Buying a new build - exchanging when mortgage offer will expire

calder123

Hello, I am currently in the process of buying a new build. Proposed completion date December 2022 (originally oct/nov when we reserved). The developer wants to exchange contracts on 17th June (this friday!!). Our mortgage offer expires September 2022 so we will need to get a new mortgage offer. If we exchange on Friday we are risking losing 10% deposit if anything goes wrong i.e. being refused a mortgage offer (i perceive this to be unlikely as out circumstances will only improve however you don't know with the way the world is). Our concern is that December is only a proposed completion date and this could continue to go on to June 2023(long stop date) - where we will need another mortgage offer! Our current mortgage offer is unable to be extended and the developer will not put a clause in the contract to protect us if we can not get a mortgage offer out of our control. 

Is anyone else experiencing or has experienced this issue of being requested to exchange contracts with their mortgage offer expiring prior to proposed completion? Any advice would be greatly appreciated as last thing we want is to risk losing our deposit! 

Many thanks in advance 

kingstreet

When embarking on a newbuild purchase, you would usually opt for a lender with longer or more easily extendable offers. Choosing a product/lender with a September expiry date with no option to extend appears a poor choice with an original ALC of Oct/Nov. Why did you do this? Were you advised to choose this lender/product?

IMHO your solicitor should not be willing to exchange without an offer which will be valid until; or can be easily extended to, cover the ALC. Best option appears to be a rethink on the lender/product, or perhaps even a different builder/plot.

Trinabelle1970

Be very careful!  I agree with kingstreet, your solicitor should not be willing to exchange if this exposes you to high risk.  Having been in a similar situation myself recently, (although not related to expiring mortgage offer) I have learnt that developers want it all their own way and for buyers to carry all the risk.  

Very long story short for us, the developers terms for exchange and completion on a show home (technically fully built) were too risky for us and in the end they withdrew from the contract.  We will not consider a new build again based on the shocking way we were treated.

Be aware that in most cases you will become liable for estate agent fees (if you are also selling) and legal fees at point of exchange, so it's not just the deposit that is at risk.