ChatterBank1 min ago
House Purchase
I wonder if any of the legal eagles can help here. My grand-daughter is buying a house, from someone who is buying a new build. All the mortgage finance is in place, but as the builders have taken so much longer to get on with building the new build her mortgage is due to expire 2 weeks before the 'anticipated' completion date, which as far as she understands will be with 10 days notice from the builder.
The bank will not consider a request for extension of the mortgage until a month before it's due to expire. Which then leaves her with less than 6 weeks before the completion may be due, should it take place on the anticipated date. The bank is saying she would then have to re-apply. But it's taking them 6-8 weeks to process an application. She could therefore find herself in a position where she cannot complete. As it's a new build, she has had to exchange already, so is legally obliged to buy the house or will lose her deposit.
This all sounds to me like a total mad house, surely things cannot work this way. Her solicitors have said that yes, as they have exchanged, this is legally binding, but due to it being a new build, all of the power of completion date is with the builders. Having the finance in place is her responsibility. They may well not finish the new house on the anticipated date, which pushes completion even further away. In which case, any extension the bank may grant could also expire.
She is now not certain as to what to do. She could apply somewhere else for a mortgage, but also still has an offer there, is that likely affect her credit rating. It's a very long time since we bought property and I am pretty sure it was not like this at all.
I am amazed with all the complications, that no-one buys from anyone buying a new build. I imagine that if they do they will only do it once.
The bank will not consider a request for extension of the mortgage until a month before it's due to expire. Which then leaves her with less than 6 weeks before the completion may be due, should it take place on the anticipated date. The bank is saying she would then have to re-apply. But it's taking them 6-8 weeks to process an application. She could therefore find herself in a position where she cannot complete. As it's a new build, she has had to exchange already, so is legally obliged to buy the house or will lose her deposit.
This all sounds to me like a total mad house, surely things cannot work this way. Her solicitors have said that yes, as they have exchanged, this is legally binding, but due to it being a new build, all of the power of completion date is with the builders. Having the finance in place is her responsibility. They may well not finish the new house on the anticipated date, which pushes completion even further away. In which case, any extension the bank may grant could also expire.
She is now not certain as to what to do. She could apply somewhere else for a mortgage, but also still has an offer there, is that likely affect her credit rating. It's a very long time since we bought property and I am pretty sure it was not like this at all.
I am amazed with all the complications, that no-one buys from anyone buying a new build. I imagine that if they do they will only do it once.
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Good question about the sellers moving out and renting from them, it was something i had thought about myself. Sadly, the sellers hold all the cards, so there is no reason that they would. Having exchanged contracts (which she had no choice about), she has no leverage, i.e. dropping out of the sale.
Also, it's one of these weird part exchange deals, so I am under the impression that the house is now actually owned by the builders, I know the conveyencer is dealing with the builder's solicitors, rather than a solicitor employed by the actually house seller. New builds are a nightmare, the conveyencer who is our daughter in law, hates them with a passion as there are so many complications.
I think if my grand-daughter had been aware of all the things that could go wrong she might have though twice. But the house is perfect, both in size and location and a really good price. Plus, when she made the offer, she was told that the house was ready to have its roof put on, and would be ready in June, July at the latest. Sinc then, of course, coronovirus issues have been a thing, which the builders have agreed.
The people who are putting the most complication in place is the bank. You would have thought that they would be more aware, and sympathetic with coronavirus issues, and they have been, but will not even consider the extension until there is not enough time to re-apply should they decline.
We have a house that is worth £220,000 and I am even considering taking out a short term secured loan for the amount they need should the new mortgage application, if that is what has to be done, is delayed. This is something I wouldn't have a clue to start on, so back to some research as a back up I guess
Also, it's one of these weird part exchange deals, so I am under the impression that the house is now actually owned by the builders, I know the conveyencer is dealing with the builder's solicitors, rather than a solicitor employed by the actually house seller. New builds are a nightmare, the conveyencer who is our daughter in law, hates them with a passion as there are so many complications.
I think if my grand-daughter had been aware of all the things that could go wrong she might have though twice. But the house is perfect, both in size and location and a really good price. Plus, when she made the offer, she was told that the house was ready to have its roof put on, and would be ready in June, July at the latest. Sinc then, of course, coronovirus issues have been a thing, which the builders have agreed.
The people who are putting the most complication in place is the bank. You would have thought that they would be more aware, and sympathetic with coronavirus issues, and they have been, but will not even consider the extension until there is not enough time to re-apply should they decline.
We have a house that is worth £220,000 and I am even considering taking out a short term secured loan for the amount they need should the new mortgage application, if that is what has to be done, is delayed. This is something I wouldn't have a clue to start on, so back to some research as a back up I guess
I fully agree the banks are, and should be picky as to to who they lend money to, look what happened when they lent it all and sundry!! My objection is their inflexibility with the way they extend (or more to the point don't) extend the offer, when the reason the offer is expiring is due to no fault on the side of the borrower.
I understand that they need to consider the reasons for the extension, but when they can see that a) it's due to covid, the builder has provided this reason in writing, and b) they don't allow for enough time to make another application should the extension be declined.
I am led to believe that the builder can suddenly turn round one day and say, 10 days hence you have to complete. If one of the parties, and I understand it doesn't happen to the actual person buying the new build, is waiting for a re-applied for mortgage offer, and it hasn't come through, the can be sued if they don't complete. Even though they want to, they are not withdrawing from the sale, they are just in the hands of the bank. How can this be OK?
I understand that they need to consider the reasons for the extension, but when they can see that a) it's due to covid, the builder has provided this reason in writing, and b) they don't allow for enough time to make another application should the extension be declined.
