Newbuild advice please

leereni

After receiving two AIPs from different lenders I am considering buying a newbuild house. The estat agent is keen for me to reserve.

Firstly, is it normal for sellers to be flexible in terms of price and/or maybe paying something like stamp duty or some extra fittings?

Also, what will I be expected to pay prior in terms of solicitors fees etc? And, Amy advice about buying a house which hasn't been built yet.

Thanks

kingstreet

Offers vary from site to site, depending on time of year, progress of development etc.

You'll be expected to pay a reservation fee to the builder which will later be deducted from the price you pay at completion. The solicitor will ask for search fees early on, as you'll be expected to exchange contracts within a month of making the reservation. That's when you'll also hand over your deposit.

Completion will be "on notice" when the property is finished. Be careful. Mortgage offers typically only last six months. Don't reserve until the estimated completion is within that timeframe.

leereni

Ok so I'll need to pay a reservation fee and also solicitors search fee prior to getting a DIP?

kingstreet

That's entirely up to you.

You said you already have "two AIPs." The terms AIP and DIP are normally interchangeable, indicating you have applied, been credit checked and a mortgage has been agreed.

If you are suggesting you have a more informal agreement, this is not sufficiently reliable, IMHO, for you to make a reservation. Get a full agreement before doing so.

Search fees won't be requested until you instruct a solicitor and you won't do that until after you reserve and you won't do that until after you get your mortgage confirmed.

I may have said this before but you really need to find someone to advise you properly.

The process is mechanical and methodical and it's more or less the same in every case.

Mortgage agreed in principle
Viewings
Offer agreed
Solicitors instructed
Sales memorandum or reservation issued by agent/builder
Purchaser applies for mortgage
Vendor's solicitor prepares and issues draft contract
Vendor completes seller's enquiry forms and returns to solicitor
Valuation/survey carried out
Purchaser pays solicitor for searches
Searches requested
Renegotiation of price due to survey findings - if required
Mortgage offer issued
Purchaser's solicitor receives seller's enquiry forms and raises any enquiries
Searches returned
Responses to enquiries
Purchaser visits solicitor to go through paperwork, hand over ID and deposit
Completion date agreed between all parties
Contracts exchanged
Completion takes place.

charliexyz

Hi Leereni, when you say the property is not yet built, what do you mean exactly? Is it within a month or two within finishing? Or is it off-plan and not yet built?

I recently bought a property off-plan, and ended up exchanging contracts with only a mortgage in principle. When the property was nearly finished, I applied for a full mortgage as normal. The risk of this is that if I had been made lost my job, etc., then I would not have been able to get a mortgage offer. So as kingstreet says, get a formal mortgage offer in place.

Regarding your question on price flexibility, my personal experience is that yes they are, although they may initially not appear to be. My negotiation took several days.