Will we get purchase completed by 31st Dec?

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gambelore

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Hi there, any advice on this matter would be greatly appreciated.

My wife and I put down a bid for €240,000 on a house on the 12th of August 2011 and were told by the estate agent we had no chance. We got mortage approval for that amount from BOI. We are FTBs have 10% deposit and 2 permenant state jobs so we feel that the approval should still hold. We confirmed with the estate agent that we had approval but he said that the house would not be sold for less than €260,000. We decided to continue renting and wait until next summer to purchase.

Today he sent me a text saying the vendor will take €240,000.

Here is my question. Will we get the deal done before December 31st?
We got approval on August 16th but have not spoken to the bank since. We had a meeting with the life assurance rep from the bank but didn't proceed further. We have not had the surveyor or valuer out to see the house yet.

The reason I ask is because of the changes in mortgage interest relief that the government have stated will set in from the first of January 2012. I appears to me that there is a difference of circa €6,200 in MIR(from now to Dec 2017) if we draw down the loan before the 31st of Dec rather than after it.

That is based on my understanding that the rate of MIR will be reduced to 15% of the first €3,000 per individual per annum which equates to €900 per annum MIR in our case.

My thought are that if we could complete the deal before Dec31st we would save €6,200 on interest and around €9,000 per annum on rent so that even if prices fall further we are not losing out too much in net terms. However if we dont get the deal done by 31st of Dec we would be happy enough to wait till next summer and see what happens with the market.

Thanks in advance for any suggestions
 
I'd agree with onq there.

One thing - for mortgage protection life insurance you are not tied to the bank and may get a better deal by shopping (e.g. online) for a low cost basic/reducing term policy separately.

How do you calculate the interest savings of €6.2K and over what period?
 
Well my reading of the situation is that prices are likely to fall more in the first quarter of 2012 given that people are aware that the MIR will be changing on Jan1. It make sense to buy before then if you are planning to purchase. So if 2 months isn't a realistic time frame to close the deal I think we will take our time and hope to get the property at a lower price next year.
 
My last post was in reply to ONQ.

I relation to your comment about mortage protection life assurance Clubman, i figured going through the bank would be quickest but maybe I'm incorrect, or maybe 2 months is plenty of time to sort this part out.

In relation to the €6.2K I used a MIR calculator online.
The MIR will disappear completely after december 2017.
Based on €220,000 mortgage over 30 years at 3.85% I calculated that I would get €10,700 MIR over 6 years (ignoring 1 payment which I would have made in 2011 and would also get MIR on). If I didnt purchase for a further 12 months and the price and interest rate remained the same, I would get MIR of €900 for 5 years or €4500 in total. €10,700-€4500= €6,200.

Maybe a better comparision would be if I bought in Jan 2012. If I did I would get another full year of MIR worth €900 so the difference would be reduced to €5,300.

Please feel free to point out any flaws in my logic.
 
We put down a deposit on our house last December and moved into it in February. The main things that held us up were the bank requesting more and more information and forms which we hadnt heard about before and the life assurance. We ended up getting the life assurance through a broker and not through the bank as they were looking for ridiculous things!! This was sorted within a week with the broker. Then the main hold ups were with the money being transferred from the bank to the solitcitor. My friend worked in the soliticitors office and said that you need to phone them every day to check if the money has been sent. Hope you get sorted :)
 
Thanks Laobhise. Your timeline backs up my feeling that it is possible but we need everything to go without a hiccup.

When we got the mortgage offer our solicitor told us that it seemed we were very straight forward clients for the bank because of our permanent state jobs and good savings history. He felt it would be quite a straighforward case.

Any other advice from people would be appreciated.
P.S. the vendors live in the UK, i wonder would that slow things down?
 
Gamblelore

Please note that we do not allow property price speculation on askaboutmoney.

We will make a very narrow exception for this case as it's to do with the impact of tax changes on the price. Do not stray outside this specific issue to discuss house prices in general.
 
All you're looking at though (or are able to look at) are things on your side of the deal. We went sale agreed on the house we're purchasing in June, still haven't got the keys. Our own sale took from sale agreed in June to keys handed over at the beginning of October. There were delays in both deals but none were down to us, we've been ready to move in for the past month but are still in interim accomodation waiting for the final date (which has already elapsed once). The mortgage protection in our case only took a couple of weeks with insure.ie.
So as was asked, is this a dealbreaker?
 
