Exchanging on a new build without a final mortgage offer

CarlaAEl

Hello,

I have reserved a purchase of a new build flat due to complete in April 2020. I have applied for a mortgage and completed eligibility and credit checks, however, the mortgage cannot be fully offered as the bank is unable to access the flat to do a valuation as the building is still under construction.

I am not worried about the length of the offer as Barclays will offer for 6 months and extend for a further 6 months for new builds. And if all goes well I hope that the long stop date of 12 months will not be met and the property will finish close to estimated completion date.

My solicitor is advising not to exchange without a mortgage offer. However, I cannot do this as I am not certain when the valuation will be able to take place (possibly Jan/Feb). At this stage the developer can turn around and put the property back on the market (and probably get more for it). I reserved in August for a great price and don't want to miss out.

Whilst I understand it is not risk free to exchange without a mortgage offer - what is the worst case scenario? and do people still exchange (10% deposit) without the mortgage offer in place?

Note out of 79 flats, 40 are sold, 33 already exchanged (all in the same position as me AKA no mortgage offer)

Any help/advice much appreciated!

Thanks,
Carla

davidmcn

CarlaAEl wrote: »

what is the worst case scenario?

You forfeit your deposit, the developer then sues you for any losses they suffer over and above that after they have remarketed (i.e. the difference in price if the market drops, additional marketing and legal costs, interest from whenever you ought to have paid).

[Deleted User]

Doesn't make a lot of sense. The lender should be offering based on an off plan valuation. I've done countless new build purchases offered with the property not close to being built. With barclays as well as other lenders. Is there something else stopping the process?

CarlaAEl

What else are possible reasons?
My broker has said at the point that they are wanting a valuation

What are the steps I need to take now?

asm89

Are you sure their hesitation isn't to do with cladding and a cladding report?