New-build homes: reservation period extension for off-plan properties?

[SnowBells]

We are currently looking at properties - some of which are new-builds. There is one we might like, but it will only be completed later this year (Oct/Nov). However, they are already accepting reservations. However, from what I know, developers expect you to exchange contracts within 28 days following the reservation date, despite completion being some time in the future. This leads to the following problems:

1. Most mortgage offers are only valid for 3-6 months (the best ones, 3 months!). Given that October/November is 6 months away, there is a likelihood that should there be any delay, you will lose your mortgage offer + have to pay the mortgage fee again to apply anew.

1. Obviously, there is opportunity cost - when you exchange contracts, they get your deposit. You get no interest, investment gains, etc. The developer will. Despite you not being able to step into your home for at least another few months.

1. Worst-case scenario: you paid your deposit, the developer is delayed, your mortgage offer expires and for some reason you can't get a reasonable mortgage that you think is affordable. If you pull out now, you lose your deposit!!!

My question is: Has anyone ever asked to get the reservation period extended? Fine with paying a reservation fee (approx. 1-2k), but not apply for a mortgage until around July/August.

This would enable us to exchange contracts in August/September, and move in in October/November. Hopefully, the mortgage offer would simply have no time to expire!!!

No and that is the problem with buying a new build and in this market they can be as picking as hell. If you can't meet their request there will be a dozen people who can.
Do they offer a part exchange scheme, as this is a way round it ?.
We have purchased three new builds (all off plan) and have had to proceedable and exchange in 28 days.

The last off plan we bought we offered on in September 2007, with a completion date of March 2008. We had a 6 month mortgage offer. Due to the banking crisis our property was delayed and not finished until September 2008. We were lucky in that our mortgage provider simply let us pick a new rate which was slightly higher than our original one but we paid no more fee's. Which considering the mess the banks were in was reasonable. Two other families were not so lucky (self employed people) and lost their mortgage offer and subsequently their houses.
Our neighbours part exchanged their old house so were able to stay put until their house was completed.

HaveToWearHeels

But what would happen to the BIG deposit (the 10% or so that gets transferred at the time of exchange)???

Surely, the developer can be sued for that if they can't finish the property in the time they say it can be finished!!!

There was NO completion date in our contract, it was all verbal (it would be unwise of them to do so) therefore they could not be sued if they didn't meet it, as they did in our case. If for some reason (like the ones you have listed in you OP) you couldn't complete then you would loose your deposit as did those on our developement. We exchanged with 10% deposit.

Is this a large developer ? I have heard of smaller local developers allowing exchange with 5% deposit with your solicitor holding the remaining deposit, if there is a long time between exchange and expected completion of the property. Less of a risk but still a risk.

Hi,
I am in also similar situation. I have now about 20 days remaining to exchange contract for a new build property. My mortgage offer is going to expire in August 2014, whereas the property is going to be ready by November 2014. Developer is asking me to pay for 10% deposit at contract exchange time. My mortgage advisor think that he would be able to extend mortgage offer or may be able to select a new product near to the end of expiry. I am not confdent what would happen with mortgage offer extension. Developer is saying that due to any reason if I back off, then they would not return 10% deposit. Can someone please guide how to handle this situation?