New Homes and Mortgage Timing

[assadahmed]

The basic scenario here is that I have found a decent new build development. Nice houses and I will be looking to buy next summer. I am currently working but have secured a new job with a higher salary which does not start until next summer.

Problem is that a lot of the houses are being reserved off plan way in advance. From the information I have read on the developers website (Linden Homes) once you pay a reservation fee you have to exchange within a certain period of time and then completion takes place once the Home is ready.

Question I have is when do I have to apply for the actual mortgage? At the time of exchange after paying the reservation fee, or closer to completion time. If I apply after reservation I wont get it as my income is too low. Closer to completion I would have started my new job and my salary will be more than enough. However, its obviously a risk to exchange without actually knowing if I will secure a mortgage. My credit is excellent so no issues on that side.

Any thoughts out there on any possible solutions??

[Sarnie]

assadahmed said:

The basic scenario here is that I have found a decent new build development. Nice houses and I will be looking to buy next summer. I am currently working but have secured a new job with a higher salary which does not start until next summer.

Problem is that a lot of the houses are being reserved off plan way in advance. From the information I have read on the developers website (Linden Homes) once you pay a reservation fee you have to exchange within a certain period of time and then completion takes place once the Home is ready.

Question I have is when do I have to apply for the actual mortgage? At the time of exchange after paying the reservation fee, or closer to completion time. If I apply after reservation I wont get it as my income is too low. Closer to completion I would have started my new job and my salary will be more than enough. However, its obviously a risk to exchange without actually knowing if I will secure a mortgage. My credit is excellent so no issues on that side.

Any thoughts out there on any possible solutions??

If you have written signed contract, there will be lenders who will lend against your future salary......

[assadahmed]

Sarnie said:

If you have written signed contract, there will be lenders who will lend against your future salary......

Thanks Sarnie! Yes I do have a written contract all signed up. When applying would lenders ask for details of my current earning? I am self employed at the moment.

[Sarnie]

assadahmed said:

Thanks Sarnie! Yes I do have a written contract all signed up. When applying would lenders ask for details of my current earning? I am self employed at the moment.

No, it's not relevant if thats not going to be your income when the mortgage starts...........

[blank]

You have to have a mortgage offer in place to be able to exchange. Then if there is more than six months between exchange and completion you might need to re apply. Some lenders will extend offers but only for a month or so. This happened to me, and is currently happening to my friends. Complete new application between exchange and completion!

I'm surprised lenders will offer based on future earnings (lots don't even like new jobs) but it sounds like Sarnie can sort you out!

[eliot]

blank said:

I'm surprised lenders will offer based on future earnings (lots don't even like new jobs) but it sounds like Sarnie can sort you out!

Indeed - I was about to post that you have no chance of getting a mortgage against earnings in a job you haven't even started.

[Ozzie Osmond]

assadahmed said:

Thanks Sarnie! Yes I do have a written contract all signed up.

Are you sure about that? In your first post you talked about "exchange" as something in the future, in which case you don't yet have a binding contract to buy the house. What you've probably got is an agreement to reserve the house for you at a particular price - then if/when it is finished the builder will tell you and you'll have a fixed period of time in which to get on with the formalities of buying it. I doubt any bank is going to give a mortgage commitment on a house that doesn't yet exist, not least because they need to see it and value it first. However, Sarnie may know more about this.

Although it is theoretically possible to "exchange" without a mortgage offer it is highly unlikely IMO,

• that the builder would be willing to exchange unless you've had legal advice from a solicitor/conveyancer, or
• that the solicitor/conveyancer will advise you to exchange without a mortgage offer. Put simply, you would be at risk of losing your entire 10% (or whatever) deposit.

[PorkInsider]

Ozzie Osmond said:

assadahmed said:

Thanks Sarnie! Yes I do have a written contract all signed up.

Are you sure about that? In your first post you talked about "exchange" as something in the future, in which case you don't yet have a binding contract to buy the house.

I think they're talking about an employment contract for OP's new job.