New Build Exchange- Mortgage Extension

LGib

So I reserved a new build in March with a planned completion date in November. When instructing solicitor and applying for a mortgage we re-iterated that it was an off plan plot and completion would be more than 6 months away so it would be likely that a mortage extension would be required. Both my solicitor and mortage advisor said in writing that it should not be a problem. My mortgage application was approved on 9th April and all documents were sent to my solicitor on the same day. After months of solicitors on both ends being slow we had a phone call from our solicitors at the end of May saying that they were pretty mucus ready to exchange and that they were just confirming the stop clause. After chasing my solicitor several times for an update today they responded that we cannot exchange until a mortage extension has been granted as our current offer expires in October and completion is in November. 
NatWest do not allow for extensions until 30days before the expiry date so my solicitor is expecting the developer to wait another 3 months (total 6 months) for exchange....

I have asked my solicitor (including her previous written confirmation that it would not likely be an issue) why she has taken more than two months to raise this to me as an issue and I have confirmed NatWest’s procedure with them. 

Whilst I appreciate that exchanging when requiring a mortage extension is a risk I took the advice from my mortgage advisor and solicitor and opted to proceed. 

Has anyone else ever been in a similar position and what was the outcome? 

eddddy

You say that your solicitor was trying to agree a 'stop clause' - presumably that's a longstop date in October.

I.e. If the house isn't ready by October (which it won't be) - you can apply for a mortgage extension, and if you can't get an extension, you can walk away without losing money.

I suspect the solicitor is now saying that the developer is refusing to agree to a longstop date in October - so the only other option is a mortgage offer which is valid for longer. (Unless you want to take a big risk.)


Assuming the above is correct, you could try explaining your predicament to your sales contact at the developers.  They probably won't earn their commission if this can't get resolved, so they might (or might not) try to help get an October longstop date sorted.

LGib

eddddy said:

You say that your solicitor was trying to agree a 'stop clause' - presumably that's a longstop date in October.

I.e. If the house isn't ready by October (which it won't be) - you can apply for a mortgage extension, and if you can't get an extension, you can walk away without losing money.

I suspect the solicitor is now saying that the developer is refusing to agree to a longstop date in October - so the only other option is a mortgage offer which is valid for longer. (Unless you want to take a big risk.)


Assuming the above is correct, you could try explaining your predicament to your sales contact at the developers.  They probably won't earn their commission if this can't get resolved, so they might (or might not) try to help get an October longstop date sorted.

Thank you for responding! This has given me an idea of a couple of questions to ask just so I get a better picture of what’s going on! 

Honestly dealing with solicitors make me want to bang my head against a wall they aren’t are so difficult to deal with particularly when they keep their phones switched off! 

jmmo20

Your solicitor is there to protect your interests. Exchanging now with a slim possibility you won't have a mortgage at the time of completion could have devastating consequences for you.

eddddy

jmmo20 said:

Your solicitor is there to protect your interests. Exchanging now with a slim possibility you won't have a mortgage at the time of completion could have devastating consequences for you.

I'm not sure that's addressing the OP's question.

The OP's complaint is that the OP diligently raised the issue with both the solicitor and mortgage advisor at the outset - and they both suggested in writing that there would not be a problem. Presumably because they would arrange a longstop date and/or mortgage extension.

But now, very late in the day, it seems that the solicitor has been unable to negotiate a longstop date, and the mortgage advisor has been unable to negotiate an extension.

So the OP feels misled. But I guess it depends on the exact wording that the Solicitor and Mortgage Advisor used.

But based on the OP's post, it sounds like the Mortgage Advisor is particularly to blame, for giving the OP bad advice because the advisor didn't understand the rules for mortgage offer extensions at NatWest.

 

LGib

eddddy said:

jmmo20 said:

Your solicitor is there to protect your interests. Exchanging now with a slim possibility you won't have a mortgage at the time of completion could have devastating consequences for you.

I'm not sure that's addressing the OP's question.

The OP's complaint is that the OP diligently raised the issue with both the solicitor and mortgage advisor at the outset - and they both suggested in writing that there would not be a problem. Presumably because they would arrange a longstop date and/or mortgage extension.

But now, very late in the day, it seems that the solicitor has been unable to negotiate a longstop date, and the mortgage advisor has been unable to negotiate an extension.

So the OP feels misled. But I guess it depends on the exact wording that the Solicitor and Mortgage Advisor used.

But based on the OP's post, it sounds like the Mortgage Advisor is particularly to blame, for giving the OP bad advice because the advisor didn't understand the rules for mortgage offer extensions at NatWest.

 

Yup you’ve got this exactly correct! A Stop Clause wasn’t mentioned until the 23rd May (and with very little explanation of what it was). I was completely aware of the risk of exchanging when needing a mortgage extension but took the advice of my solicitor that they could work with it and applied for the mortgage as they said I should do it as soon as possible - if I had known I would have waited until mid May to submit the application to ensure it would be valid for the projected completion date.
I’ve asked the developers to work with their solicitors to arrange a long stop date but if that can’t be arrange I guess our only other options are to apply for another mortgage and ask the developers to wait a couple of weeks more or to ask the developers to wait until we can extend it (September) which seems unlikely. 

Thanks for your help