Legalities of reserving a new build (FTB)

mlaf

Hello, apologies if this question is quite basic! My wife and I are first time buyers. We have already met with a mortgage broker (First Mortgage) and received our Agreement in Principle (Halifax). We are now house hunting, and looking at new builds in which we qualify for Help To Buy (Scotland). We have visited a few developments we are interested in and had a look at the show homes. The house(s) we are considering are still being built.

Aside from being non-refundable and giving us a few weeks to arrange the mortgage, what happens legally when you reserve and what should we look out for when signing the reservation papers? For instance, do we negotiate the price and/or extras before reserving? Do we need to have a solicitor check the reservation papers or is it not that big a deal legally speaking? What gets "locked in" when we reserve?

Thank you.

Kell4life

You need to negotiate on any discounts or extras thrown in before reserving.

Depending on how popular the development is, if you are first time buyers chain free it puts you in a good position.

I would work out an offer based on what you are willing to pay/what deal you want and start from there, tell the onsite sales negoiator that you'll reserve today if you can buy the property for xyz. They may not agree to what you ask but it's a good starting point.

They will often want you to speak to their own broker to pass affordability until they will proceed with your reservation. They tend to ignore a mortgage in principle and will still insist you speak to their broker. Once you pass that you have 28 days to exchange and must apply for your HTB.

Rarely does exchange happen that quickly, we recently took 7 weeks to exchange on our newbuild and that was fine. At this point you pay your deposit, I.e. 5/10% of the house value. Between paying the reservation fee and exchange you can change your mind but will likely loose all or half of the fee you've paid. Once you've exchanged contracts it would be very costly to back out, so make sure it's the right decision.

marksoton

Kell4life wrote: »

You need to negotiate on any discounts or extras thrown in before reserving.

Depending on how popular the development is, if you are first time buyers chain free it puts you in a good position.

I would work out an offer based on what you are willing to pay/what deal you want and start from there, tell the onsite sales negoiator that you'll reserve today if you can buy the property for xyz. They may not agree to what you ask but it's a good starting point.

They will often want you to speak to their own broker to pass affordability until they will proceed with your reservation. They tend to ignore a mortgage in principle and will still insist you speak to their broker. Once you pass that you have 28 days to exchange and must apply for your HTB.

Rarely does exchange happen that quickly, we recently took 7 weeks to exchange on our newbuild and that was fine. At this point you pay your deposit, I.e. 5/10% of the house value. Between paying the reservation fee and exchange you can change your mind but will likely loose all or half of the fee you've paid. Once you've exchanged contracts it would be very costly to back out, so make sure it's the right decision.

It's Scotland so things are slightly different.

lorelai34

We reserved our new build in November and you negotiate price/extras at time of reservation. We used the Help to Buy Scotland Mortgage Guarantee. They expect the missives to be signed within 28 days but as long as you have submitted the mortgage application the builder should understand it probably will take longer. Took us 6 weeks from date of reservation to signing the missives. You would need to have negotiated any free extras as the missives need to make mention of them. At The time of signing the missives we had to pay 2% of the deposit. As far as I'm aware once you've signed the missives that's you committed. We are buying our carpets/flooring through the builder as well and we had to order and pay deposit for that in December too. We get the keys next week! Oh and we didn't get a solicitor to look at reservation document.

Derboy

Deposit depends on the builder. We paid £500 reservation fee then a further £1000 when signing missives. We've nothing further to pay until completion.