First Time Buyer - Advice please

WeaponX

Hello,

I'm a first time buyer and would like some advice. Below is what has happened to date.

OK there's a new build that I went to view and was very interested in, it is still being built and the estimated completion date is July 2012.

As the particular flat I wanted was the only one in my price range I paid the reservation deposit of £2000 with my credit card. They then recommended me a mortgage broker and solicitor that the developer was using. I also have 28 days between then and the exchange date.

Ok the mortgage broker that was recommended by the developer came round and I ended up paying the 'lifetime membership fee'. Having gone to my bank, the mortgage broker made alot of sense and saved me paying the product fee upfront (which my bank was very keen on) and added it to the mortgage. I mentioned that the completion date was for July 2012 and that the mortgage was only valid till the end of June 2012, he informed me that that they'll deal with it closer to the time on a case by case basis. He said that they could extend the deal with the lender if it were a few weeks out or get another mortgage offer. So I figured having a mortgage broker would save me alot of hassle if I needed another mortgage offer if the completion date was pulled out.

Secondly the solicitor i'm dealing with is the developer's recommended solicitor, the thinking here was that the developer will contribute an amount towards my legal fees plus using the same solicitor will help things go more smoothly. I haven't signed their terms and conditions yet but have been liasing with them by e-mail. The do state that if the transaction fails to proceed to completion then a charge will be made for the work carried out to that stage of the transaction. Doing some research there are those solicitors that operate on a 'no move no fee' basis.

Admittedly I should have done more homework in the beginning, getting quotes for two or three mortgage brokers and solicitors. And reading on these forums about developers pushing back the completion date and the risk of not having a mortgage in place, has made me alot more cautious. Personally the building work is going well, my finances are in good shape in getting a mortgage and I have a sizeable deposit so I don't think I would have a problem in getting a mortgage in the future.

I would deeply appreciate any advice on how to proceed, what I should look out for. As I'm a first time buyer I'm very new to this and have no one to really go to for advice.

Thrugelmir

WeaponX wrote: »

I also have 28 days between then and the exchange date.

When are you due to exchange contracts?

Yorkie1

In such developments there are risks which your solicitor should be advising you about. I would have reservations about the solicitor's / broker's ability to advise you independently given their links to the developer.

You are legally committed to the purchase as soon as you exchange. This remains the case irrespective of anything which may happen in the next few months. In years gone by, people who bought off-plan sometimes found that they couldn't get a mortgage for some reason by the time completion came around. Perhaps the development dates slipped so that their original mortgage offer had expired, or the lender's criteria had changed when they tried to find a replacement mortgage offer, or they'd lost their job, or taken out more credit, or had a child etc etc. The developer sued for the full purchase price and they ended up bankrupt.

This is very much a worst case scenario but if your solicitor isn't pointing out the risks then I'd be asking why. I'd also be seeking for the contract to have a get-out for you of some description if you can't raise the mortgage funds for any reason.

G_M

Never use the developer's solicitor - the solicitor needs to be purely working in your interests, for your protection. The D's solicitor will be thinking of his future relationship with the Developer.

If you are right that "using the same solicitor will help things go more smoothly" (which I doubt) then it will be because.... the solicitor fails to raise issues on your behalf!

Same is true of the mortgage advisor - get independant advice. Not the Developer's. Not your bank - someone independant.

Advice? Write to the solicitor de-instructing and find your own.

NeverAgain_2

As a first time buyer buying something that isn't built yet, GM's advice to use an independent solicitor must be followed.

Particularly so in your case, as you concede you are not knowledgeable about house buying in general.

I would advise any first time buyer to buy something that already exists, but you've paid a deposit, so backing out now may not be a good idea financially.

Mortgages are not my thing, but you say your finances are in good order, so I wonder why you need a broker.

As someone in good standing, you ought to be able to get the best available deal yourself from one of the High Street lenders.

Cat2011

You should also be aware that they will probably only give you 14 days notice for completion. So until you have that notice - you have no idea when you'll be able to move which can make things expensive. I bought a new build which was finished 2 months later than they originally said, costing me an extra £2k in rent due to my circumstances. Best to have a contingency fund on the side.

I wouldn't have used their solicitor, but there's probably less legal issues with a new build than with pre-owned houses. Sounds like you have it fairly in hand. Just be aware it's a really really slow process, and don't change jobs/credit card/your credit record in the meantime.

geoffky

you have been had...the solicitor should be working for you,,and i bet they got the valuations through easily, start looking out for yourself..

What happens if there are so few mortgages around and you do not qualify..The same that happened in 2008 you will end up in the high court getting sued for damages...google about it....they were unable to complete as the market had dropped that nmuch that the banks valued tens of thousands less than agreed price. You are in a minefield..

G_M

Cat2011 wrote: »

..

I wouldn't have used their solicitor, but there's probably less legal issues with a new build than with pre-owned houses.

????????????

New estates come with a whole range of covenants that need considering/understanding.

Half-built estates come with unadopted roads which have no proper maintenance till adopted - assuming they ever are adopted.

New estates often have service charges/managment companies, over which there is little control but which need understanding

................

WeaponX

First off thanks for all your replies.

Thrugelmir wrote: »

When are you due to exchange contracts?

17th January

Yorkie1 wrote: »

In such developments there are risks which your solicitor should be advising you about. I would have reservations about the solicitor's / broker's ability to advise you independently given their links to the developer.

You are legally committed to the purchase as soon as you exchange. This remains the case irrespective of anything which may happen in the next few months. In years gone by, people who bought off-plan sometimes found that they couldn't get a mortgage for some reason by the time completion came around. Perhaps the development dates slipped so that their original mortgage offer had expired, or the lender's criteria had changed when they tried to find a replacement mortgage offer, or they'd lost their job, or taken out more credit, or had a child etc etc. The developer sued for the full purchase price and they ended up bankrupt.

