FIRST-TIME buyer Jack Bowden, 23, is racing against the clock to buy a home before his mortgage offer expires and he misses out on owning a property for the foreseeable future.
The sports therapist from Portsmouth and his partner had their £270,000 offer on a two-bedroom terrace accepted back in July.
The pair then secured a mortgage offer at a rate of 3.5 per cent and have been patiently waiting for the sellers to move out so the sale can complete.
But hold-ups in the chain mean weeks have turned into months.
The mortgage offer is due to expire at the end of November and the lender has ruled out the chance for an extension.
The best rate Jack can now secure is 5.8 per cent – this would mean an extra £300 a month in the cost of repayments, or £3,600 a year.
Jack told The Sun: “The sellers are stuck in a chain and waiting for someone to move to a newbuild.
“We will probably have to pull out if it doesn’t go through in time. It won’t be worth it to pay the extra.
“It’s really stressful – we have done all the work to get this far and already paid £1,800 in solicitors fees and surveys that we won’t get back.”
Jack has been living with his parents for the past couple of years to save the money needed for a 15% deposit of £40,500.
If the sale collapses he’ll likely move out and rent with his partner.
He added: “We’ll be stuck on the point of what to do next – we need that independence.
“We will probably rent and hope that mortgage rates might drop.”
What are the rules around mortgage offers?
Lenders typically give a window of between six and eight months on mortgage offers for the transaction to go through.
However, many home purchases end up being delayed for months at a time due to legal issues, chains falling through or other factors.
If there is a hold-up, borrowers – or brokers on their behalf – can apply for an extension to the offer.
In cases where the extension is denied borrowers have to start a new mortgage application from scratch.
Scott Mowbray, co-founder of money-saving app, Snoop, said: “The recent hikes in mortgage rates have been tough on so many potential first-time buyers.
“It’s very disheartening, but unfortunately Jack’s story is pretty common right now with people who have worked so hard to save for a deposit and now, due to circumstances out of their control, won’t be able to make that first step onto the housing ladder.”
Mortgage advisers say they are seeing many hopeful buyers anxiously waiting for purchases to complete on mortgage offers secured before the Autumn.
The steep jump in mortgage rates this year means there is a huge difference in the cost of an offer today compared to just a few months ago.
At the beginning of July, the average two-year fixed rate was 3.74 per cent and the average five-year fixed rate was 3.89 per cent, according to financial analysts Moneyfacts.
Now the average two-year stands at 6.42 per cent and the average five-year rate is 6.24 per cent.
For many would-be borrowers, the change is the difference between affording a home and not.
Gindy Mathoon, owner and mortgage broker at Create Finance, said: “We’ve had a client that reserved a new build property under the help to buy scheme in April getting to a point of mortgage offer in May.
“The developer has now said the property will not be ready until December, and the lender has said they will not be granting an offer extension.
“If the property isn’t built in time the client could be in a position where they may lose their deposit.
“Affordability was tight during the initial underwriting process and now the interest rates have increased it wouldn’t pass the lenders affordability rules based on a new application – it’s a nightmare.”
What to do if you’re affected
Anyone who is worried about their current mortgage offer can speak to a mortgage broker to get advice.
There are lenders that will happily grant an extension to mortgage offers to help save a sale.
Mark Robinson, managing director at Albion Forest Mortgages, said: “Whilst there is a concern that extensions may prove difficult with some lenders, I imagine the majority will continue to operate as they always have and honour extensions.
“If you have a mortgage offer, and it is due to expire, don’t dilly dally, get in touch with your mortgage broker so they can get it extended in good time.”
Last week, major banks cut mortgage bills despite the Bank of England hiking interest rates.
The central bank raised its base interest rate by 0.75 percentage points to 3% – the biggest increase in 33 years.