New build, ensuring I have everything in order

J89eu

Hi all

Looking to buy a new build with my girlfriend and want to run everything by people that are a bit more knowledgeable than I!

The house is 167,000 and is a new build, we both have Help To Buy ISAs, Her's was set up this month so will be ready in July for the 25%, mine is ready and will have 2600 in by July so we should have £5250 just from there. We seemingly need £8350 for a 5% deposit and I have enough in my account to cover that difference and then we'd get the Help To Buy Equity Loan for the remainder. The documents that the new build company gave us says we need about 135k mortgage which doesn't tie in with what my maths shows (surely it's 25% of the total amount meaning 125k?) but maybe I'm wrong.

I estimate we need 2000 for solicitors fees and stamp duty (the new build have a deal with a local solicitors who offer some discount on all the fees). My Mum is borrowing me this money and I will pay her back over time, she has assured me she is in no rush for the money and would rather see me not renting than hold onto it but I will pay her back as soon as I can regardless.

I have ran various mortgage calculators and being VERY conservative (as in not adding in my work on call pay which is almost guaranteed 1 week a month) it seems we can get a 175k mortgage which is plenty more than we'd need. We have owe no one any large figures of money but I do have a lease car, again the amount per month was factored into the calculator.

The building company want £500 for a reservation then the deposit after 28 days so I estimate that we can reserve the house mid June and after 28 days we'd have both ISAs up to the 25% bonus and be ready to pay. After that we'd just need to get a mortgage. I did try to get a mortgage in principal but due to the house being ready around December they couldn't do one as it'd be out of date by the time we're ready to move in so would need to look for one in a few more months. I did a very brief mortgage check on MSE and seems the HSBC 135k mortgage would be best but we need to see closer to the time.

We are also considering a lodger for around 2 to pay off a large amount of the H2B Equity Loan ASAP as I see that is now 7500 tax free earnings so we could charge someone around £400 a month all bills included. With anything I can spare going onto paying this as well we'd almost certainly be able to pay off it off within the 5 years meaning no interest.

We currently rent and are on a rolling contract so we already have furniture etc.
Am I missing anything?

Thanks...

Newbiebuyer2016

Wow! Seems like a lot going on!

We are buying a new build so two things that stand out for me are

1. Is your mum lending you more deposit money? This would be seen as a loan ? We had to provide a gifted deposit letter and details of where the money can from.

2. I'm sure you can get an AIP but it's the full mortgage offer that would run out in 6 months. I saw another thread the other day about maybe Halifax that has a longer expiry date.

I found with a new build, where they have a high demand, they wanted to see everything was all in order.

Our £500 reservation fee also came off our deposit.

Their may be lenders fees too although ours were only a couple of hundred pounds.

rtho782

Bear in mind HTB ISA bonus funds don't come in until completion, you'll still need the full 5% deposit for exchange.

If you buy a new build they will want you to exchange within 28 days, so you'll need the whole £8,350 in cash before the end of june if you sign up now, not including your HTB ISA bonuses.

I would not go near their recommended solicitors with a barge pole, you need your solicitors on your side, not on the vendors side.

Fees will almost always end up being more than you planned.

Newbiebuyer2016

Yes we had to exchange 28 days from reservation. Although ours was already built. They only delay was our mortgage company taking ages, plan B is that we had to exchange 7 days from mortgage offer so exchange dates moved from 18th May to 31st May (today.....eeek)

J89eu

Newbiebuyer2016 wrote: »

Wow! Seems like a lot going on!

We are buying a new build so two things that stand out for me are

1. Is your mum lending you more deposit money? This would be seen as a loan ? We had to provide a gifted deposit letter and details of where the money can from.

2. I'm sure you can get an AIP but it's the full mortgage offer that would run out in 6 months. I saw another thread the other day about maybe Halifax that has a longer expiry date.

I found with a new build, where they have a high demand, they wanted to see everything was all in order.

Our £500 reservation fee also came off our deposit.

Their may be lenders fees too although ours were only a couple of hundred pounds.

