HtB Equity Loan Off-Plan question

johannalf88

Hi All,

Hoping some-one can shed some light.

We are looking at the equity loan, and are a little confused about how to buy off plan. The two quotes below seem to be at odds (taken from help to buy guide FAQ) :

Q Can I buy a home off plan?
Yes. You are able to reserve a new home off plan at any time. However, you cannot exchange contracts before three months to legal completion of the sale. You also need to ensure that your mortgage offer is valid through to legal completion.

Q How long will it take before I can move in?
Because Help to Buy homes are generally on new developments (and may still be under construction), in common with most new home sales, you will normally be expected to arrange a mortgage and exchange contracts within one month of paying your reservation fee.

Does this mean that we can not reserve a place until 3 months before completion? Because where we are looking there is no new builds available now for completions in 6 months- and I don't now how this is even possible with a normal mortgage!

Any help would be appreciated.

johannalf88

Has anyone got a view on this please?

(Also a bit of a bump to get it on the 1st page! Forum is running quickly tonight!)

giddypenguin

I read it as you reserve you house (pay your reservation fee to the builders), and must exchange within one month of this date, then you have to complete within 3 months of exchanging.

dgtazzman

First you get your 'Authority to proceed' from your HTB agent, this is valid for 3 months from the date issued. After this you and your solicitor have till the end of this 3 month period to get everything in place to exchange contracts. When this is in place, the solicitor requests the 'Authority to exchange' from the HTB agent, this is valid for a further 6 months from the date it is issued. You will have to exchange/complete inside this 6 month period, so in essence, you have 9 months from the date you put in the HTB application. Most mortgage providers will issue a mortgage offer that is valid for 6 months, but it will take maybe a month for the mortgage to go through and receive the formal offer. Also, you could just get a DIP from a mortgage provider to show the developer, that should be enough for them to take your reservation, after that you have a month/6 weeks (depends on the developer) to get a mortgage in place and exchange contracts. Don't forget, this can be negotiated about, in our case, we knew the house we are buying wouldn't be ready for 5 months (March/April coming to be exact) and we got them to accept mid February as 'exchange by' date. They weren't difficult in this as that would still leave them nearly 2 months to resell the house if things went wrong last minute.

Hope this helps.

johannalf88

Thanks dgtazzman. That's what we were wondering. All developers seem to say exchange one month after reservation, but if we can ask to exchange 3 months later like you it would be practical, and not result in us risking a whole lot of money!

johannalf88

giddypenguin wrote: »

I read it as you reserve you house (pay your reservation fee to the builders), and must exchange within one month of this date, then you have to complete within 3 months of exchanging.

See that to me would mean they can complete a house/flat from scratch in just 4 months! :eek: surely that's the only way to buy off-plan?! It isn't built at time of reservation.

dgtazzman

Just be sure to get them to write any delayed exchange date you negotiate into the reservation forms, so it's nice and official, that way they can't withdraw any incentives they may have offered you till this dates passes and you haven't exchanged.

johannalf88

Definitely!

If it is not recorded it never happened!

Sparx

Doubt they enforce the exchange of contracts within 3 months of legal completion. I already have my mortgage offer and ATP from my local HTB agent and they have no problems with my current time frames.

I early bird reserved with the developer in November and completed reservation in January. This week we paid our deposit to sol and are exchanging contracts on Monday. The house isn't built until July.

johannalf88

Thank you Sparx. That is the thing we were hoping to hear. As long as it is possible we have hope!