We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
New Build Long Stop Dates Longer Than Mortgage Offer (inc Help To Buy)
OrpMoench
Posts: 12 Forumite
We reserved a new build flat in June last year. Estimated completion was end of 2021 so our mortgage offer lasted through end of Jan (now!). The estimated completion moved to end of March 22 and now is looking to be going back further... awaiting info. So we now need to extend or renew our mortgage offer (it's a first-time buyer help-to-buy mortgage). We're being put under pressure from developer/agent to exchange asap, ie sign contracts and put down our 10% deposit, having had the flat reserved for some time now that I guess is fair enough. BUT (there was always going to be a but...)
The developer has set themselves a 'long stop' date of end of November 22 (that's the date by which if they have not completed the build we can take our deposit back and walk away or they will compensate for any further delays) they can at any point between now and that long stop date get to building completion and trigger us 10 working days to complete, should we not do so at that stage we are in breach of contract and stand to lose our entire deposit(!) (at least that's how we understand it and our solicitor has explained it)
However, mortgages on the market do not stretch all the way through until end of November... and here is the question...
- Are we really being asked to gamble our deposit of hard-earned savings and inheritance for a first time buyer uk government backed help to buy on the proviso that a bank is still going to be willing to offer us a new mortgage or extension on it in 6/7/8/9 months time... that's all down to lender policy way down the line out of our control...
- And also, have we understood this correctly? Do other people take these risks with their deposit on new-builds?! Anyone any experience on this would love to hear, good or bad!
The developer has set themselves a 'long stop' date of end of November 22 (that's the date by which if they have not completed the build we can take our deposit back and walk away or they will compensate for any further delays) they can at any point between now and that long stop date get to building completion and trigger us 10 working days to complete, should we not do so at that stage we are in breach of contract and stand to lose our entire deposit(!) (at least that's how we understand it and our solicitor has explained it)
However, mortgages on the market do not stretch all the way through until end of November... and here is the question...
- Are we really being asked to gamble our deposit of hard-earned savings and inheritance for a first time buyer uk government backed help to buy on the proviso that a bank is still going to be willing to offer us a new mortgage or extension on it in 6/7/8/9 months time... that's all down to lender policy way down the line out of our control...
- And also, have we understood this correctly? Do other people take these risks with their deposit on new-builds?! Anyone any experience on this would love to hear, good or bad!
0
Comments
-
There are newbuild products which last until the end of December and/or lenders who have 6 + 6 mortgage offers. Are you doing this alone, or with broker support?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.1
-
We're via a (good + highly-recommended) broker...0
-
Just to clarify - your deposit is the minimum you would lose, if you breach the contract.
I guess it's unlikely, but if you breach the contract and property prices fall - the developer would have to sell to somebody else for less money. You'd then be liable for paying the developer the difference (plus all their reselling costs).
Some people do take a risk on this type of thing - and exchange contracts without a firm mortgage offer in place, assuming (hoping) they'll get a mortgage offer before completion.
But again, in the past people have got burnt because lenders then value the property lower than expected, and the buyer doesn't have enough cash to cover the difference.
1 -
What is a 6 + 6 by the way? 6 month offer which can be extended by 6-months?kingstreet said:There are newbuild products which last until the end of December and/or lenders who have 6 + 6 mortgage offers. Are you doing this alone, or with broker support?0 -
Yep. That's right.OrpMoench said:
What is a 6 + 6 by the way? 6 month offer which can be extended by 6-months?kingstreet said:There are newbuild products which last until the end of December and/or lenders who have 6 + 6 mortgage offers. Are you doing this alone, or with broker support?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Thanks for all the replies. What would you do though? Only exchange if mortgage can cover the full long-stop?
Reading that a) Help To Buy grant authority to exchange which is only good for 6-months.
&
The developer can only set a long-stop at 6-months once the roof is on the property...?
I wonder if we could push-back on the developer to wait until the roof is on (am told that's next month), then it's all neat and tidy that H2B, Mortgage and long-stop can all be 6-months...?! I don't know if we have this negotiating power though0 -
Can I ask what was the outcome of this? Finding ourselves in a similar situation to you and would really appreciate any insight.0
-
Sorry just seen this... See my new post 🙈nuthatchfarm said:Can I ask what was the outcome of this? Finding ourselves in a similar situation to you and would really appreciate any insight.
https://forums.moneysavingexpert.com/discussion/6409047/new-build-longstop-compensation#latest
0
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.9K Banking & Borrowing
- 253.9K Reduce Debt & Boost Income
- 454.7K Spending & Discounts
- 246K Work, Benefits & Business
- 602K Mortgages, Homes & Bills
- 177.8K Life & Family
- 259.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards