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    • mallen
    • By mallen 5th Dec 17, 5:30 PM
    • 24Posts
    • 0Thanks
    mallen
    Buying house off plan
    • #1
    • 5th Dec 17, 5:30 PM
    Buying house off plan 5th Dec 17 at 5:30 PM
    Hi, I have found a few properties which are being sold off plan.
    The developer want me to pay a £500 reservation fee up front and then proceed with the mortgage application process.

    They then want to exchange contracts within 6/8 weeks from this I think.. Is this normal?
    I'm guessing I will need to pay the deposit then?

    The property isn't due to be completed until June 2018.. If I exchange contracts in Feb/Mar do I have to start paying mortgage payments then?

    Any tips for doing this type of house purchase is appreciated.
Page 1
    • GDB2222
    • By GDB2222 5th Dec 17, 5:36 PM
    • 14,177 Posts
    • 76,267 Thanks
    GDB2222
    • #2
    • 5th Dec 17, 5:36 PM
    • #2
    • 5th Dec 17, 5:36 PM
    Hi, I have found a few properties which are being sold off plan.
    The developer want me to pay a £500 reservation fee up front and then proceed with the mortgage application process.

    They then want to exchange contracts within 6/8 weeks from this I think.. Is this normal?
    I'm guessing I will need to pay the deposit then?

    The property isn't due to be completed until June 2018.. If I exchange contracts in Feb/Mar do I have to start paying mortgage payments then?

    Any tips for doing this type of house purchase is appreciated.
    Originally posted by mallen
    My own top tip is not to! Many people do it, and they get away with it, perhaps not realising all the risks involved.

    Your biggest risk is that you can't secure a mortgage now for completion next June. Plus, you could lose your job in the meantime, etc. Plus the building may not be completed on time - or ever, for that matter!

    You only pay your mortgage when you borrow the money, which is on completion. You may be asked to make stage payments, and you should avoid signing any contract like that.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • SuboJvR
    • By SuboJvR 5th Dec 17, 5:51 PM
    • 458 Posts
    • 325 Thanks
    SuboJvR
    • #3
    • 5th Dec 17, 5:51 PM
    • #3
    • 5th Dec 17, 5:51 PM
    We reserved off plan, though the house’s foundations were being built at the time and the neighbouring build was progressing well.

    Timeline: late May we reserved, given Oct/Nov completion date.
    Applied for mortgage late June along with Help to Buy authority to proceed
    Paid Reservation Feee once Help to Buy authority was received around a week later
    Exchange contracts early August (after we had been inside the house for the first time) and paid deposit
    Completed 3rd Nov, bang on schedule, mortgage started being due then paid in arrears (first payment 1st Dec)

    I am aware it is a minefield but we went in quite well researched having spoken to several existing residents which reassured us and I would definitely recommend this step!
    • eddddy
    • By eddddy 5th Dec 17, 6:01 PM
    • 5,529 Posts
    • 5,220 Thanks
    eddddy
    • #4
    • 5th Dec 17, 6:01 PM
    • #4
    • 5th Dec 17, 6:01 PM
    The property isn't due to be completed until June 2018.. If I exchange contracts in Feb/Mar do I have to start paying mortgage payments then?
    Originally posted by mallen
    You'll only pay mortgage payments once you've completed (i.e. once the house is finished and you've got the keys).

    Bear in mind that June 2018 is probably the current estimated completion date - it could end up a lot later.

    Your contract should specify a 'long stop date', which is a kind of 'latest possible date for completion'. If the house isn't ready by the 'long stop date', you can walk away and get your deposit back.

    But... you need to make sure your mortgage offer is valid all the way up to the 'long stop date' - and mortgage offers are often only valid for 6 months.
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