Advice please?

ultra55ound

I was approved for a mortgage last July, and subsequently made an offer on a house that I was told would be ready in 2 months.

Since then the builder has delayed at every step and eventually signed the contract.
The finish date was last Friday and all that had been done since the offer was the sockets and the chasing, and a very small amount of brick work. It's nowhere near complete and I haven't been told anything with regards to a rescheduled finish date.

Now I'm left wondering what's going to happen what with the IMF restructuring the banks etc.

The contract has a clause that states if the bank should refuse to lend the money for whatever reason then I should get my deposit back (without interest, minus costs etc.)

The loan approval only lasts 6 months so it's up pretty soon and I'll have to reapply and I might not get approval again. Also the asking price for the house (same houses in the same estate) is now less than what I agreed to pay, so I can't see the banks lending the full amount anyway.

So what do people think? With the IMF taking over the banks will my initial approval still stand? If so what if the house isn't complete before the approval runs out?
And of course, what happens if the builder goes out of business before then, which I suspect might be the case?

Bit of a messy situation really. what do you guys think?

eagle_i

First off you need to consult your solicitor regarding your contract to see what penalties are for missing the agreed finish date. Reading between the lines of your post I assume you and the builder signed the contract? If this is the case you (and the builder) are tied into completing the purchase(sale) and cannot voluntary opt out of the purchase(sale) at this stage without losing your deposit. Most contracts have a reciprocal penalty on the builder for missing an agreed close/finish date – you need to know this information before you can make your next move.

Really you need to consult your solicitor on your options at this stage, perhaps part of the contract will have penalties on the builder for unreasonable delays, which could make the contract null and void, therefore allowing you to opt out without suffering a penalty or losing your deposit.

With regard to your mortgage, if you don’t draw down within 6 months of the offer, it is as such back to the drawing board, perhaps not a full application but given the times we are in, certainly a review of the offer will be undertaken. Depending on the amount you are borrowing as against your original agreed price (i.e the loan to value ratio) the mortgage lender will certainly be reluctant to agree a mortgage of 90% of your agreed price if the same house is now cheaper on the open market.

Anyway, until you know what your legal situation is with regard to opting out of the contract without fear of losing your deposit you are not in a position to move either way.

If it was me, I’d be looking at any way of getting out with minimum loss where possible, or certainly trying to renegotiate the purchase price with the builder for the unreasonable delays, missed finish date and the new cheaper price! Ultimately, I’d really walk away assuming little or no loss to my deposit. If you were recently approved for a mortgage the likelihood is you will be approved again for another property. But that is just a personal opinion!