Exchanged Contracts - Now being made redundant

funkyfriend

Advice please. Me and my partner have been in the process of buying a new build for many months, we exchanged contracts 4 months ago and we’re preparing for completion in 7 days as the house is ready…

However today the worst thing happened, my partner has been told he’s going to be made redundant this year. He’s the main income in the household but I do make a decent wage. The mortgage is obviously already agreed but we’re fairly young and are taking out a large mortgage which was based on us both being on a good wage. So we’re very worried about affordability as it’s unlikely he’ll be able to get a job near the salary he is now, for various circumstances. 

So my main question is, do we have any options at all with the house sale or because we’ve exchanged contracts now and completion is days away we absolutely have to go ahead? I understand if we decided going down the road of pulling out we’d definitely lose the deposit we put down and any legal fees. But what other implications would there be? Are there any “ways out” if we can prove he’s facing redundancy? If the mortgage lender was to be told and pulled the mortgage offer would we still be committed to buy?

It may be worth noting we’re living with my parents right now as our previous house sale completed 4 months ago, so we wouldn’t be out of a home completely. 

housebuyer143

Yes you are committed to buy and if you don't you lose your deposit and can be sued for any extra losses the seller incurs. It's not really a choice in my opinion. 

I wouldn't tell the lender or your solicitor and just carry on. He's not redundant yet and you have just put 'sometime this year' so that's a lot of breathing space to plan.

MeteredOut

Assuming you have to go ahead, first thing to determine is whether you can (or for how long can you) continue to live your current lifestyle (including, but not just, your new mortgage) on your wage alone.

If the answer is you can't (or can't for very long), then *now* is the time to start changing your lifestyle to reflect your future reality, before he is made redundant. This will give you extra breathing space should it take longer for him to find a new job.

DE_612183

Not sure - but the developer might hold you to any loss they make - for instance if you've agreed to pay £300k and they end having to sell for £275k you could be held for that additional £25k.

How many months *could* you survuve?
You say your partners is being made redundant this year - not straight away?

He may get redundency as well?

Whats the market like for the new builds - is it likely to re-sell quickly?

Might be worth keeping for a couple of months then selling.

I think you'd still have to pay solicitoes fees - but you wouldn't pay stamp duty if you pulled out. 

eddddy

funkyfriend said:

 If the mortgage lender was to be told and pulled the mortgage offer would we still be committed to buy?

I'm sorry - it's a very difficult situation.

If your mortgage lender withdraws the offer, you will still be committed to buy. 

If you don't proceed with the purchase, you will probably lose at least 10% of the property's price.

So, for example, if your deposit was only 5%, the developer will probably chase you for 5% more.

If the developer has to reduce the price of the property by more than 10% in order to find another buyer, again the developer might chase you for the difference.


You mortgage t&cs probably say you must tell your lender about this - but I think a lot of people might suggest you don't.

Similarly, if you tell your solicitor about this, he/she has a duty to tell your mortgage lender - so a lot of people might suggest you don't tell your solicitor either.

MeteredOut

DE_612183 said:

Not sure - but the developer might hold you to any loss they make - for instance if you've agreed to pay £300k and they end having to sell for £275k you could be held for that additional £25k.

How many months *could* you survuve?
You say your partners is being made redundant this year - not straight away?

He may get redundency as well?

Whats the market like for the new builds - is it likely to re-sell quickly?

Might be worth keeping for a couple of months then selling.

I think you'd still have to pay solicitoes fees - but you wouldn't pay stamp duty if you pulled out. 

Buyers pay a premium for a new build. Unless in a very desirable area, where there was competition for those particular new builds, I'd expect someone would have to take a not-insignificant hit, even if they sold just 1 day after taking ownership. This would be particularly the case if there are still other buildings of the same type being constructed in the same estate - why would someone buy a previously owned one unless a lot cheaper than a brand new one.

The OP could consider staying at parents and renting it out, but I'm not convinced that's a good choice and would impact mortgage etc.

Skiddaw1

OP, I think your best option is to keep quiet, go ahead and keep your fingers crossed. After all, he's not being immediately made redundant by the sound of it and anything could potentially happen. Hopefully you'll at least have time to make some plans for how you're going to cope in the medium term and you never know what might be around the corner for him. I hope it all works out for you both- it's not an easy situation to be in.

DE_612183

MeteredOut said:

DE_612183 said:

Not sure - but the developer might hold you to any loss they make - for instance if you've agreed to pay £300k and they end having to sell for £275k you could be held for that additional £25k.

How many months *could* you survuve?
You say your partners is being made redundant this year - not straight away?

He may get redundency as well?

Whats the market like for the new builds - is it likely to re-sell quickly?

Might be worth keeping for a couple of months then selling.

I think you'd still have to pay solicitoes fees - but you wouldn't pay stamp duty if you pulled out. 

Buyers pay a premium for a new build. Unless in a very desirable area, where there was competition for those particular new builds, I'd expect someone would have to take a not-insignificant hit, even if they sold just 1 day after taking ownership. This would be particularly the case if there are still other buildings of the same type being constructed in the same estate - why would someone buy a previously owned one unless a lot cheaper than a brand new one.

The OP could consider staying at parents and renting it out, but I'm not convinced that's a good choice and would impact mortgage etc.

Where I am the new builds have a 6 month wait list from the developer - 2nd hand ones sell for the same and sometimes more than the developer price - especially if they have had all the snagging done and the extras added ( turf, carpets, appliances etc ).

Albermarle

Skiddaw1 said:

OP, I think your best option is to keep quiet, go ahead and keep your fingers crossed. After all, he's not being immediately made redundant by the sound of it and anything could potentially happen. Hopefully you'll at least have time to make some plans for how you're going to cope in the medium term and you never know what might be around the corner for him. I hope it all works out for you both- it's not an easy situation to be in.

I agree with this, as the potential redundancy is some time off.
He will get some kind of redundancy package, some employers are more generous than others, and he might be able to get a new job lined up in the meantime.

Veteransaver

That sounds like a nightmare scenario timing wise. Has your partner been served official redundancy notice or has he just been told it is happening at some point this year?
When I was last made redundant I was told I'm January too and didn't actually leave until November (I was buying a house too as it happens!) Do you know what the firm's redundancy package is, it can be enhanced based on years of service etc and could even include retention bonuses etc Eg if he is key employee and agrees to stay until he needs to be let go. Could be enough to give him 6.months or a year of breathing space to find another job.
But yes, don't mention it to your solicitor or mortgage co, it could open up a world of additional pain.
Thinking outside the box a bit, is there anyway to pull out of the purchase legitimately, Eg if the house isn't fully finished yet or there's any significant changes to dimensions etc compared to what's in the house specs, might be a long shot though. It might be easier if the house wasn't finished yet though.
Trouble with it being a new build is that it isn't usually easy to flip it immediately on purchase without taking a big hit.

Ksw3

Is the redundancy at consultation stage and what is the liklihood they will be offered another role in the business?