When to apply for a mortgage?

Grezz24

Hi all (i posted this in the house buying area but wanted to see what this area thought)

So we have put down £100 (refundable) on a new home expected for release at the end of the year.

This gave us time to save the full 5% deposit (£4000 short but saving £1000 a month)

Fast forward to today and they have called us saying it’s been released yesterday and we have 72 hours to put another £150 down to effectively confirm the start of the purchase (non refundable). The house is estimated ready for December.

We are happy to put the £150 down, carry on saving, apply for a mortgage in October when we will have the full 5% and be ready well within the December completion date, but the new build told us we need to apply for the mortgage as soon as we put the £150 down.

if we were to do this then we wouldnt have the 5% deposit amount in the bank so would be pointless to apply for a mortgage?

My concern is firstly we don’t have it so can’t , but secondly if we did and they had delays in the build the offer could expire as it’s 6 months away?

What would people suggest and are we being reasonable asking the new builders if we can wait to apply for the mortgage until October, knowing the house wont be ready until at least December?

Thanks

Mortgage_Adviser

With the mortgage applications not always going as planned leaving the application till October is a bit short sighted.
However you do need to be able to show the deposit at the time of the mortgage application.

The mortgage lenders who lend for the off plan newbuilds are normally flexible within a reason if they need to extend the offer for the new build.
Can you possibly get a deposit somewhere else?

Grezz24

Thanks for the reply.

We haven't applied yet other than the initial AIP and been through some details with a broker.

We were expecting the house to be released around December and ready for around March which fit in with us perfectly but it seems they are ahead of schedule.

So its looking like it wont be possible then, as we need to have the 5% deposit before we can apply, but we wont have that until end of October.

firstbuyer

I know that with our build we put down a deposit of £500, got a mortgage sorted, then had to pay the rest of the deposit of £11.5k on exchange which had to happen within 40ish days.

With new builds there seems to be a lot of upfront and now we have months of waiting until our Nov/Dec completion date.

ACG

I disagree with Mortgage_Advisor to some extent, there are a couple of lenders who either:
1) Do not ask to see proof of deposit or;
2) If they can see your income after expenses is more than enough to get the deposit in place by the time you complete, they are happy to take a view on it.

In terms of the build date, this is one of my pet hates with new builds, there is a mad rush to exchange contracts with no guarantee your home will be built before the offer expires, at which point you need to request an extension or re-apply.

I do not think the developers will allow you too wait until October, primarily as they will want you to exchange within 28 days. Without a mortgage in place they will not allow that and neither will your solicitors.

Grezz24

Thanks for the reply,

so the solution is to basically forget about this house and move on - but wait until we are closer to the full 5% (3 months) rather getting into another situation where the house may be released 'early'?

ACG

Grezz24 wrote: »

Thanks for the reply,

so the solution is to basically forget about this house and move on - but wait until we are closer to the full 5% (3 months) rather getting into another situation where the house may be released 'early'?

I think there is a chance you can get this house if you really wanted to. Your options are going to be limited, but that does not mean it needs to cost a fortune.

Have a chat with a broker or 2 and see what they say. Chances are the developer will try to push their broker on to you as a starting point.

Where there is a will and all that...

Noobie2011

I can tell you Halifax for one are not bothered about seeing the Deposit aslong as you can prove where it is coming from as in future wages.

Also if helps we are being pushed to exchange next week but 3k of our 13k deposit is not coming until end of July so our Solicitor agreed with our new build we coukd exchange with only 10k and the rest on completion

Grezz24

Thanks Noobie.

Just had the discussion with our newbuilder and they said they would accept £8 with the remaining 3200 on completion.

So based on that it seems that mortgage providers are happy to take that into account as we can show where the money is going to be coming from and when it will be there etc?

Noobie2011

Grezz24 wrote: »

Thanks Noobie.

Just had the discussion with our newbuilder and they said they would accept £8 with the remaining 3200 on completion.

So based on that it seems that mortgage providers are happy to take that into account as we can show where the money is going to be coming from and when it will be there etc?

Pretty much yes and Halifax did not even ask us about Deposit proof and was our Solicitors who we dealt with on that. My understanding is you need to show proof of your deposit or proof of where it is coming from and aslong as you can show you wilk have what is needed by exchange(agreed new lower amount by builder) then all is fine providing you can show where the remaining deposit is coming from and it is before completion.