Signing contracts to buy without having selling contracts signed

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Redzer

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I have a problem getting the deeds of my current house from the bank that has gone on for nearly six weeks (long story, for another time) and its affecting the purchase of my dream house. The sellers of that house have issued me contracts over 2 weeks ago but my own contracts have not even gone out because they need the deeds with it. The sellers are starting to get very edgy as they need the contracts back to move on the house they're buying,etc and I'm afraid that the chain could fall apart if I don't return the contracts within the next few days. My solicitor initially said that he wouldn't let me sign to buy the new home without having the signed contracts returned on my current home.

My questions are:

1) Can I instruct my solicitor that I want to sign and return the contracts on the new home in this situation and must he do as I instruct?
2) Has anyone any experience of this course of action and what did happen?

I'm aware of what could happen (end up with 2 houses) but I'm confident that once the contract on my current home goes out that it will be signed and returned promptly (cash buyer, ready to go). Worst case scenario with this option (current buyer backs out) is still ok as I could cover the 2 mortgages until my current home resells but it wouldn't be pretty. Worst case scenario with letting things run their course is the dream house disappears but I'm currently willing to take the above risk to avoid that. The dream house will probably be my home for the next 30 years and I do not want to lose it. For other reasons I also want to conclude this process soon and am not keen to wait for another 'dream house' to appear as they're rare in the area.

Any answers or comments (especially positive ones!) greatfully appreciated
 
As you say, you know the worst case scenario. Your solicitor will do as you instruct as long as you know the risks and are prepared for the potential problems. If you were a client of mine, I would probably ask you to sign a waiver confirming the legal advice before allowing you to go ahead. Only potential problem I see is in relation to the mortgage you have approval for for the new house. How much is it for? Ie. is it for the entire purchase price, or is it for the purchase price less any equity in the house for sale? If it is for the entire purchase price, is it dependant on you selling the old house- in other words had your loan adviser known of the possibility of you still being indebted on the old house, would you have qualified for this loan? Also if it is for less than the purchase price on the new house, how do you propose to come up with the purchase monies, stamp duty etc?
 
Hi Redzer,

If you can cover 2 mortgages fiancially, then go ahead and sign the contracts on new house and get your solicitor to return them. I did this once, the solicitor wasn't happy, but you are the client.

Make sure that you have mortgage approval in writing, not some verbal from a broker. Don't loose your dream house over this.
 
My situation re the two mortgages is purely theoretical at the moment as the situation is just evolving over the last 2 days and I'm considering what my options are.

I had intended taking out a 55% mortgage on the dream house and making up the balance with the equity from the sale my current house. I'd still intend to do that but to bridge the gap now I'm considering sourcing the remaining 45% + stamp duty etc by equity release on my current home i.e. moving from a 35% mortgage to an 85% mortgage if the bank would allow it. I haven't gone near them yet but do you think they'd go for this arrangement (given that it should only be for a short term period i.e. worst case scenario I sell the current house within 3-6 months)? Best case scenario the situation never arises as the current buyer just gets, signs and returns the contracts and this whole issue is just a storm in a teacup to laugh about later. But I want to be able to cover the situation should it arise.
 
The loan offer letter from the bank most likely includes a clause indicating that the loan offer is dependent on contracts signed for the sale of the first property (based on the info in your last post).

That being the case, your solicitor cannot let you sign the offer letter, until you have the contract sorted out on your sale.

You can of course go back to the bank and get a revised offer letter. You probably will qualify, but it will take T I M E.

¬ Revised application form for mortgage,
¬ amendments possibly being required in planned life cover (which means possibly having to retrieve the policy from your bank, getting it to the life company for them to make the amendments
¬ possibility that your new increased life cover will go over an underwriting limit and while you may have escaped PMA first time, you may now need a PMA (from GP) and this is never quick.
¬ You may be hit with higher repayment rate because rates are usually tied to LTV (which for you looks like more than doubling)
Yes it is possible, but don't think for a minute that the logistics of getting a loan offer changed are straight forward. Been there, and it worked out, but it took best part of 5 weeks.
 
Only have 4 weeks to closing so time very tight. New mortgage and mort prot cover are from different sources than current ones so they may not trigger limit alarms. The loan offer went to the solicitor and I don't have a copy yet so I'll have to check that angle out pronto. The new house loan offer amount is still the same so its only the current one that could take time (if there isn't a clause in the new mortgage loan offer about signing contracts on the current house).

Anyone know if such a clause is standard as the solicitor is away till Monday?

Steelblue's comments below indicate that it may not always be the case as he signed in a similar situation. Anyone else go down this road before?
 
Lets say the clause is common, but is not always there. You should have recieved a copy of the loan offer at the same time as the solicitor.
 
Dutifully following Murphys Law the mortgage pack to the solicitor and my copy of the loan offer have also gone astray in transit and will have to be reissued next week.

Does anybody know if NIB include a clause indicating that the loan offer for a new property (<60% ltv) is dependent on contracts signed for the sale of the current property?
 
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