I am led to believe that the builder can suddenly turn round one day and say, 10 days hence you have to complete. If one of the parties, and I understand it doesn't happen to the actual person buying the new build, is waiting for a re-applied for mortgage offer, and it hasn't come through, the can be sued if they don't complete. Even though they want to, they are not withdrawing from the sale, they are just in the hands of the bank. How can this be OK?
I believe, from what she was told by the mortgage advisor, that she can apply now for a new mortgage. Obviously more costs, i.e. new valuation etc. but cheaper in the long run than being sued because she can't complete on time!!
I wasn't sure if she could have two mortgage offers in place at the same time, although from what I understand they take so long to process an application the first offer would have expired before the second one came through.
The issue really is that the bank won't even consider looking at an extension until it's too late to put in another application. From everything I have read about this kind of situation, and its happening more and more often due to new builds, the bank want you to give them plenty of notice of a request to extend. Then when you give them loads of notice, its too much notice!!
She is waiting on the mortgage advisor, who tells her he is pushing the bank for an immediate answer, although he will get round their 'policy' goodness only knows. The worst part of it is, this mortgage advisor told her, when the time came to exchange contracts, there would be no problem extending the offer. Otherwise, she would have thought twice about agreeing the contract dates.
This is the first house she has bought, and we are not able to advise from our own experiences, as they are too long ago. In my day you went to talk to your friendly local bank manager. Now you have to take to an algorithm. Her solicitor is doing everything she can but her hands are tied as well, due to the builder having all the power to decide when completion takes place. For all she knows, they could back track at the last minute and say it's going to be another month, or two, or six, who knows.
I wasn't sure if she could have two mortgage offers in place at the same time, although from what I understand they take so long to process an application the first offer would have expired before the second one came through.
The issue really is that the bank won't even consider looking at an extension until it's too late to put in another application. From everything I have read about this kind of situation, and its happening more and more often due to new builds, the bank want you to give them plenty of notice of a request to extend. Then when you give them loads of notice, its too much notice!!
She is waiting on the mortgage advisor, who tells her he is pushing the bank for an immediate answer, although he will get round their 'policy' goodness only knows. The worst part of it is, this mortgage advisor told her, when the time came to exchange contracts, there would be no problem extending the offer. Otherwise, she would have thought twice about agreeing the contract dates.
This is the first house she has bought, and we are not able to advise from our own experiences, as they are too long ago. In my day you went to talk to your friendly local bank manager. Now you have to take to an algorithm. Her solicitor is doing everything she can but her hands are tied as well, due to the builder having all the power to decide when completion takes place. For all she knows, they could back track at the last minute and say it's going to be another month, or two, or six, who knows.
'Do they have a set in stone completion'? If only!! With a new build there is only an 'anticipated' completion date. If they could be absolutely certain the one they were given was going to be the actual day, then a 2 week extension, which apparently most banks give as a matter of course, would be sufficient. Sadly, it doesn't work like that with a new build.
So far as I can work out, the builders say they 'anticipate' the house will be finished by the date given. They then give 10 days notice before this date for both parties to be ready, in this case there are only 2 in the chain, the people buying the new build, and my grand-daughter who is buying from the people buying the new build. But to complicate it even more, the people buying the new build are putting up their house in part exchange, so it almost seems that the house doesn't actually really belong to them.
Said it was complicated!! So in reality, if this house is not finished by the date given, the builders have leave to drag this out for weeks, if not months. Or they could turn up tomorrow with their 10 days notice if it gets finished all of a sudden. I have read a couple of articles online about the problems people are having with new builds, both the ones actually buying it, and then all along the chain, which could be several people long. Everybody hanging on for the builder.
I fail to see how this situation is not happening on a regular basis, and how the banks do not have a 'policy' in place for anyone who is borrowing and is involved in a new build chain. But that seems to be rather too much to expect.
Currently, she is waiting for the mortgage advisor to contact her this week. If he cannot come up with anything positive, in writing, to say she can get an extension, then she is going to have to start with a new application next week for safety purposes. With all the stress this entails, new valuation - will this be OK, new credit checks - will they take a dim view of another application going in within 6 months, - will the application be processed in time.
So on it goes. The solicitor is tearing her hair out as well, but at least she is very experienced so if there is anything she can do she will. Unfortunately she does not have any clout at the bank!
So far as I can work out, the builders say they 'anticipate' the house will be finished by the date given. They then give 10 days notice before this date for both parties to be ready, in this case there are only 2 in the chain, the people buying the new build, and my grand-daughter who is buying from the people buying the new build. But to complicate it even more, the people buying the new build are putting up their house in part exchange, so it almost seems that the house doesn't actually really belong to them.
Said it was complicated!! So in reality, if this house is not finished by the date given, the builders have leave to drag this out for weeks, if not months. Or they could turn up tomorrow with their 10 days notice if it gets finished all of a sudden. I have read a couple of articles online about the problems people are having with new builds, both the ones actually buying it, and then all along the chain, which could be several people long. Everybody hanging on for the builder.
I fail to see how this situation is not happening on a regular basis, and how the banks do not have a 'policy' in place for anyone who is borrowing and is involved in a new build chain. But that seems to be rather too much to expect.
Currently, she is waiting for the mortgage advisor to contact her this week. If he cannot come up with anything positive, in writing, to say she can get an extension, then she is going to have to start with a new application next week for safety purposes. With all the stress this entails, new valuation - will this be OK, new credit checks - will they take a dim view of another application going in within 6 months, - will the application be processed in time.
So on it goes. The solicitor is tearing her hair out as well, but at least she is very experienced so if there is anything she can do she will. Unfortunately she does not have any clout at the bank!
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