New Build reserved on plan

Varzazz

I am in the process of buy a new build on shared ownership, due to demand I had to reserve the property while it is under construction, I have only seen plans but have not had a viewing.

The legal dealings seem to be moving along quite quickly, I have received the sales agreement which need to be signed and send along with my deposit, should I not sign and send my deposit until viewing has taken place or would this risk me losing the property?

VIGILANT22

http://www.guardian.co.uk/money/2010/feb/01/property-developers-off-plan-investors

Fire_Fox

Has your solicitor explained the risks of a large gap between exchanging contracts and completion?

Richard_Webster

Have you got a mortgage offer and will it still be valid when the property is finished?

BexInLondon

I'd be very, very reluctant to hand over any money, much less exchange contracts, without having seen the place. There could be all sorts of things that need doing and once they've got your money they'll be a lot less keen.

SJCJDCLSC

Ok. It can be done but ask yourself some serious questions.

Firstly, when will the build likely complete i.e when can you move in? A mortgage offer will likely only last 6 months so if a lender has approved you and arranged a mortgage and lets say it expires the 1st October, if you can't move in before then you will be agreeing to buy a property without actually having a mortgage secured.

What has happened to people in the past is that they have agreed to pay, say, 200k on a house. They have a mortgage in place and the lender agrees with the valuation. Flash forward 12 months later and the house is not complete yet. The mortgage previously agreed ran out some time ago. They apply for a new mortgage but the house value is now 160k. The valuation comes back 40k short and there is no mortgage that can be found on 200k. You can't just pay less to the builder because by this point you have already legally agreed to pay 200k for the house even though no bank will agree that it is worth that much. Not only will you risk your 20k deposit that you put down when you signed the contracts but you will also find yourself sued by the builder. After all, you said you were good for 200k and they will hold you to that.

Secondly, if you are going the shared ownership route you will have severe mortgage option restrictions and may have no opportunity to haggle on the price you pay. Is this really the best route for you? Consider the extra payments when the interest on the extra part of the loan (or whatever) kicks in.

As far as viewing, be 100% sure you know what you are buying. Has any of it been built or is it literally a plot of land at the moment? Is there a show home? Get specifics even down to 'this light fitting is included, these floors are not' etc.

be aware it is a lot riskier buying this way but it is a feasible way of buying you just need to go what you are getting in to.

robin_banks

Notwithstanding the madness of shared ownership I agree with all other posters tread very very carefully.

sgh1976

I am buying off plan. It was due to be completed last month but the bad weather ruined all that and the property has now just been plastered. (no work for 2 and a half weeks and then they had to redo half of the brick work when they started again)

When we got the Mortgage offer it was set to expire on the 31st Jan. However in October we spoke to broker and he sorted out a new mortgage offer which now expires on the 31st July.

So if you have any doubts about the mortgage offer expiring before completion you need to try and get a new offer sorted.

DVardysShadow

sgh1976 wrote: »

I am buying off plan. It was due to be completed last month but the bad weather ruined all that and the property has now just been plastered. (no work for 2 and a half weeks and then they had to redo half of the brick work when they started again)

When we got the Mortgage offer it was set to expire on the 31st Jan. However in October we spoke to broker and he sorted out a new mortgage offer which now expires on the 31st July.

So if you have any doubts about the mortgage offer expiring before completion you need to try and get a new offer sorted.

Not enough. You need to make your contract conditional upon completion before the mortgage offer expires. Of course the builder will huff and puff, but you need to stick to your guns.

Varzazz

Thanks for your replies, i have seen the development and and it looks advanced, im also sure the property will be of a good build standard, im also aware of what is included, and i dont think build will go over due by a great length of time.

Ive seen the plan and have the dimensions and layout which im happy with, however these are said to be aprox, just wondering how much difference if any aprox to finished, im worried it will be much smaller than stated.

Brallaqueen

Varzazz wrote: »

Thanks for your replies, i have seen the development and and it looks advanced, im also sure the property will be of a good build standard, im also aware of what is included, and i dont think build will go over due by a great length of time.

Ive seen the plan and have the dimensions and layout which im happy with, however these are said to be aprox, just wondering how much difference if any aprox to finished, im worried it will be much smaller than stated.

That happened to a landlord I knew, bought a two bed two bath off plan in Welwyn and the second bedroom ended up being a single, not the double bedroom she had believed...