New Build Purchase

Henneb_84

Hi all, just wanted some quick advice regarding the processes involved with buying a new build home.

Currently my partner and I are renting but are in a fortunate position to be able to save around £900 per month.

A homebuilder are currently in the process of building a development close to us with an estimated completion of summer 2015.

At the moment we do not have the full deposit needed. However, we would definitely have this by April/May next year and so in time for the 'summer' timescale.

My question is around the mortgage process when reserving a plot. When do we need to have a mortgage offer? Do we need this before we reserve? Would it be possible to have a mortgage offer based on the understanding that we have a deposit of x? Typically when does exchange of contracts etc occur with new builds?

Any advice/help much appreciated :-)

alice_kate_2

We recently purchased a new build.

When we viewed and reserved the plot we were slightly short of our deposit and did not have a mortgage offer.

The builder said that they were happy to reserve on a smaller deposit so long as the remaining amount was paid by completion (we had enough in the end so this didn't matter).

We reserved, and then got approval for Help to Buy and the mortgage offer.

Most builders set a deadline of 28 days to exchange - we managed to get all the above done and exchange maybe on the 29th or 30th day. The builders tend to be slightly lenient with the deadline so long as everything is moving!

Hope this helps.

BlueberryB

Hi

we are the same, are just in the process of buying our new build with the help to buy equity loan.

we reserved our plot in feb this year and paid a £500 deposit to do this, we did not need anything about mortgage offers, we had to conclude the missives (scotland) or exchange contracts within a 30 day term and then pay a further £2000 deposit (which will come off the price of house) when this was all signed, this happened 1st week in april it was all signed and sealed and we were drawn into a legally binding contract.

We had instructed a Mortgage Broker before we reserved our plot for a DIP, just to make sure we could get a mortgage which was all fine but i have never had to show this to anyone.

our mortgage offer just came through this week! phew! so thats it all done, we just have to wait now. Our new build is an off plan and built to order this is why it has taken so long.

Due to complete on the 24th November! not banking on that though as our first date was 2nd Oct then 2nd of Nov now its the 24th! :mad: blooming delays. i have told them we must be in before 2nd week of Dec as our mortgage offer is only valid for 90 days and expires on 20th dec! i am NOT going through that process again.


Good luck

Henneb_84

Thanks both :-)

They are having a launch event at the end of October so I guess if we like what we see we would be able to reserve. My concern is that we wouldn't have the full 5% deposit until the middle of next year.

BlueberryB - you say you exchanged with a £2k deposit - without being too nosey was this the full deposit that you needed for your mortgage offer or have you been able to use the time between February and now to continue saving?

dgtazzman

With nearly a year till completion, don't let them convince you to exchange till 4 to 5 months before estimated completion date, so you can secure your mortgage offer at that time and it remains valid till you actually complete. Most mortgage offers are only valid for 6 months. Some lenders will give (small) extensions on that, but keep in mind, there is a real chance for delay on the completion date, so best to keep some time spare.

They'll probably give you some lip about it, but in the end, they know it makes sense and it shouldn't matter to them, as long as they have their reservation fee and you've got an AIP or had a talk with a mortgage adviser to confirm you stand a good chance of getting the required mortgage when the time comes. Make sure the paperwork is amended to reflect any agreements made, the standard paperwork usually says the house is only reserved for 28 days and if contracts aren't exchanged by then, but builder reserves the right to resell the house.

Also, full deposit has to be paid on exchange of contracts, until then you only pay a reservation fee.

Ulfar

Don't use the solicitor they recommend, get your own.

Ask for a long stop date, when you do exchange.

BlueberryB

Henneb_84 wrote: »

Thanks both :-)

They are having a launch event at the end of October so I guess if we like what we see we would be able to reserve. My concern is that we wouldn't have the full 5% deposit until the middle of next year.

BlueberryB - you say you exchanged with a £2k deposit - without being too nosey was this the full deposit that you needed for your mortgage offer or have you been able to use the time between February and now to continue saving?

Hi no not nosey at all

The 2k deposit was to the builder, plus the £500 reservation fee, we get both of these payments back on completion!

Our actual deposit £10,500 is due to the mortgage company on completion, we had this when we applied though as we had to get a statement of the account this was held to prove we had deposit. We have been saving like mad to get all the legal fees and stamp duty which is costing an extra £3290 and we have some extras added on to house which is going to stump us another 7-8k :eek:

We have got no incentives at all, not even turf or extra plug sockets since the help to buy came in the houses are flying off the shelf so they don't need to offer any goodies I suppose which sucks but never mind! We would never have been able to get on the property ladder without the help of the scheme so not all bad

dgtazzman

Your solicitor should have secure the 10500 deposit on their account on exchange, not on completion, those funds are forfeit should you pull out between exchange and completion, hence why they should be held by the solicitor.

BlueberryB

dgtazzman wrote: »

Your solicitor should have secure the 10500 deposit on their account on exchange, not on completion, those funds are forfeit should you pull out between exchange and completion, hence why they should be held by the solicitor.

Gah!!! They have never said that!!
I'm in Scotland and we have signed the Missives? Maybe different here? We only got our mortgage offer this week though so that is maybe how? Offer valid only for 90 days :eek: just praying the build does not go too much over the estimated date

dgtazzman

Maybe, I'm in England, so could well be a completely different ball game...

BlueberryB

dgtazzman wrote: »

Maybe, I'm in England, so could well be a completely different ball game...

Maybe lol

I was just into the solicitors today with a copy of our valuation so they could forward a certificate of title to woolwich. I asked her what happened next? She said we would get something in the post soon for us to sign and then when we get closer to completion date we will get told how much we need to pay etc and when, I'm assuming this will be fees, stamp duty and deposit as well as extras?

Hoping it won't be too long now! Been waiting since feb