Mortgage advice/House not built yet

necailis

Hi, I'm a FTB who is looking to buy a new build home from a local Taylor Wimpey development.

The home in question is not yet built but is due to be ready by 2nd quarter 2013 (probably closer to June).

I have a 40% deposit, and I can easily afford the size of the mortgage this will leave me with on my salary.

I have no real debt, just a single 1k limit Tesco CC for which I have a DD set to take the maximum payments each month.

My questions are around getting a mortgage for a property which is not yet built.

I understand that most mortgage products are valid for 6 months so if I go looking for one now it will probably have expired by the time the house is ready.

Has anyone else had experience buying a property which is not yet there? I will be discussing more with Taylor Wimpey later this week, but i'm trying to get my head around what they need and when at the moment, and I'm a little out of my depth to be honest.

Should I be seeking an agreement in principle for now, and then actually properly applying for a mortgage at the early stages of next year so that the mortgage offer does not expire?

Thanks!

littlesparkles

I am also buying from TW and when I spoke to their mortgage advisor he said that TW would cover any fees related to the mortgage offer expiring so me needing to re-apply. It's worth asking (although I arranged my own mortgage in the end rather than go through the advisor). Also my solicitor (the recommended one) told me that contracts could be exchanged subject to satisfactory searches and mortgage offer. Again, worth asking! My solicitor was going to put a long-stop date in the contract to match my mortgage offer expiry date but in the end TW agreed to an earlier deadline.

Good luck with your purchase. I reserved in July and exchanged in October. The house should be ready in December. It has been great watching it be built!

necailis

Thanks for the reply littlesparkles!

Is that all they care about, contracts being exchanged? so if I can exchange contracts with any old mortgage provider, even if it's more than 6 months until completion, the mortgage provider will just do some updates and then extend the offer or make a new one based on current rates?

Broker (Key Solutions) is offering me this at the moment:

• 2.69% fixed for 2 years.
• £999 arrangement fee.
• Early exit fee of 3% of the balance before 31/12/2014. After then 0 exit fee.
• Max overpayment of 10% a year.
• 25 Year term.

They said I would need to cover any costs of mortgage offer expiring though. I guess I could speak to TW and see if they would?


The deal above seems OK, though I can get a little better via my bank (HSBC), or perhaps via another company like Tescos.

littlesparkles

Yes they seem to be mainly concerned with you exchanging contracts. I accidentally managed to lengthen the time between reservation and exchange by putting enquiries to TW via my solicitor. It took ages for their legal team to respond to these. I should have exchanged in August but it was the end of October before my solicitor had everything from them! The sales rep was satisfied though because I had my mortgage offer by the beginning of August and had ordered and paid for extras in the house so I had shown a commitment to buying it.

Yes you can just change mortgage before completion. As long as you are sure you would be approved again! I got a better deal going direct to a lender and taking my current account to them as well.

necailis

I would hope I would be approved again after the initial exchange, I would not be taking out any extra debt or anything so the checks should be more of the same if i'm approved once

Worst case scenario here? surely they can't keep the 10% I would pay on Exchange if I am not then subsequently re-approved for a mortgage?

littlesparkles

It depends on your contract with them. Best to speak to your solicitor.

harvey115

There is always this sort of things coming from NewBuilds. I have recently completed with a NewBuild through Cala Homes. What you need to make sure before the Exchange is the following:

- A get out clause with your deposit refunded in case you cannot secure finances (mortgage) on completion i.e. if the current offer expires and you are not able to renew it due to lending criteria changes etc.

This way you are not risking your deposit money you paid at the time of exchanging contracts. If TW does not provide such confirmation the risk is on you not them. So either ask them to allow for a get out clause or complete the house before your current offer expires.

Zero_Sum

necailis wrote: »

Thanks for the reply littlesparkles!

Is that all they care about, contracts being exchanged? so if I can exchange contracts with any old mortgage provider, even if it's more than 6 months until completion, the mortgage provider will just do some updates and then extend the offer or make a new one based on current rates?

Broker (Key Solutions) is offering me this at the moment:

• 2.69% fixed for 2 years.
• £999 arrangement fee.
• Early exit fee of 3% of the balance before 31/12/2014. After then 0 exit fee.
• Max overpayment of 10% a year.
• 25 Year term.

They said I would need to cover any costs of mortgage offer expiring though. I guess I could speak to TW and see if they would?


The deal above seems OK, though I can get a little better via my bank (HSBC), or perhaps via another company like Tescos.

As you've got 40% deposit, I'm assuming you're mortgage isn't that big, in which case you should go for something with a slightly bigger rate, but no arrangement fee, as it'll work out cheaper

Thrugelmir

necailis wrote: »

Worst case scenario here? surely they can't keep the 10% I would pay on Exchange if I am not then subsequently re-approved for a mortgage?

The deposit would be lost. That's the whole point of exchanging contracts. You are committed to the purchase.

So potentially you are at risk. Speak to your solicitor regarding this.

necailis

Thrugelmir wrote: »

The deposit would be lost. That's the whole point of exchanging contracts. You are committed to the purchase.

So potentially you are at risk. Speak to your solicitor regarding this.

Some updates for you all:

Harvey pointed this out to me before, and I'm glad he did! I spoke to TW and they have agreed that I can write into my contract via the solicitor that in the event the mortgage falls through after exchanging but before completion, I will get the 10% from the Exchange back.

They said I would not if completion did not occur for any other reason though, it has to be due to inability to obtain a mortgage if the previous one expires.

Chances are slim this will happen if I am accepted for the first one though, as I would not be taking out any other debt or anything.

I also agree about the comments I've read here (and elsewhere) about lower fees but slightly higher rates, a lot of people have also suggested fixing for longer if the rates are good.

Because I'm buying a Coach House which isn't yet built, the Broker I am speaking with reckons some lenders will be funny about giving me a mortgage on it. The lease is free hold, but the garages under the property are sub-leased (I guess on lease hold). I don't own the rights to the ones that aren't mine.

I've spoke to a few companies and a lot of them seem confused about giving a mortgage on a new build, it's odd, but it's like they don't know what to do.

To avoid too much hassle on this I am only going to speak to my Bank (HSBC) directly, otherwise I will use a broker. I will be speaking with more than one broker so I can get the best deal from them.

I have a meeting with HSBC next Tuesday at my local branch. I won't be agreeing to anything there and then, but I will take down all the info, and ask all the relevant questions. They do a 5 year fixed at 3.29% with £500 Arrangement fee, or 3.49% with no arrangement fee, which seems like they may work out better for me based on the amount I am borrowing.

At the moment I am trying to get solicitor paperwork sorted, I have had to change my address on some things like my drivers license so I need that to come back to me before I can send that paperwork off.