What happens if you are afflicted by a diasaster (loss of job, accident etc.) between exchanging contracts on a property and legal completion..? For some off-plan properties this time can be quite long (e.g. > 1year).
Does the mortgage Co release the funds for completion... and then reposses..? Or do you lose your desposit and risk getting sued for the remainder..?
You complete the purchase and immediately put it on the market, selling it on at a whopping profit.
Don't you have disaster insurance?
The mortgage company would release the funds for completion, assuming the mortgage had been arranged prior to the "disaster". I expect that in that case (where the mortgage was being arranged well in advance of completion), they would have required you to take out insurance against such disasters occurring prior to completion.
If you have no such insurance, then they will only repossess after you have missed several payments on the mortgage. Your best bet in that case would be to put the house on the market straight away, and hope you can sell it before they repossess.
It may be cheaper to renege, especially if the disaster would have a real consequence on your ability to complete.
You will lose the deposit and possibly get sued for readvertising costs, abortive legal fees and interest on top. A lot will depend on the sort of disaster and the vendors attitude to it: -
Traumatic injury - back out look for sympathy and a negotiated solution*.
Loss of job - complete; look for another job, put new house on market or take lodgers.
Own sale falls through, or old house burns down etc. - complete; go to bank for bridging loan pending sale / insurance payout..
Divorce / spouse walks out - stall completion of purchase, rush completion of sale, draw the net proceeds out in 500Eu notes and fly to another country of your choice ;-)
Remember stamp duty, agents & legal fees etc. will amount to 5-6%.
In message , Alex Heney writes
Do they? I have never heard of a lender having such expectations.
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