Mortgage application and new build property

[guessmyusername]

My dd has just reserved a new build property which is scheduled to be ready oct/Dec this year. She has a mortgage in principle from her preferred lender and contacted them but they have advised not to apply until later in the year because any mortgage offer obtained now will expire by the time the property is ready. The builder's sales person is not very happy about this but my dds solicitor doesn't see a problem. Anyone experienced this and can shed any light?

I'm no expert but my understanding is that mortgages are only good for 3 months so I can see why the sales team aren't happy. Her circumstances could change in the next 6 months and she may not be able to get the right mortgage needed.

Not sure why they have let her reserve it as they would of known about the mortgage situation?

Hope it all gets sorted for your daughter so she can buy her new house

@lady725516

I'm no expert but my understanding is that mortgages are only good for 3 months so I can see why the sales team aren't happy. Her circumstances could change in the next 6 months and she may not be able to get the right mortgage needed.

Not sure why they have let her reserve it as they would of known about the mortgage situation?

Hope it all gets sorted for your daughter so she can buy her new house

Sorry, just seen that they want her to re apply in a few months time. Makes sense to me as she will need a new mortgage later in the year when the house is ready

When we purchased a new build it was inevitably delayed so we had to contact the mortgage lender and they just checked that we hadnt had a change in circumstances then extended the offer.
I can see both points of view though, i guess the sales team are potentially going through a sale that might not happen and thats why they arent happy?

A mortgage company may agree to make stage payments during construction in some circumstances. I would advise speaking to a qualified and certified financial adviser

No need for stage payments as nothing more due until completion

Basically with new build properties exchange is expected to occur 4-6 weeks after reservation. This will be part of the initial reservation agreement and should have been explained from the start. It is usually 6 weeks for Help To Buy purchasers and 4 weeks for all other purchasers. Part of this being done is that the mortgage is applied for, approved and paid to the solicitors. Without doing this the exchange cannot take place and the builder would likely cancel the reservation and remarket the property. Currently it is extremely busy in the housing market with no signs of it slowing down, and there will always be someone able to complete the 4-6 week exchange from a builders standpoint so won't wait for someone who cant. There are mortgage lenders that provide 9 month offers, and the majority are aware that due to how quickly properties are selling that they are being released at a much earlier stage with a longer completion time and factor this into their offer. There is also the scope to extend with a number of lenders to suit the timescales. A new build specialist mortgage advisor would be a good person to chat to.

Typically an offer is valid for 6 months. Some lenders will let you extend the offer, others will ask you to pick a new product (potentially at a higher interest rate). The rules from some lenders are different if a new build property (Barclays and Santander offer a longer extension period on new builds)

@xsamix86

Basically with new build properties exchange is expected to occur 4-6 weeks after reservation. This will be part of the initial reservation agreement and should have been explained from the start. It is usually 6 weeks for Help To Buy purchasers and 4 weeks for all other purchasers. Part of this being done is that the mortgage is applied for, approved and paid to the solicitors. Without doing this the exchange cannot take place and the builder would likely cancel the reservation and remarket the property. Currently it is extremely busy in the housing market with no signs of it slowing down, and there will always be someone able to complete the 4-6 week exchange from a builders standpoint so won't wait for someone who cant. There are mortgage lenders that provide 9 month offers, and the majority are aware that due to how quickly properties are selling that they are being released at a much earlier stage with a longer completion time and factor this into their offer. There is also the scope to extend with a number of lenders to suit the timescales. A new build specialist mortgage advisor would be a good person to chat to.

Very helpful thank you