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Original poster

What would happen if we exchanged but couldn't complete?

87 replies

Helpplease181 · 17/10/2020 13:01

Due to complete very shortly on our house, we have the full deposit available which will be paid on exchange of contracts.

We won't complete until April/May as the properly isn't built yet. My worry is that at the moment we are tied into a big abroad wedding in May that we are not yet within our rights to cancel (Covid..) We booked it well over a year ago, and although we'd like to postpone a year we have other people's money wrapped up in it, so if/until the company cancel we have to assume it's going ahead. We have cut it to the absolute bone and got rid of all extras.

If we complete in April, then we will be fine for the wedding in May as we're currently estimating we'll be around £3k short at the maximum which we can put on a credit card and pay off with DHs November bonus.

My worry is if there are any delays (they haven't started building our house yet) that we may end up having to pay for the wedding before we complete. This means putting £3k on a credit card before our mortgage funds are released, which could in turn affect our affordability and lead to the lender pulling out.

If this happened, what would happen? Would we lose our deposit, and the house? Would they give us a couple of months to pay off the credit card? I'm beginning to panic that maybe we shouldn't exchange, but we so desperately want this house.

OP posts:
thetigerthatcamefortea · 17/10/2020 17:20

Normally and I can only talk about Main Street biggish builders you will have agreed when you reserved your plot that you needed to exchange contracts with 28 days (or at least aim for 28 days)
The sale is in their eyes unstable. You might change your mind or you might not get a mortgage or lose you chain etc. So the exchange gives certainty.
In fairness it gives certainty to both parties. For example there were some people that decided to cancel back in March because of Covid. We have gone on to sell those plots for more money so an exchange means the price and deal is protected

LyingDogsLie1 · 17/10/2020 17:23

You exchange “on notice” which means when notice is served (which can be anytime after exchange) you complete ten days later. You’ll be given an estimated build date, which is when the developer anticipates completion will take place.

anniegun · 17/10/2020 17:28

Its a legal contract once you exchange and you could be sued for the losses as well as losing your deposit. If you have any doubts about your ability to pay then you should not exchange. Talk to the solicitor about this before you commit.

OliviaBenson · 17/10/2020 17:32

I'm not sure I'd be exchanging on something that wasn't even built yet. It would be binding but there could be all sorts of things that go wrong between now and may. Do you also miss out on the stamp duty break?

Has your solicitor advised about this?

OliviaBenson · 17/10/2020 17:33

For example, what if the building company goes busy and they haven't started on your house yet? It could get very messy!

anniegun · 17/10/2020 17:35

Personally I would not buy a house like this. You cant see the house you are buying or have it properly surveyed and checked. Too many stories of new builds being thrown together with very poor quality control. At least wait until it is standing before you commit

OliviaBenson · 17/10/2020 17:47

Bust not busy Hmm

Fallowdeerhunter · 17/10/2020 17:48

If it’s over 6 months away you don’t even have a cast iron mortgage offer as they’re only valid for 6 months. What if there’s a massive financial upset (Covid/ Brexit) and you can’t get a mortgage down the line? Usually you exchange and complete very quickly there’s no way I’d be comfortable with 6+ months between. Anything could happen.

user1487194234 · 17/10/2020 17:53

Normally with new builds the date of entry is so many days after the habitation certificate is granted and if that is much sooner or much later than expected them that's tough
If you have exchanged and don't complete then the penalty provisions in the contract apply
Normally interest on the price until completion of resale,any loss on resale,additional legal expenses of builders
Not a course of action to e recommended

murmurgam · 17/10/2020 17:59

I wouldn't commit to anything so time sensitive personally. I think there's a reasonable possibility of delay to the building schedule - winter storms, outbreak of covid amongst the staff, further lockdowns etc.

Original poster
Helpplease181 · 17/10/2020 18:00

I'm so confused. We have a 12 month mortgage offer from the bank because it's a new build, we have been told we need to exchange in a few weeks. The plots are selling so quickly if we don't exchange I think they'd resell rather than wait for us to be happy. Our solicitor said it's standard process for a new build?

OP posts:
sunshinesupermum · 17/10/2020 18:00

I wouldn't be exchanging on a house that hasn't been built with so much uncertainty OP. How much have you paid the developer to date?

