long as they're confident they can sell them all and not miss out on a genuine sale due to time-wasters then they'll be happy.

I'm fairly content that the developer has enough flexibility to work with us to maintain a long-term reservation without contracts being exchanged. I could be wrong on this, but am not entirely sure how they would do it any differently with any other buyer until nearer the end of the build - please advise if I've missed something.

Thanks all.