In the process of buying a new build ... unsure on my rights

gyphorz

I am in the process of purchasing an apartment and was told that I can only put the minimum 20% down of the property value in order to qualify. I asked about the firstbuy scheme and I was told that I do not qualify because the property is going to be built in November 2015 and that firstbuy schemes is offered to properties that are to be completed within 6 months (can not find any reference to this online - when i initially queried they told me it is possible which is why it is raising doubts).

- I was told to go with their mortgage adviser and they will cover £600 in lawyer fees. Are there any benefits of finding a mortgage dealer by myself? (they told me it is easier for them, this is why they offer the incentive).

- I was told by the mortgage adviser that I need to have a surveyor done within a week of putting down the deposit to secure the property (which has not been built, so i am assuming it will be done on the development plans) which will cost me £400. This is with Halifax. Because the mortgage in principal has been done, it is only valid for 6 months. Meaning I would have to re-do the mortgage in principal 2 more times. Meaning that the rate of interest can easily change and I might go with another bank – in which case i would lose these £400. Am i allowed to decline until it is closer to the date? . Also halifax is offering first time buyers to pay for their stamp duty at present but the offer expires in a few months time. Is there a way for me to make a formal agreement that if i do decide to use them, they would still cover my stamp duty (even if the offer expires).

thank you

kingstreet

FirstBuy no longer exists, so I presume you are talking about Help To Buy - Equity Loan. Scheme guide here;-

http://www.homesandcommunities.co.uk/sites/default/files/our-work/help_to_buy_buyers_guide_sept_2013.pdf

The scheme administrator (your area HCA HTB Agent) provides an Authority To Proceed which gives a three month period in which contracts must be exchanged and when that takes place, there is a six month window in which to complete.

Separate to this, builders expect you to reserve and apply for a mortgage immediately, getting into a position where you can exchange contracts within 28 days of reservation.

FWIW we're newbuild specialists and handle a lot of HTB business, we (and our builders) will not accept a reservation until within nine months of the completion of the property, as otherwise we could leave a client needing to make a new mortgage application and pay their fees again.

dimbo61

"November 2015"
It is May 2014 so DO NOT SPEND ANY MONEY YET
reservation fees, survey on a property not yet built!
How good of the builder to pay the £600 legal fees IF you go with there Mortgage Broker
Get your own solicitor and mortgage broker, survey will be Instructed by Lender not builder

gyphorz

dimbo61 wrote: »

"November 2015"
It is May 2014 so DO NOT SPEND ANY MONEY YET
reservation fees, survey on a property not yet built!
How good of the builder to pay the £600 legal fees IF you go with there Mortgage Broker
Get your own solicitor and mortgage broker, survey will be Instructed by Lender not builder

So i have been given the agreement in principal by Halifax and the mortgage lender has told me that they need to get the property evaluated. Am i able to prospone this till near future or am i forced to get it evaluated now?. It seems pointless and a waste of money since I will have to re-evaluate 2 more times, given the 6 month maximum valuation term .. (just so i know, to cancel the appointment, they want to come to my house in 2 days and get everything sorted).

Also i need to pay the developer 10% upfront within 28 days and another 10% by completion date. I dont want to loose the property because launch day 85% of the properties sold, but at the same time dont want to be taken advance of since i am unware of the rules (all the questions the mortgage adviser/developer answered seems to vary when their staff - so dont know what to believe)

Mortgage_Mark_2

Absolutely pointless applying now for a mortgage that won't begin for a year and a half. Leave it as 'kingstreet' advises until far closer to the time - what happens if the value of the development has dropped significantly from the off-plan price you've agreed now? You're committed to pay that price if you want to preserve any kind of reservation fee that you may have paid, and I suspect the developer is pressing for an early exchange - do not under any circumstances do this, as you are being legally bound to purchase the property at the exchange price.

I had a client some time ago who'd put down a 15% deposit and exchanged on a new-build development on the banks of the thames for c.£800k, in 2012. I spoke with her last year on completion of the build and the valuation was £550k. Her options were forfeit over £100k and face being sued for losses too, or find an extra £250k from somewhere for deposit.

