First Time Buyer - some help please!

MMG

Hi all,

I'm currently looking at buying a property for the first time - Quick run down.

Combined income - £55k
House Price - £199950
Deposit - £30000

It's for a new build 4 bedroom semi. I originally looked at them this time last year and they were £270k!

Spoken with the estate agents, who say that the builders will accept £192k

Now, here comes the part I don't understand. Its not built yet, but will be ready by Sept/Oct time. You pay a £1000 fee, and have to get the mortgage sorted within 8 weeks I believe.

What step should I take? I don't think it should be a problem getting a mortgage, should I put in an offer?

Will a mortgage company even lend to me if its not been built yet? And when would I actually start paying the mortgage, when I move in?

Any help appreciated!

neb_3

the builder will want you to "exchange contracts" within the 8 weeks they've told you. They'll want a "reservation deposit" to be paid now upfront and then probably a 10% deposit on exchange of contracts. the balance will be payable on completion (ie the day you get the keys). you will need to have everything in place including your mortgage offer before you exchange contracts and yes they will give you an offer on a house thats not yet built.
in the contract when you exchange there will be no set "completion date", completion will be "on notice" as the builder wont yet know the exact date it will be finished. therefore make sure your solicitor / conveyancer makes the builder put a "longstop" date in the contract (a date by which the house MUST be completed, say christmas 2009 for example) otherwise the builder can complete whenever they like.
so now you need to instruct a solicitor and start sorting your mortgage application out

MMG

Thanks for that, useful information!

Any more tips?

neb_3

yes, if the builders are desperate to get rid of the po#roperties then see what extras you can get out of them, turfed garden, fence panels, carpets, curtains, etc etc, anything you can get means you wont have to pay for it when you move in!

david29dpo

If you exchange, what happens if the mortgage offer is withdrawn?

neb_3

basically thats the risk you take

Conrad

A very big risk in the current lending climate. There are quite often posts on here where people have exchanged and then the mortgage offer withdrawn and unable to get an alternative.

There is no way I would bank roll a developers project. Pay £1000 until completion and insist on no further liability.

blunt_crayon

not sure how to post links but search 'the gazundering challenge' within forums for a sobering case of why not to borrow money on a house that isn't built yet... there are plenty more like that too.

also have read about people who have bought houses on developments, hardly any others have sold, so the rest of the stock has been bought up by a housing association so the development effectively becomes a council estate.

not necessarily trying to put you off, but i would think carefully about buying a house that isn't built yet, for the simple reason that... you don't know what might happen (and never more so than now).

good luck x

neb_3

get your solicitor to add a special condition to the contract where if your mortgage offer is withdrawn etc etc, you would not have to complete