New Build Mortgage - Validity Period and Valuation

declanmc

Morning all,

After an unsuccessful house purchase this summer where the seller pulled out after asking us for £20k more, I am now hoping to buy a new-build. However, my chosen house will not actually be ready until approximately the end of April.

This presents an issue with the mortgage in particular. My existing mortgage offer was with Nationwide directly applying online. I made this decision partly as I bank with them and they offered a good rate in comparison to the market. My preference this time is to go with them again, but I'm running into an issue with validity periods. The offer is only valid for 180 days, with a possible extension of 45 days in case of build delays.

I spoke to a Nationwide customer adviser and they suggested applying for an agreement in principle now, lasting 90 days, and once that is close to expiry, applying for the full mortgage then. This would then give a potential max validity period of 315 days all in.

The issue I can foresee though is having to hand over a large cash deposit during this 28 day reservation period to the housebuilder, then having the property valued by Nationwide at a lesser value than the purchase price, either leaving a shortfall or worst case they might be unwilling to lend. For context, the purchase price is £320,000, south-east location and I have a deposit of 20%.

Can anyone offer any advice whether they have done this kind of 'validity period stacking' before? Or other options to put minds at rest e.g. independent valuations. Thanks in advance.

kingstreet

You need to make a full application to have a valid mortgage offer otherwise your solicitor should advise you not to exchange contracts despite the builder wanting you to exchange usually in 28 days.

If you insist on Nationwide, you'll have to reapply. Alternatively, use a lender with longer offer periods on newbuilds.

Expecting a newbuild to be finished on time is probably a bit ambitious too!

[Deleted User]

possibly the worst 'advice' I have ever heard of to not apply for a mortgage until later.   

Plenty lenders will do 6month + 6 month offers.  Just got to ensure you try keep your financial situation as stable as possible in the meantime

declanmc

Thanks for the response both - decided to go with Barclays as they offer 6 + 6 months, which even with new build timescales should easily do the job. Now just to find a solicitor with capacity who isn't from their panel !