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First-time buyer mortgages



What to do if your house sale falls through

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Buying a house is stressful enough. However, when a sale falls through it’s especially dispiriting: all those hopes and dreams (and plans for the kitchen) shattered with one phone call or email from the estate agent.

According to Which?, around three in ten house purchases in the UK fall through and it’s too early to say how many sales will fall through as a result of the coronavirus pandemic. The most common reason for a house sale falling through is because of a problem in the ‘chain’ – the interconnected string of properties that your purchase is part of. For example, if the vendor of the property you’re buying can’t move into the new home that they’re purchasing, then it’s likely they’ll stay in their present home and so will not sell it.

There are other reasons why sales can fall though: the surveyor might discover structural problems, which in turn may deter you or a buyer within the chain of purchasing the property. You (or someone else in the chain) loses their job, or another buyer comes in with a higher offer (‘gazumping’).

It is important to note, that Scottish property law is significantly different to England and Wales, and this article refers to English and Welsh property law only.

Exchanging contracts on a property makes the sale legally binding: after exchange has taken place neither you nor the vendor can pull out without running the risk of paying major penalties to the other party. But before the exchange, even if you and the vendor have both signed contracts and you’ve paid for a survey, for example, either party is free to walk away with no financial penalty, other than a loss of costs already paid out.

As a buyer, it is likely that you have applied for a mortgage to cover the cost of the purchase. The good news is that Mortgage offers are usually valid for three months and can sometimes last up to half of a year. If you had to start again, the lender may be willing to issue a mortgage offer on your new found property without the need for further assessment, subject to the new property meeting the lenders criteria: though it may not be wise to rush into another purchase just because you’re keen to move. A mortgage specialist like Charles Cameron will be able to advise you on your mortgage options here.

Another worry is legal costs. When you buy a house, you may have to pay Stamp Duty (a tax on buyers), plus the cost of assorted legal fees from your solicitor. If a sale falls through, you won’t have to pay Stamp Duty but you’ll still be billed by the solicitor for the work they’ve done for you so far. However, if you feel like the solicitor is charging you too much, don’t be afraid to question them about this.

The key throughout this process is to remain calm and not to make rash decisions – no matter how much stress you’re under. Another suitable property will come on to the market, and if you need to reapply for a mortgage then Charles Cameron will find the most suitable one for you and help guide you through the purchase process during this difficult time.

 

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