WhereverIGoddamnLike · 17/10/2020 18:04

Why are you buying a new build? There are so many problems with new builds?

Also, have you seriously tied up all the money you have in a wedding? Would your families be happy to just have the holiday if you 2 didn't get married whilst out there?

Original poster
Helpplease181 · 17/10/2020 18:07

@WhereverIGoddamnLike

Why are you buying a new build? There are so many problems with new builds?

Also, have you seriously tied up all the money you have in a wedding? Would your families be happy to just have the holiday if you 2 didn't get married whilst out there?

The wedding was booked two years ago. Our priorities have changed since but we're committed. We are buying a new build because not all developers are bad and it's the only way we can purchase a house as we need to use help to buy. We are thinking of exchanging because we've been told that's standard procedure. I'm reading online now and everything seems to say the same.
OP posts:
user1487194234 · 17/10/2020 18:08

The builders will want you to commit to the property by exchanging

shivermetimbers77 · 17/10/2020 18:09

I would talk to your solicitor OP and see what your options are.

AcornAutumn · 17/10/2020 18:12

Are you saying you have to exchange and put deposit down now?

My sister did the same with new build, bought off plan. It was very weird putting down a deposit for something that didn’t exist. It was four months late to be built and completed. Our understanding from the start was to factor in that they were likely to run late.

Original poster
Helpplease181 · 17/10/2020 18:14

@AcornAutumn

Are you saying you have to exchange and put deposit down now?

My sister did the same with new build, bought off plan. It was very weird putting down a deposit for something that didn’t exist. It was four months late to be built and completed. Our understanding from the start was to factor in that they were likely to run late.

4 months late fine, on time fine, it's just if it happens to complete literally the same payday as the wedding. Then we'd have a problem. Really not sure what to do!
OP posts:
PlanBea · 17/10/2020 18:15

Is there another plot on the site you could switch to? One further down the line will give you a bit more time to move around with things.

We bought a new build. We initially early bird reserved our plot and got first dibs when it was released for sale in February 2019. We were told they were aiming for completion September -November 2019; we exchanged begining of April, we got our keys at the end of January 2020. Delays happen. The longer away the window is, the more likely a delay will happen as it could be something on another house that makes your go slowly - for us, the scaffolding contract changed, they lost a month building houses before us which had knock on effect on trades. Then our neighbours house's upper walls needed to be rebuilt, and they couldn't do our roof till theirs was done.

When they announced they were ready for 31st Jan, we didn't have any option to change the date - that was it.

Another plot could give you more time to save/more options for moving things about. Otherwise, you've got 5 months to save up more - can you cut back anywhere to get that 3k as low as possible?

AcornAutumn · 17/10/2020 18:16

Oh I see

If your mortgage offer is good for 12 months, then surely taking out a credit card shouldn’t affect it as you’ve already cleared the credit check?

Original poster
Helpplease181 · 17/10/2020 18:18

@AcornAutumn

Oh I see

If your mortgage offer is good for 12 months, then surely taking out a credit card shouldn’t affect it as you’ve already cleared the credit check?

We aren't taking out a credit card. We'd be using one we already have. We have 2 £3000 limit credit cards both currently on £0. We'd have to max one, or use half on both. We've read that they sometime credit check again on completion and are scared we'd have our offer pulled at the last minute because of it
OP posts:
AcornAutumn · 17/10/2020 18:18

PS I would say the home is definitely priority over the wedding.

When guests book travel in advance, they must surely be aware that the wedding could be cancelled for any number of reasons?

murmurgam · 17/10/2020 18:20

I think exchanging well in advance of completion is normal for new builds, however a worldwide pandemic is far from normal. That's the aspect that would worry me. It doesn't matter what was normal last year because this year there's a pandemic + brexit which could fuck everything up.

LyingDogsLie1 · 17/10/2020 18:22

The problem with extra spent on credit is it’s an extra liability for OP that the bank weren’t aware of. For the lender, it affects the OP’s affordability.

AcornAutumn · 17/10/2020 18:23

OP “ We've read that they sometime credit check again on completion and are scared we'd have our offer pulled at the last minute because of it”

Can your lender answer that for you?

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