Mortgage Offer Expires Before New Build Property Complete

When buying a property, the prospect of a new build can be tempting; a never-been-lived-in house you can make your own – sometimes custom-made to your requirements.

But with benefits come pitfalls; a common issue with new builds is construction delays, which sometimes result in mortgage offers expiring between exchange and completion.

What is the process for buying a new build?

When you purchase a new-build property, the developer will either give you a fixed completion date or put completion “on notice.”

Completion on notice means you will not be given a set date of completion when you exchange; rather, your solicitor will be informed when the new build guarantee provider has issued a cover note confirming that the property is structurally sound.

If the construction is delayed beyond the projected date, you cannot request your mortgage funds because they cannot be released until the cover note is issued – and this is where you run the risk of your mortgage offer expiring.

How to avoid mortgage offer expiration

So, how do you minimise the risk of mortgage expirations, and what are your options if you run into trouble?

Check the expiration term before taking out a mortgage

To minimise the risk from the offset, if you’re buying a new build, be sure to find out from your broker or provider how long the mortgage offer is valid.

If you or your solicitor have concerns that the expiration term with your selected lender is insufficient, ask your broker to find some lenders with extended offer periods.

This leads us to…

Look for a mortgage with a long offer period

If your new home isn’t likely to be completed for a long time, it’s a good idea to do your homework and hunt around for lenders that provide mortgages with longer offer periods.

While six months is the standard term, some lenders offer specialist new-build products with terms of nine months, others even more. If you’re worried about delays, these longer offers can provide buyers with added peace of mind.

Speak to a self-build mortgage expert to be put in touch with these specialist lenders.

Ask the lender for an extension

Find yourself in an unfortunate position that you’re unable to complete before your mortgage offer expires due to construction delays. You may be eligible for an extension from your lender.

The expense and difficulty of securing a mortgage offer extension will vary by provider. However, be aware that the process can be tricky with some lenders, and there are likely to be costs associated.

Moreover, because your financial circumstances can change over time, lenders tend to treat this process as if you’re re-applying. Many will run new credit checks and affordability assessments; some may even request a new valuation.

Apply for a new mortgage

If your lender refuses to extend the expiry date on your mortgage, you may be able to reapply for the same deal or look for an entirely new product. If this is the case, ensure that you use a whole-of-market broker to carry out your search.

If in doubt, speak to an expert

Delays with new builds are common, and it is very difficult to foresee whether and how you will encounter any issues.

It’s highly recommended that you speak to a whole-of-market broker before committing to the purchase of a new build. A broker can access the full range of offers and identify the best product to suit your circumstances.

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