It’s a common misunderstanding that once contracts have been exchanged that your purchase (and possible sale) is a done and finished deal. The reality is that mortgage lenders can actually withdraw a mortgage offer after exchange of contracts and all the way up to completion. This can leave all parties involved, in the collapsing chain, to deal with the associated costs as well as possibly loosing deposits.
It is for this reason that it is wise to leave as short a time frame as possible between exchange of contracts and completion, although this is sometimes easier said than done – particularly when you are part of a large chain which can often throw up complications and delays.
After the credit crunch and resulting recession of a few years ago, mortgage companies have been far more cautious – and remain so to this day since there is a belief that the situation was brought about by bad lending decisions. This means that mortgage companies are particularly receptive to issues surrounding Coronavirus and Covid 19. People who have had mortgage offers only weeks before can find them being withdrawn due to ‘changes in circumstances;’ changes that you are legally obligated to declare to the lender. Your solicitor or conveyancer, knowing of any such changes, is also legally obliged to advise your lenders too.
Changes in circumstances could mean the fact that either you or your partner has been furloughed or news of your employer reporting possible redundancies in the future. Whilst we recognise that it can be very disappointing to have to put house moving plans on hold, its better to be honest with both yourselves and other parties concerned of any changes, however small, to your circumstances to avoid disappointment and considerable financial loss for all – further down the line.
If you have had an offer and your future employment and that of your partners, looks certain, it is important that you expedite the process as swiftly and efficiently as possible using a proven solicitor or conveyancer. It might also be worth considering selling your property first and living with your in-laws or renting. This not only puts you in better negotiating position, but also, it enables you to move far faster when purchasing.
Remember, that an ‘exchange of contract’ is an agreement between ‘buyer and seller’ and that mortgage companies are not, in any way, bound by this agreement. You are only completely ‘home and dry’ after completion.
For further advice on the mortgage offer and exchange of contract process talk to independent mortgage broking specialists, Dunham McCarthy.