Best 5yr fixed mortgage??

purplesmiler82

Hi all,

We have agreed a part ex on ours towards a new build and are now looking for a mortgage. Ideally we want a 5 yr fixed rate so we know where we are as we are hoping to start a family soon.

we have a 25% deposit and would be looking to make slight overpayments each month

Have found one with coventry at 4.5% with max 80%ltv but are there any better on the market?

My second rather strange question as i've never been in this situation is we are buying a new build off plan so how is it possible to get a mortgage on something that isnt built yet?? (i'm probably having a blonde moment and you'll be sat reading this laughing!!)

Any help would be fab

Thrugelmir

purplesmiler82 wrote: »

My second rather strange question as i've never been in this situation is we are buying a new build off plan so how is it possible to get a mortgage on something that isnt built yet?? (i'm probably having a blonde moment and you'll be sat reading this laughing!!)

The mortgage (money) will be only be advanced once the deal can be completed, i.e. you can move into the property.

purplesmiler82

Thanks Thrugelmir, with that in mind how far in advance can you hold a mortgage rate............ we have been told the property should be built by xmas although know this depends very much on the weather

Yorkie1

A couple of things to be aware of with off-plan purchases, gleaned from other threads on here:

1. The developer will want to make you exchange very early, probably with a variable completion date; they will tell you the actual completion date quite late on (perhaps) and which they (probably) then won't negotiate on for your convenience.

2. Mortgage offers expire after so many months (usually 3 or 6), so even if you got a mortgage offer now, it may well have expired by the time that the developer tells you the completion date.

3. If your circumstances change after exchange, or the lender wants to for any reason, your initial mortgage offer may be withdrawn; or, even if it just expires, you may find it difficult to find a new mortgage at that point - but be obliged to complete the purchase.

4. Lenders are very wary of new builds generally, and they often down value them during the mortgage offer process.

5. There are often additional associated costs in getting new build estates adopted by the council - and extra legal fees to do with documents and stuff; make sure your solicitor gets up front quotes from the developers for these, or you'll find yourself with a nasty extra bill of a few hundred ££ at completion.

Make sure your solicitor has got your back covered in the contract, particularly with a get-out if you find yourself unable to complete for reasons related to e.g. mortgage unavailability.

Don't use the developer's mortgage broker or solicitor.

dimbo61

YBS do a 5 year fix at 3.39% fee £995 but they have tough lending policy and can chose the best customers so please pay attention to Yorkie 1 post re new build

purplesmiler82

Thanks will have a look at the YBS one

what have mortgage companies got against new builds and why do they down value them?

dimbo61

Its a bit like a new car with the dealer telling you its all shiny and new but as soon as you drive it out the door for MOST ! cars you have lost 10/15%
The builder will say ist worth £400K while the surveyor might say £350K and that is the figure the lender will take into account

purplesmiler82

well here's hoping the surveyor is quite positive....... no point worrying just yet as its going to be a few months yet

kingstreet

Typically a mortgage offer lasts for six months, with the valuation needing to be refreshed if it is to be extended beyond that. In addition, lenders also have product completion deadlines ie the date by which the mortgage has to be drawn down and the purchase completed.

Many lenders have special products for the newbuild market with longer completion deadlines. For example, Halifax completion deadline is currently 31/03/2012 but its newbuild products have until 31/05/2012 to complete.

As Yorkie mentions, you'll be expected to exchange very early, probably within four weeks and you'll complete on notice. This means when the property is nearing completion, you'll be given the completion date by the builder. Normally immediately the property is complete you'll be expected to pay for it.

kingstreet

Nationwide's take on newbuild valuations, for information;-

In some areas of the country, heavy investment and development has led to a large supply of new properties. This, combined with falling property prices, more buy to let activity and developers' incentives has led to difficulties in assessing the true value of these properties as new homes for owner occupation.

As a result, Nationwide instructs it's valuers to value all new properties (flats, houses and maisonettes) as if they have already been occupied and are being resold for the first time.

This reflects Nationwide's desire to protect both the lender and the borrower from the potential risks in this market. It will help protect borrowers of new build properties from the risk of negative equity by ensuring that the valuation given is a true representation of a property's resale value. The 'resale' value is based on comparable evidence of properties that have been occupied which may result in some new build properties being valued at below the purchase price.

Where a new build property is valued at below the purchase price, and the loan is affected, a copy of the report can be provided to the customer, who will then have the option of a reduced loan or renegotiation of the purchase price. The valuation fee is non-refundable once a valuation has been carried out.

The definition of a 'new flat or house' includes maisonettes and means one that has not been occupied within two years of construction, conversion or refurbishment. This includes properties being bought off plan.