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New Builds Contract Process if Circumstances Change

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  • 06-03-2018 10:37am
    #1
    The Sparrow
    Registered Users Posts: 3,614 ✭✭✭


    As I understand it, the process when buying a new build is usually that you place a deposit and then put a larger amount down when you sign a contract. One place I was talking to said that after putting the deposit down you have 21 days to sign a contract and put a larger amount down.

    My question is about what happens next if you put the deposit down and sign the contract and then have to wait a few months or longer until the build is completed and you can drawdown the rest of the mortgage? What if your circumstances change during that period between signing the contract and the full mortgage drawdown?

    When the property is built will the bank reevaluate your ability to pay the mortgage? What would happen, for instance, if you had lost your job during that period between the contract being signed and the house being completed? Or if you were forced to change job and were working a probation period.

    Could you find yourself in a position where you have signed a contract to buy a property and are therefore liable to pay the full amount but the bank refuses to honour your mortgage approval? :eek:


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    #2
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    The Sparrow wrote: »
    Could you find yourself in a position where you have signed a contract to buy a property and are therefore liable to pay the full amount but the bank refuses to honour your mortgage approval? :eek:

    In theory you could be compelled to purchase the property (which you would be unable to do - blood from stone etc.) In practice they would just keep your deposit and sell the property to someone else.


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    #3
    The Sparrow
    Registered Users Posts: 3,614 ✭✭✭The Sparrow


    Samuel T. Cogley wrote: »
    In theory you could be compelled to purchase the property (which you would be unable to do - blood from stone etc.) In practice they would just keep your deposit and sell the property to someone else.

    Losing the deposit is a pretty big risk too. Do people buying new build not worry about this?

    Potentially you could lose a significant deposit due to no fault on your side if you are made redundant or whatever.


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    #4
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,218 Mod ✭✭✭✭godtabh


    Isnt there a standard condition of contracts that the sale is contingent of mortgage approval at time of closing i.e. if no mortgage sale is off and deposit is returned?

    Something to ask your solicitor.


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    #5
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    godtabh wrote: »
    Isnt there a standard condition of contracts that the sale is contingent of mortgage approval at time of closing i.e. if no mortgage sale is off and deposit is returned?

    Something to ask your solicitor.

    The vendor has to accept that clause and the anecdotal consensus (on boards at least) seems to be that developer won't. Definitely worth asking for this clause though.


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    #6
    GingerLily
    Registered Users Posts: 4,767 ✭✭✭GingerLily


    Samuel T. Cogley wrote: »

    The vendor has to accept that clause and the anecdotal consensus (on boards at least) seems to be that developer won't. Definitely worth asking for this clause though.

    Our developer would not allow this clause, but we were due to close 2 months after signings contracts so our loan approval would not have expired.

    Its a massive risk OP, we took it but we were confident we would get approval (determined would probably be more accurate).


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    #7
    witchgirl26
    Registered Users Posts: 2,141 ✭✭✭witchgirl26


    From things I've seen a lot of the time the clause is removed but a number of developers are willing to put it back in once it's raised with them. Always worth asking. I talked to my solicitor about it when we were looking and he said that he would be cautious of continuing without the clause if there was an expected long lead time to completion of the property as anything could happen in the mean time which could mean that the bank would refuse the mortgage at that stage. Ultimately it is your risk to take at the end of the day. Some people do and are fine.


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