This is very much a worst case scenario but if your solicitor isn't pointing out the risks then I'd be asking why. I'd also be seeking for the contract to have a get-out for you of some description if you can't raise the mortgage funds for any reason.

Yes will definitely ask for that get-out clause. The reply I got from the solicitor was:
"You will need to liaise with your lender direct. Some lenders are familiar with the process of new builds and may provide you with a mortgage offer long enough to cover the anticipated completion date. However with some lenders you may need to obtain an extension (if necessary) or even a fresh offer altogether, for which a new application fee and other fees may be payable. You may wish to liaise with your broker/financial advisor/contact at the lender on this point. We will advise in our Contract Report the risks of exchanging contracts without a mortgage offer in place or even if a mortgage offer expires between exchange and completion "
I'm guessing that in the contract report it will highlight the said risks?

G_M wrote: »

Never use the developer's solicitor - the solicitor needs to be purely working in your interests, for your protection. The D's solicitor will be thinking of his future relationship with the Developer.

If you are right that "using the same solicitor will help things go more smoothly" (which I doubt) then it will be because.... the solicitor fails to raise issues on your behalf!

Same is true of the mortgage advisor - get independant advice. Not the Developer's. Not your bank - someone independant.

Advice? Write to the solicitor de-instructing and find your own.

Will I have enough time to find another solicitor if the exchange date is the 17th? If de-instruct the solicitor that i'm with would i incur any charge in doing so (bear in mind i haven't signed any contract with them)?
With the mortgage advisor he has submitting my application to the bank so I think it's too late on that front.

NeverAgain wrote: »

As a first time buyer buying something that isn't built yet, GM's advice to use an independent solicitor must be followed.

Particularly so in your case, as you concede you are not knowledgeable about house buying in general.

I would advise any first time buyer to buy something that already exists, but you've paid a deposit, so backing out now may not be a good idea financially.

Mortgages are not my thing, but you say your finances are in good order, so I wonder why you need a broker.

As someone in good standing, you ought to be able to get the best available deal yourself from one of the High Street lenders.

I haven't paid the deposit yet, just the reservation fee. Yes the reason I went with a broker is to help me if i needed to obtain another mortgage offer if the existing one expired.

So looking at the responses it's recommended that I use a different solicitor and mortgage broker.

So the first question is that can stop using the solicitor that i'm with?
Would I incur a charge? (I have not signed their terms or conditions yet)
Which solicitors do people recommend then? A friend said to use http://www.1stpropertylawyers.co.uk/ as he found them very good to deal with.

Secondly, with the mortgage broker firm. I guess I lost out in paying their 'lifetime membership fee'.
Is it too late to pull out as they are submitting my mortgage application to the bank, though they are waiting on some information from me?
Which mortgage brokers do people recommend or should i go alone to one of the banks?
(The reason I went with a broker in the first place was to help me in the event that if my mortgage offer expired the broker can help get another quickly, am I right in thinking this?)

Again thanks again to your replies, i should of posted my situation from the beginning I feel like such a clutz now

G_M

WeaponX wrote: »

So the first question is that can stop using the solicitor that i'm with? Yes
Would I incur a charge? (I have not signed their terms or conditions yet) If you've not signed, probobly not. Have theydone any work yet?
Which solicitors do people recommend then? A friend said to use http://www.1stpropertylawyers.co.uk/ as he found them very good to deal with.
shop around. Compare local firms with online. Read here for more.

Secondly, with the mortgage broker firm. I guess I lost out in paying their 'lifetime membership fee'. Depending on terms. Is there an opt-out period?
Is it too late to pull out as they are submitting my mortgage application to the bank, though they are waiting on some information from me?Until you sign a formal mortgage agreement you are not commited. Whether the broker will charge a fee depends on their terms
Which mortgage brokers do people recommend or should i go alone to one of the banks? google for local independant mortgage broker

...........................................

WeaponX

G_M wrote: »

So the first question is that can stop using the solicitor that i'm with? Yes
Would I incur a charge? (I have not signed their terms or conditions yet) If you've not signed, probobly not. Have theydone any work yet?
What work? Not to my knowledge like I said there has been a couple of e-mail exchanges, that's about it.
Which solicitors do people recommend then? A friend said to use http://www.1stpropertylawyers.co.uk/ as he found them very good to deal with.
shop around. Compare local firms with online. Read here for more.
Thanks will look into that.

Secondly, with the mortgage broker firm. I guess I lost out in paying their 'lifetime membership fee'. Depending on terms. Is there an opt-out period?
No, it's a non-refundable fee.
Is it too late to pull out as they are submitting my mortgage application to the bank, though they are waiting on some information from me?Until you sign a formal mortgage agreement you are not commited. Whether the broker will charge a fee depends on their terms. Not to my knowledge.
Which mortgage brokers do people recommend or should i go alone to one of the banks? google for local independant mortgage broker

Looking at the correspondence the solicitor has sent it states that

"
As you may be awre, Parkinson Wright are on a panel of Solicitors that Linden Homes recommend to purchasers of their developments. We are receommended as we have knowledge of teh Linden Homes developments which enables us to progress to an exchange of contracts within the timescales set by Linden Homes on confirmation of your reservation with them.

We confirm that Linden Homes will not in any way be able to influence or constrain our professional judgement in relation to any advice that we give to you and we will not compromise, infringe or impair our duty of care that we have with you as our client".

So I guess they aren't strictly the developer's solicitors, just the ones that are recommended by them. With the above in mind why should they not represent my best interests?

G_M your advice seems good, what's your experience in these matters?