Thanks for the responses. This is my first post on the site and I do apologise if I strayed over the boundries.

I tried to give as much detail about the variables involved which I know are many.
F9710145, thanks for your reply. That was what I suspected, that there could be unexpected delays from the other parties but as a FTB I'm not too sure what they are.

My key question is "is 40 working days enough time to close the deal and start repaying"

Is the MIR a deal breaker for us. Yes if we dont get it I think we will delay purchasing for at least 6 months.
 
Hi gambelore,

's experience is not untypical - AFAICR the solicitors only get going on requisitions in title after the deal is agreed, and that can drag on even if there are no issues arising.

His experience is four months, while 40 working days is only eight weeks [40 ÷ 5], so it looks like you may be delaying purchasing for six months.


ONQ.
 
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That is awful for the vendors - if they go sale agreed, they have to stop all viewings and you will all have to incur costs of solicitors etc, they will probably have to have costs of moving their stuff out, take the house off the market and at the end of the day you may pull out of the sale because it doesn't make 31 December?

If you are serious about not going through with it if it doesn't make 31 December, then you shouldn't go for it. If you do agree to buy and try to put a clause in that says deal must be done by 31 December, I seriously hope the vendors solicitor does not allow it. Neither you nor they will have any real control over when it actually closes, and to all have to go to that expense and stress would be awful.
 
Then there is all the obvious grief of moving around Christmas and the New Year.

Moving house is a very stressful time and Christmas and New Year puts a strain on most families.

Combining both events seems like you might be inviting disaster, so even on those grounds I'd think again.
 
Thanks Daisy and ONQ,

Daisy we will try to be fair to the vendors in this situation. I posted my initial post so that I could decide what to do before we meet the estate agent on Tuesday. I dont want to waste our time and energy or that of that vendors/agent if we aren't going to complete the deal. However if they had accepted our offer in August we would all be happy right now.

ONQ I agree with your thoughts re Christmas time. There are actually 9 weeks from today until new years but there are 4 bank holidays including today so there are 41 working days. But I guess there is a good chance there will be issues re weather/personal holidays for people we are dealing with, which could slow the process down.

We change our minds a few times everyday re this decision, but at the moment we think we will wait.
 
If the vendors do not have a mortgage (i.e. they have the deeds in their possesion) you have a chance.

We were just in the exact same situation as you. Slightly higher pruchase price, same original asking price and vendors in the UK (same house possibly!!). We were about two weeks ahead of you in terms of timing. We went sale agreed about two weeks ago and all parties were of the belief that the sale would go through by Christmas. Unfortunately the vendors failed to mention the presence of a restrictive planning clause which prevented us from purchasing.

We are now happy to see what affect the lowering of MIR has on prices, plus the introduction of the sales price database, in 2012.
 
gambelore said:
I relation to your comment about mortage protection life assurance Clubman, i figured going through the bank would be quickest but maybe I'm incorrect, or maybe 2 months is plenty of time to sort this part out.
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Slightly off the main point, but it should be noted that banks selling life insurance policies are simply acting as agents for the life insurance companies. So even though they may share a name, e.g. Bank of Ireland and Bank of Ireland Life, the latter is simply a trading name of New Ireland Assurance.

There's no reason to believe that arranging a life insurance policy through your lender is going to be any quicker than arranging it through a broker or any other channel. If anything, an experienced and professional broker should be able to gather all the relevant information at the outset, making the process quicker. Many brokers have facilities to print policy documents in their own offices, within certain limits. (Disclosure - as I'm a broker myself, I'm not exactly impartial in this, but it's genuinely my opinion.)
 
Mortgageseek said:
Unfortunately the vendors failed to mention the presence of a restrictive planning clause which prevented us from purchasing.
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Hi Mortgage seek, it could be the same house!! Were ye planning on extending/rebuilding? We are not, as the house is certainly adequate for our needs in terms of space etc. Am I correct in thinking that this restriction would only apply to us if we wanted bo extend/rebuild in the future?
 
Doubt it's the same house to be honest! The planning issue in my case related to the existence of an inurement clause i.e. vendors can only sell to a local with a rural housing need.
 
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