buying a new build?

Kimberley82

I am hopefully about to buy my first home with my husband, we are very excited but nervous too, its such a big step.

We have found a house we like its not finished yet we are just waiting for confirmation on price. The next step is to pay a £500 reservation fee and then exchange contracts within 28 days. The house will not be ready until December.

This might be a really stupid question but when do we start paying our mortgage? As soon as we exchange or once we move in?

opinions4u

Exchange is when you commit to the deal.

Completion is when money changes hands from lender to seller (and you start paying your mortgage then).

When you move in is usually the same time as completion, but doesn't have to be.

I'd suggest you make sure the mortgage lender is supportive of new builds, because if their valuer tells you it's worth less than the asking price (which it probably is) then there could be some difficulties if you have a relatively small deposit.

Yorkie1

The one thing which is riskier with new builds, is the possibility of the unexpected happening between exchange of contracts (i.e. before end of July in your case) and completion (end of December if all goes to plan). This can include a change in your circumstances which leads to a mortgage offer being withdrawn; a mortgage offer which expires before completion if there are delays or your offer is only available for 3 months.

If this happens, you could be forced by the developer to complete - even if you can't get a new mortgage - or pay lots of money compensation. Do ensure that your solicitor has get-out clauses written into the contract so you're not bankrupted by legal action from the developer if the worst happens.

Kimberley82

Yorkie1 wrote: »

The one thing which is riskier with new builds, is the possibility of the unexpected happening between exchange of contracts (i.e. before end of July in your case) and completion (end of December if all goes to plan). This can include a change in your circumstances which leads to a mortgage offer being withdrawn; a mortgage offer which expires before completion if there are delays or your offer is only available for 3 months.

If this happens, you could be forced by the developer to complete - even if you can't get a new mortgage - or pay lots of money compensation. Do ensure that your solicitor has get-out clauses written into the contract so you're not bankrupted by legal action from the developer if the worst happens.

Thanks thats good to know I hadnt thought of that.