Furlough/Redundancy Risk & Need To Exchange

LJS95

Hi,

Really hoping someone can help me in this tricky situation I am in...

I reserved a new build apartment back in March way before the lockdown and everything seemed to be ok. Fast forward to now, June and my NatWest mortgage and HTB have been approved which is great and I am ready to sign the contract and exchange (Due to complete in November). The risk I have now is I have been on Furlough for three months and will need to let the lender know, I am wondering if this will change things drastically? I am back to work and off the Furlough scheme from the 1ST July. I have been told redundancies cannot be ruled out either due to the current times (I work in the aviation industry). My broker is my brother in law and he seems to think I should let the lender know about my furlough but sit tight and wait to hear about redundancies (A long and dragged out process).

I don't know if I should just pull out now and lose a little bit of money as opposed to a huge deposit should I exchange and things take a turn for the worst? I could then start again when things calm down and I 100% know my job is safe or speak to my lenders and my new build developers to see if they can delay exchange or if that is even something they would do?

I feel the developers wouldn't sit around and wait for me and the lender would probably just pull my offer anyway after listening to my circumstances in full but I just wondered if anyone else has been in a similar position or could give me any useful advice?

jamielutz1987

Personally, exchanging in June and completing at year-end when working in a sector especially hard-hit by the current crisis would be a risk too far for me.

But, you know your employment situation the best and how much of a rush you are willing to take with the deposit (is it 5% or 10%?).

As for informing NatWest about your furlough, your broker brother in law should be best placed to give an opinion. From what I know, if you can get a letter from the employer confirming a restart date and salary, the lender should be ok taking the normal pay.

LJS95

jamielutz1987 said:

Personally, exchanging in June and completing at year-end when working in a sector especially hard-hit by the current crisis would be a risk too far for me.

But, you know your employment situation the best and how much of a rush you are willing to take with the deposit (is it 5% or 10%?).

As for informing NatWest about your furlough, your broker brother in law should be best placed to give an opinion. From what I know, if you can get a letter from the employer confirming a restart date and salary, the lender should be ok taking the normal pay.

Yeah this is the risk I am in, god forbid there isn’t for everyone’s sake but if the colder weather came and there was a second ‘Wave’ it could change things more, trying to keep positive!

10% deposit so it’s a case of pulling out and losing the £1,000 spent in reservation fees, solicitor fees or continuing and having over £10,000 at risk.

Yeah think that’s the best option then NatWest can hopefully advise. Totally new to all this and as much as I trust my brother in law I would be worried to just risk it.

[Deleted User]

Is the £500 reservation fee refundable? Check the terms as it might be considering htb is involved.

If so then you are only out £500. Seems a no brainer to me

Arefer

I’m in a similar situation and pulled out recently as the risk was too high with the long gap between exchange and completion, with further delays possible.

They can also sue you for their costs and any shortfall in the final sale price, if you pull out after exchanging. Check if your solicitors have a no move no fee policy, as mine did.

LJS95

Deleted_User said:

Is the £500 reservation fee refundable? Check the terms as it might be considering htb is involved.

If so then you are only out £500. Seems a no brainer to me

Have not checked this! Doubt they would keep it for a future reservation when I am ready again to reserve something else but may be able to get some of it back.

LJS95

Arefer said:

I’m in a similar situation and pulled out recently as the risk was too high with the long gap between exchange and completion, with further delays possible.

They can also sue you for their costs and any shortfall in the final sale price, if you pull out after exchanging. Check if your solicitors have a no move no fee policy, as mine did.

Are you just going to wait until things have calmed down and start again? Half of me is like 'Risk It!' and the other half is like 'Don't be so stupid and pull out!'.

I haven't exchanged or signed any contracts yet thank god, just weighing up options.

Arefer

LJS95 said:

Arefer said:

I’m in a similar situation and pulled out recently as the risk was too high with the long gap between exchange and completion, with further delays possible.

They can also sue you for their costs and any shortfall in the final sale price, if you pull out after exchanging. Check if your solicitors have a no move no fee policy, as mine did.

Are you just going to wait until things have calmed down and start again? Half of me is like 'Risk It!' and the other half is like 'Don't be so stupid and pull out!'.

I haven't exchanged or signed any contracts yet thank god, just weighing up options.

Yes, I’ll restart the process early next year  depending on the situation then, have decided to write off what’s left of 2020 as I’ve a feeling it will become worse later this year once the furlough/SEISS scheme ends.

If you decide to proceed now, get your solicitor to insert a covid rider in your contract to protect your deposit. Also try negotiating a smaller 5% deposit at exchange - mine had agreed to it before I pulled out.

LJS95

Arefer said:

LJS95 said:

Arefer said:

I’m in a similar situation and pulled out recently as the risk was too high with the long gap between exchange and completion, with further delays possible.

They can also sue you for their costs and any shortfall in the final sale price, if you pull out after exchanging. Check if your solicitors have a no move no fee policy, as mine did.

Are you just going to wait until things have calmed down and start again? Half of me is like 'Risk It!' and the other half is like 'Don't be so stupid and pull out!'.

I haven't exchanged or signed any contracts yet thank god, just weighing up options.

Yes, I’ll restart the process early next year  depending on the situation then, have decided to write off what’s left of 2020 as I’ve a feeling it will become worse later this year once the furlough/SEISS scheme ends.

If you decide to proceed now, get your solicitor to insert a covid rider in your contract to protect your deposit. Also try negotiating a smaller 5% deposit at exchange - mine had agreed to it before I pulled out.

Yes I feel the same! Good idea, I will speak to the solicitor to see if a COVID rider can be added and would be interesting to see if a lower deposit can be arranged by the developer Barratt’s. I just hope this won’t have any negative effect on me applying for future mortgages and the HTB scheme if I pull out and end it all now. 

70Jenny2184

Another one here who has pulled out of a new build as developers were pressuring to exchange. The house now won't be complete until the end of the year so it just didn't make sense committing now to a price agreed in January.  I don't have job security issues right now but I still think buying in 2020 is a risk and am willing to wait. Prices might not drop but I really don't expect them to increase so hopefullyI'll be no worse off.

I'm also thinking the new HTB rules for 2021 may mean that houses out of my price range by around £10k-20k may drop to be within my region's price cap which would make them affordable for me. So much is at play though as we dont know about a second wave, how hard the recession will hit, government policy etc. Its impossible to predict which is why I've cancelled mine. 

Rebecca5833

hi, i work in the airline industry too and just reserved a house. I have really struggled to get a mortgage and im doing shared ownership and me and my partner earn triple the minimum salary is for the house we are buying! You will need to let the lender know you are on furlough, I have, one mortgage broker i spoke to refused as they said we couldn't have a mortgage as redundancies were coming up and to go back if my job is safe. We are in a similar position to you, as we are bit worried as the housing association is pushing to exchange contracts and I wont know if my job is safe till after

Wish you all the best!