Newbiebuyer2016 wrote: »

Yes we had to exchange 28 days from reservation. Although ours was already built. They only delay was our mortgage company taking ages, plan B is that we had to exchange 7 days from mortgage offer so exchange dates moved from 18th May to 31st May (today.....eeek)

Hi mate

My mum is lending me the money for the fees rather than the deposit, can she just make a transfer into my account? That was the plan

The £500 reservation is the same, just taken off the the deposit

rtho782 wrote: »

Bear in mind HTB ISA bonus funds don't come in until completion, you'll still need the full 5% deposit for exchange.

If you buy a new build they will want you to exchange within 28 days, so you'll need the whole £8,350 in cash before the end of june if you sign up now, not including your HTB ISA bonuses.

I would not go near their recommended solicitors with a barge pole, you need your solicitors on your side, not on the vendors side.

Fees will almost always end up being more than you planned.

Hi bud, that's OK we should be able to raise the additional funds. I'm asking to take over peoples on call at work so extra money where I can get it.. Though It may extend our plans by about a month.

If that is the case with the deposit, when does that bonus come into play? If I had 8350 and then the bonus on top, that'd mean I'd be putting down more than 5% right? That bit confuses me to be honest

Good shout on the solicitors, I'll look elsewhere. I imagine it wouldn't be much cheaper than others anyway.

Newbiebuyer2016

how much do you actually have in your account currently towards the deposit? Would you be ready to pay the deposit in a months time?

If your short why don't you borrow the £2k from your mum towards the deposit? Then save your own money for fees on completion which would be later on?

rtho782

J89eu wrote: »

If that is the case with the deposit, when does that bonus come into play? If I had 8350 and then the bonus on top, that'd mean I'd be putting down more than 5% right? That bit confuses me to be honest

Good shout on the solicitors, I'll look elsewhere. I imagine it wouldn't be much cheaper than others anyway.

Yeah, it confused the hell out of me for the same reason. We've completed on our house today.

It doesn't help that many solicitors have never dealt with H2B ISAs at this point, ours had not.

So, you close the ISA, don't just withdraw the funds from it, or no bonus for you. For Nationwide, you can do this on internet banking. This took 5 working days for us, then we got letters with closing balance.

You will have gotten the money sent into your account when you closed the ISA, you send this to your solicitor. You give them the letter.

It then takes another 5 working days or so for the solicitor to claim the bonus, so you need to have started all this a couple of weeks before completion.

At the end, you get a bill from the solicitor, for fees, stamp duty, and anything else you haven't already paid for. As they will have money left over from the deposit (as you'll have given them 5%, and your H2B Bonus will have come in as well) you won't have much of a bill.

Our H2B bonus was just over £1100, this effectively paid about half our stamp duty. We then had the remainder of the stamp duty and the solicitors fees etc to pay before completion.

Your solicitor will ask for proof of funds for the deposit. You can pay all your fees another way (e.g. we paid the searches on a credit card) and nobody will ask for proof of funds for this money. Your mum could even pay it directly.

I'm pretty sure you can technically pay stamp duty on a credit card if you really want.

[Deleted User]

Usually with new builds you have to pay extra for pretty much everything (flooring etc). Have you factored in anything you may need to shell out for extras?

rtho782

Deleted_User wrote: »

Usually with new builds you have to pay extra for pretty much everything (flooring etc). Have you factored in anything you may need to shell out for extras?

This is a good point. Don't expect turf in the back garden, or tiles in the kitchen/bathroom, or carpet anywhere, if you don't pay extra for them.

RIPironman

I assume you have also checked your credit files to make sure they are squeaky clean? We are about to reserve a new build and they require an AIP before they will accept the deposit. Its is often a soft credit search so won't make much impact on your credit file. Although technically they don't guarantee a mortgage.

We luckily get our stamp duty paid and full flooring throughout including all fixtures and fittings and turf in the garden. The only extras we have to pay is for any upgrades on flooring or tiles.

franklee

Make sure the contract has a long stop date.