FTB - to be built property

roadsidetree

Hi,

We are FTB. Yesterday we viewed newly built estate. This estate is in a nice location. All that is already built has gone. Instead the developers showed us proposed extension (the actual plot, details of plans etc) which will likely to be ready by December or at the latest by Jan '08. Even here, there is only one property left.

They said once we make an offer, contracts have to be exchanged within 28 days. I have following queries Would be great if someone could throw some light on this please -

1) Considering the fact that it is yet to built, is this a normal practice?
2) Also when we would be expected to pay our deposit to the mortgage company? Is it within the 28 days period?

TIA,

Doozergirl

1) Yes it is normal.
2) You will be expected to pay some form of deposit on exchange. It is the developer that sets the amount, you don't pay any money to the mortgage company (well, not until you mive in and pay them interest for the next 25 years anyway). Ask the builder what amount is required for exchange.

Be aware that the developers proposed dates are VERY flexible and that the contract will be entirely worded in their favour - you move in when they are ready and you get no favours if they are late. It can be really difficult, especially if you have to give notice to a landlord.

Do you really want a new build? They are more expensive than older houses, or even nearly new houses much of the time!

Please tell me it's not a flat. I'd run away if it is

roadsidetree

thanks for the clarification Doozergirl no it is not a flat. it is a 3 bed semi.

We are not so keen with old houses. we also looked at so many 'nearly newly built' in this area and we didn't see any significant difference in price.

david89999

Hi roadsidetree, I am in the same scenario but much more advanced, having brought a house "off plot" on a new estate. Putting the positive side of things across, I have to admit that my process so far has been great.
Because we are FTB's we got a discount on the price of the house, which meant the deposit we have paid is very reasonable, (5k on a 195k mortgage, for 205k house)
We have had the opportunity to choose the extras in the house, some a bit expensive but very convenient, choose the style of things like kitchen, tiling etc.
It's been fantastic watching the house grow from a slab of concrete (windows in this week yay!!!)
We have read lots of doomsayers talking about quality etc but have looked in several houses (not just the showhomes) and have no qualms about the buid. I'm a fairly robust chap, so snagging won't be a problem for me.
The bottom line is that I would not have been able to afford a deposit on a house until well into next year, so the incentives available have meant I can buy a house at long last.
The house was due to be ready in September, but we have now been told it may be as early as the second week in August. The mortgage is in place, at the rate before the latest interset rate rise, and fixed for 5 years starting from completion. The house is likely to have raised in value before I have even moved in. For me buying a house in this way has been a very positive experience.
Good luck to you if you go ahead!

wecanhelpu

david89999 wrote: »

Hi roadsidetree, I am in the same scenario but much more advanced, having brought a house "off plot" on a new estate. Putting the positive side of things across, I have to admit that my process so far has been great.
Because we are FTB's we got a discount on the price of the house, which meant the deposit we have paid is very reasonable, (5k on a 195k mortgage, for 205k house)
We have had the opportunity to choose the extras in the house, some a bit expensive but very convenient, choose the style of things like kitchen, tiling etc.
It's been fantastic watching the house grow from a slab of concrete (windows in this week yay!!!)
We have read lots of doomsayers talking about quality etc but have looked in several houses (not just the showhomes) and have no qualms about the buid. I'm a fairly robust chap, so snagging won't be a problem for me.
The bottom line is that I would not have been able to afford a deposit on a house until well into next year, so the incentives available have meant I can buy a house at long last.
The house was due to be ready in September, but we have now been told it may be as early as the second week in August. The mortgage is in place, at the rate before the latest interset rate rise, and fixed for 5 years starting from completion. The house is likely to have raised in value before I have even moved in. For me buying a house in this way has been a very positive experience.
Good luck to you if you go ahead!

Oh dear!

Best wishes to you both

Doozergirl

david89999 wrote: »

The house is likely to have raised in value before I have even moved in.

How do you work that out when the house isn't even built yet? Is the developer selling subsequent houses for more?
Developer price is more than current market value, that is a simple fact.

I'm not trying to scare anyone with stories of build quality and snagging, I'm trying to point out that you will pay a premium for something which is the same as everything else.

There's nothing Money Saving about buying new build. Convenient it may be but this isn't 'Convenience Expert'

david89999

Can I have my shoes back before you spoil my positive experience?

roadsidetree

thanks david89999 for your reply :A good luck and hope the rest goes well too

just one query. initially after you put the offer to 'to be built' property, what were the next steps? like Doozergirl (bless her heart ) said how much was the deposit you agreed with the builder?

I hope you wouldn't mind for asking the above. i asked it mainly for us to get an idea about the way it works. in case if you are not comfortable writing it here, please do 'pm' me.

xycom1

I just bought a new build, expecting to exchange next week and complete in about two weeks. The house had been showing 'for sale' for a couple of months so we made an offer and they accepted £11500 below the 'asking price'.

A lot of places these days expect people to buy before the house is even there - I'm not a fan of this. Where I bought, a similar layout showhouse was already there and the house we eventually bought was already almost finished so it was easier to analyse the deal and visualise and plan moving in.

Standard contract is usually for 10% of the purchase price of the property but your solicitor may be able to negotiate this down if the sellers are in agreement.

david89999

I don't mind saying what happened in order.
First chose house we wanted, then we had a phonecall from a financial adviser call us about our finances. They then contacted Wimpey and said that we could afford the house we wanted. I think this is to help Wimpey avoid wasting time with people who can't afford the property. Our next job was to get a mortgage offer, and reserve the house. We got a decision in principle from Mortgage company and reserved house with £1000. This guaranteed us the house if we exchanged in 28 days. Wimpey were offering 5% deposit paid to first time buyers, and this was key to our decision making process, as Nationwide would give us a 95% mortgage without us personally having to make any deposit. However we still needed to make a deposit to Wimpey, they wanted 5% (approximately 10k on our house) but we got them to settle for 5k (which included the 1k deposit)
Effectively I am getting the house for 10k below the asking price. To answer some of the "criticisms" above, some of the houses on the state, which is now quite well established are selling at above the price they were paid for, houses prices in my area are going through the roof, and the contract does not appear to be either one sided or the other. I wouldn't have signed it if I had not been happy with it.
One of the benefits of buying as we are, apart from financially, is that the planners are now much more in tune with trying to create a good environment. Therefore the estate has park areas planned in etc etc.
The house was due for completion in September (garage completed this week yay!) but we have now been told that it may be ready as early as the middle of August.
I can easily afford the mortgage, will now have the security of owning my own place, and know that my children will have something when I depart. I strongly suspect they will never be able to afford their own home otherwise.
As I have not brought the house as an investment, but as a home, the worry about house prices crashing does not affect me. Ultimately the house will rise in value.
Good luck. I'd be delighted to offer any other factual information you want, rather than just opinion from people who have probably got the benefit of already owning their own house!

Doozergirl

Don't worry david, I won't take your rose tinted specs!

As someone who just offers opinions, I couldn't possibly know as many facts as you, the experienced FTB.