Barratts new build , should I exchange before arranging a mortgage ?

ack330

Hello

I am non uk resident moving soon to uk  , I reserved a barrats new build due to completion in Dec 2022 

Now salesperson at barratts want to exchange contract by Feb 2022 at the latest .

My mortgage provider tell me they can not consider this property till at least 4 or 5 months before completion so they will only consider it in  july or Aug 2022

If I exchange contract now or even by feb 2022 it will leave me in difficult postition should my mortgage doesnt come through for whatever reason 

What if after exchange for example the valuation come less than the selling price ?

I wonder what uk resident do mortgage wise when it come to buying a new build with completion date 12 months or more ?

Would appreciate any thoughts

Thanks

RelievedSheff

Most lenders for new build mortgages will extend the offer period to cover the time taken to build the property.

It would be very risky to exchange without knowing if you can get a mortgage or not. You would be liable for the deposit and could lose that if you don't for whatever reason secure a mortgage.

eddddy

Some UK mortgage lenders give offers that last for 12 months for new builds - or the initial offer lasts for 6 months, but there's an option to extend it for another 6 months.

But I don't know their policy on lending to people who aren't currently UK residents.

And new builds are often delayed, so there's a risk that even a 12 month offer won't be long enough.


You can ask for a 'long-stop date' in the contract. For example, you could ask for a long-stop date of 1 Feb 2023 - so you have the option to walk away and get your deposit back, if the property isn't ready by that date and you can't get another mortgage offer.


But some people do just exchange contracts without a guaranteed mortgage offer, or a mortgage offer which might expire. But I don't know if that's because they have carefully evaluated the risks, or whether they don't really understand the risks.



Edit to add...
Just to clarify - you could be liable for more than your deposit, if you exchange contracts and then can't get a mortgage.

If property prices fall, and Barratts have to sell the house for, say, £75k less - you'll be responsible for paying Barratts the £75k difference, plus all their selling costs etc.

ack330

Thanks for the feedback

As I am getting my mortgage from international bank not local uk bank the mortgage they offer wont last more than 5 months , 

Whats my chances reserving the house till june before exchanging ?

eddddy

ack330 said:

Whats my chances reserving the house till june before exchanging ?

To be honest, I imagine Barratt would remarket to look for another buyer who is prepared to exchange in February.

But if they can't find anybody, and the house is still available next June, you could come back and reserve it then.


But bear in mind that new builds are usually delayed and finished late - so a 5 month mortgage offer in June is still very risky.