Buying a house from someone moving to a new build

eleanor48

Hi all,
We’re first time buyers and have had an offer accepted on our dream home. However the owner is moving into a new build and therefore their builders are using a ‘part exchange’ to help them move quicker (I don’t fully understand this?)
Due to them moving to a new build we don’t know when this will be ready. We’ve been told it could be October but then also it could be as late as March.
The estate agents and part exchange company want us to exchange as quickly as possible on the house and have a prolonged completion. However our mortgage advisor is reluctant to do this due to a mortgage having a 6 month expiry and due to the fact it’s not us being a new build, the longest extension we can get is 4 weeks. 

We don’t want to exchange and then our mortgage expire and the sale fall through
Has anyone got any advise on this as according to our estate agents it seems quite ‘normal’ 
Thanks in advance 

pinkteapot

eleanor48 said:

Hi all,
We’re first time buyers and have had an offer accepted on our dream home. However the owner is moving into a new build and therefore their builders are using a ‘part exchange’ to help them move quicker (I don’t fully understand this?)
Due to them moving to a new build we don’t know when this will be ready. We’ve been told it could be October but then also it could be as late as March.
The estate agents and part exchange company want us to exchange as quickly as possible on the house and have a prolonged completion. However our mortgage advisor is reluctant to do this due to a mortgage having a 6 month expiry and due to the fact it’s not us being a new build, the longest extension we can get is 4 weeks. 

We don’t want to exchange and then our mortgage expire and the sale fall through
Has anyone got any advise on this as according to our estate agents it seems quite ‘normal’ 
Thanks in advance 

It's worse than that. If you exchange, then your mortgage offer expires, then for some reason you're no longer eligible for a mortgage at that point (e.g. due to job loss), you'll lose your deposit on the house (usually 10% of its cost). It's not just that the sale will fall through.

Personally, I wouldn't do it - I agree with your mortgage advisor (and your solicitor will probably warn you of the risks too). The person buying the new-build should really break the chain and rent till it's ready. However, if you're in a popular area they'll probably refuse as they'll be confident of getting a buyer who is prepared to take the risk.

And remember that the estate agent works for the seller, not you - so of course they'll say it's normal and you should do it. 

EDIT: To be fair, I was forgetting about longstop dates - see posts below. Exchanging with a longstop prior to your mortgage expiry is a safe option. 

Marvel1

eleanor48 said:

according to our estate agents it seems quite ‘normal’ 

Please note, ignore any advice from the estate agent, they are not yours, you are not their client and not paying them anything, they work for the seller, their only interest is get property sold.

Your solicitor has your interests.
 

Irishpearce26

I bought my house in March that was part exchange, I exchanged contracts 5 days before completion. What the developer has done is listed the part exchange house too early. My house was listed in November with the owners moving into their new build in February, offered end of February and complete in March. You could ask for a longstop date to be added to the contract that reflects your mortgage term + extension. That way if they don't meet it you can walk away and keep your deposit.

eddddy

You should explain to the EA / Seller that you require a 'long stop' date in the contract - that coincides with your mortgage expiry date.

For example, if your mortgage offer expires on 20th December, you require a 'long stop' date of 20th December (or maybe a few days earlier).


That means that if the 20th December arrives and the newbuild isn't ready, you can walk away without losing your deposit.


Or if you manage to get a 4 week mortgage offer extension, you can wait an extra 4 weeks beyond 20th December before walking away.


Or you can start applying for a new mortgage (maybe in mid-November), and if you get a new 6 month offer, you can wait another 6 months before walking away.

lookstraightahead

Some people don't like selling to FTB, I won't buy from people waiting for their new build.

Think about it - you're having to put yourselves out practically, financially and emotionally, while they just sit waiting. On top of this they want the security of exchange.

nope it's just not fair.