Mortgage Delay

I am in the final stages of completing an off-plan purchase of a new build as a first time buyer. My mortgage offer had been approved and the completion date set for the end of December. My solicitors had been in contact with the bank's solicitors for over a month for the final paperwork but didn't indicate any delay until I emailed them a few days ago. At the time, they were still waiting to hear back from the bank's solicitors, despite having taken payment for stamp duty, legal fees etc. Leaving the solicitors' incompetence aside, what are my options if I miss this completion date? Obviously I will chase down the bank and solicitors as much as feasible. However, I also currently have extra funds available to complete the purchase - can I use these until the mortgage is finalised? I still need the mortgage as the extra funds have been earmarked for other uses and I can only tap these funds for a very short while.

1 Answers

Hi,

Thanks for the question. You really need to take advice from your solicitors, however in terms of purchasing with cash you could do this but you could not then take out the mortgage that has been arranged. The mortgage you currently have approved will be for a purchase whereas once you have bought the property the transaction will instead be a remortgage. This may seem like an unimportant distinction but it is likely that you would need to apply for a new mortgage and the terms may not be the same. Aside from the delay in arranging a new mortgage and registering the property in your name (which may take a while but would have to be done before the remortgage could complete) the lender my not be prepared to lend at all until you have owned the property for 6 months. Speak to your solicitor and to your mortgage advisor before making a decision.

In terms of where you stand with the purchase, this depends on whether contracts have been exchanged and if so, whether the completion date was fixed in the contract or if not whether notice has been served so as to create a fixed completion date. If yes and if the completion date arrives and the issues with the mortgage are not resolved the builders' solicitors will serve a notice to complete. This will give you 10 working days (unless this period has been varied in the contract in which case it may be reduced to 5) in which to complete. If completion does not take place by the expiry of the notice the builders have the option to take your deposit as compensation and re-sell the property. They may or may not exercise the option. Either way, from the day that notice to complete is served to the day you actually complete you will be liable for interest under the contract at the contract rate. Your solicitor can tell you how much this would be. You will also be liable for any losses suffered by the builder as a result of the delayed completion/failure to complete at all though there may not be any.

Best regards

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