No mortgage extension but told to complete asap - Help

pa860044

Hi all,
Unfortunately I’ve been unable to get an extension by the bank on my mortgage offer which is due to expire on the 12th May. I’ve been told to either complete the purchase (which will be really tight although all the searches have been done) or reapply. With the current situation with the pandemic I don’t feel fully confident in proceeding without knowing what the fallout will be on the market. Is it wrong that I’m thinking in this way? For background, I’m buying a two bedroom modern terrace in London. Really appreciate any advice.

tasticz

they can also pull out the mortgage offer altogether before that date.

if i was in your boat and i don't see any changes to my work for the near future then just go ahead with the purchase. the increase/decrease in value should have little impact if its a family home and you are not planning to sell immediately

AdrianC

It's a simple binary choice.

Exchange and complete by the 12th... or walk away. You don't have the luxury of any more time, because come the 13th, your current lender are not willing to lend you the money.

Nobody knows "what the fallout will be on the market". People can guess, and many will use it as a great opportunity to wave their favourite hobby-horses around. But NOBODY, and I mean quite literally NOT ONE PERSON, knows what will happen when. Waiting another week or three, even if you could (which you can't), won't make it any clearer.

Crashy_Time

You won`t know the fallout in 12 days that is for sure, withdraw and re-apply in the future, a two bed terrace isn`t exactly going to be hard to find again is it?

RelievedSheff

How long do you intend to stay in this house? Is it a long term home or short term hop onto the ladder? 

If it is the latter then yes be wary but if you intend to stay there long term then any short term drops in value will be ironed out in the long run.

GDB2222

"the increase/decrease in value should have little impact if its a family home and you are not planning to sell immediately" 

Nobody knows for sure what prices will be like in a few months time, I agree.   But it's a false argument that it doesn't matter that you could pay X% less if you wait. That's X% less mortgage payments for the rest of your working life (more or less). You're being a bit blase about that.

Also, there's a real problem if prices fall so much that the buyer is in negative equity. The OP said he is buying in London, and prices weren't exactly forging ahead before the plague struck! Things may be different in other parts of the country.

steampowered

You just have to make a decision either way and stick with it. 

If you are waiting for certainty in the housing market you'll be waiting for a very long time. Nobody knows how the market will develop over the next few years. We won't know the fallout of the pandemic for months if not years. Things aren't going to become any clearer over the next few weeks so you need to accept that and make a decision based on longer term factors. 

My general advice would be to hold fire if you are moving from rented, buying with a <10% deposit and looking to move again within the next 5 years. If you have a more substantial deposit, are expecting to be in the property for the long term or are also selling your own property; then proceed. 

pa860044

RelievedSheff said:

How long do you intend to stay in this house? Is it a long term home or short term hop onto the ladder? 

If it is the latter then yes be wary but if you intend to stay there long term then any short term drops in value will be ironed out in the long run.

Hi, I wasn't planning on staying here for more than 2-3 years. It's my first purchase with a 20% deposit. I'm buying alone and it's big enough for me now but I'm a little worried that won't be the case then.

pa860044

steampowered said:

You just have to make a decision either way and stick with it. 

If you are waiting for certainty in the housing market you'll be waiting for a very long time. Nobody knows how the market will develop over the next few years. We won't know the fallout of the pandemic for months if not years. Things aren't going to become any clearer over the next few weeks so you need to accept that and make a decision based on longer term factors. 

My general advice would be to hold fire if you are moving from rented, buying with a <10% deposit and looking to move again within the next 5 years. If you have a more substantial deposit, are expecting to be in the property for the long term or are also selling your own property; then proceed. 

Thanks for your advice, I have more of a substantial deposit but I planned to be there 2-3 years at the most as it was good enough to get me on the ladder in a good area in London. If it comes to it I could stay for 5 years but would have liked to move to something bigger by then.

AdrianC

Crashy_Time said:

You won`t know the fallout in 12 days that is for sure, withdraw and re-apply in the future, a two bed terrace isn`t exactly going to be hard to find again is it?

If the market does collapse, then it'll do so because affordability is restricted - which will primarily be due to lenders not lending. So while the property may be cheaper, it may not be possible for the OP to buy.

GDB2222

AdrianC said:

Crashy_Time said:

You won`t know the fallout in 12 days that is for sure, withdraw and re-apply in the future, a two bed terrace isn`t exactly going to be hard to find again is it?

If the market does collapse, then it'll do so because affordability is restricted - which will primarily be due to lenders not lending. So while the property may be cheaper, it may not be possible for the OP to buy.

On the other hand, the OP has a 20% deposit now. If the market drops, his LTV improves.

The OP has said that he wants to get on the ladder and move to somewhere more expensive in 2/3 years. That's fine if prices rise. If prices drop, that will eat into his equity and make it harder to move up later. 

I'm not saying the above will happen, but it's prudent to consider the possibility.