Be very, very careful - I'd suggest PM'ing kingstreet to be honest and having a chat with him(sorry if it's her!).

kingstreet

TBH I can't say more than I already have.

Our builders and ourselves would not do this, but if you go to one of the other builders and their tame broker, I can't say the same will happen.

gyphorz

Mortgage_Mark wrote: »

Absolutely pointless applying now for a mortgage that won't begin for a year and a half. Leave it as 'kingstreet' advises until far closer to the time - what happens if the value of the development has dropped significantly from the off-plan price you've agreed now? You're committed to pay that price if you want to preserve any kind of reservation fee that you may have paid, and I suspect the developer is pressing for an early exchange - do not under any circumstances do this, as you are being legally bound to purchase the property at the exchange price.

I had a client some time ago who'd put down a 15% deposit and exchanged on a new-build development on the banks of the thames for c.£800k, in 2012. I spoke with her last year on completion of the build and the valuation was £550k. Her options were forfeit over £100k and face being sued for losses too, or find an extra £250k from somewhere for deposit.

Be very, very careful - I'd suggest PM'ing kingstreet to be honest and having a chat with him(sorry if it's her!).

Have spoke to them and they said that because I put down a 1k deposit on the property I am required to pay the minimum 10% of the property price within 28 days. Since an agreement in principal only shows if i am credit worthy or not, I am required to go though the mortgage process to see if the bank lends me the money. They stated that the re-evaluation will be free with Halifax in the future.

Have asked them what if the property is under-evaluated and they said they have no history of this occurring in the zone that I want to buy the property.

I guess i am obliged to go by their terms

Mortgage_Mark_2

gyphorz wrote: »

Have spoke to them and they said that because I put down a 1k deposit on the property I am required to pay the minimum 10% of the property price within 28 days. Since an agreement in principal only shows if i am credit worthy or not, I am required to go though the mortgage process to see if the bank lends me the money. They stated that the re-evaluation will be free with Halifax in the future.

Have asked them what if the property is under-evaluated and they said they have no history of this occurring in the zone that I want to buy the property.

I guess i am obliged to go by their terms

I cannot advise you strongly enough not to do that.

28 days is nowhere near long enough for a mortgage company to assess an application, value the property and produce a mortgage offer (in most cases). If you can't do that, then you will lose the 10%, end of story.

As for a revaluation being free - that could be subject to change if they change their policy in future, but what if they say you need to re-apply, and you can't get the mortgage? What happens then?

And it's jolly good there being no history of valuations being difference in the zone you're looking at - there was no history of Peaches Geldoff having health problems before she dropped dead either.

You need to think of your circumstances - if you're happy to risk the 10% then fill your boots but if not, either walk away or get them to get real.

dgtazzman

I don't really get why they would want 10% of the purchase price so far in advance and make it non-refundable, that just plain stinks to me and wouldn't touch it with a barge pole.

I think normally in these situations most builders do 'early bird reservations', where you put down a few hundred pounds, which is mostly refundable and in return, you get first pick of the property once they are officially released (which would be 4-5 months before build completion). You can still walk away if you want to, but you have the peace of mind that you will be given a chance to buy the property before it is released to the open market.

Mortgage_Mark_2

Common tactic with some developers dgtazzman, if they can press for a 28 day exchange then they commit the buyer to the price agreed far in advance of completion, ironically safeguarding them against the exact situation I'm warning the OP against...

gyphorz

Mortgage_Mark wrote: »

Common tactic with some developers dgtazzman, if they can press for a 28 day exchange then they commit the buyer to the price agreed far in advance of completion, ironically safeguarding them against the exact situation I'm warning the OP against...

Yeah you are right. Walked into this part blinded and the developers seem shady when asking further questions. I put down £1000, i'm rather sure that if i don't pay a 10% deposit then I stand to lose my initial deposit that I secured the plot for.

I got to the point where I was just fed up of being outbid on every house, even when i offered the owner their asking price and sometimes 3k-4k over. So this seemed like a way to bypass it and concentrate on the future. I am a first time buyer, also 24. Guess you live and you learn, but heck looking back at it, cant help but feel like a moron.