Buying a new build.

Lozie

Hi, my husband and I have reserved a new build plot with Barratt, we're first time buyers using the help to buy scheme. We are due to pay Barratt the 5% deposit in a few weeks but will not be fully exchanging until March/April. My concern is with the mortgage company, we have to sort out our mortgage now but with us not actually fully owning the house until next year could the mortgage company pull out between now and then especially if the value of the property were to drop?

Any help and advice is greatly appreciated.

MortgageMamma

On new builds usually the offers are longer, or more easy to extend because of the longer deadline to completion. You are fortunate in that many new build developers require you to exchange contracts within 30 days of paying your deposit, you have a little more breathing space.


There is a chance the value could drop, but its not unusual for new build developments to be downvalued anyhow, sometimes the developers get a bit over enthusiastic about values. You won't know if this is the case until you apply for your mortgage, so try to avoid paying lots of fees upfront to prevent even more loss of money.


Regarding your legal work, you are able to ensure it against a non completion that's not your fault, including a down valuation of over 10% of purchase price. I think the max you can insure legal fees for is £800 but that's just the insurer I work with there may be others.


I don't get involved in a lot of new build transactions, but if you need help hop over to the Mortgages & Endowments forum and ask a user called KingStreet for his opinions, he more or less specialises in new builds.