New Build - 28 days to exchange

Chickenman1108

Hi
I hope someone can help me.
My partner and I are hoping to buy our first home soon. A new development is being built that we are very keen on. The flats are being released, off-plan, in September. They wont be ready to move into until Q1 of 2018 (they're not exactly sure when).
We have been told that if we want to reserve one of the flats we need to pay a reservation fee and then we have 28 days to exchange contracts and pay 10% of the sale price (with the remaining 90% payable once the build is finished).
We don't currently have that sort of money. We are using the Government H2B Equity Loan scheme, so we only have a 5% deposit.
I'm a total mortgage virgin and the whole process is already confusing me. Obviously by the end of the 28 days we have to have our mortgage arranged (as well as all the H2B stuff) but we wouldn't actually have the money by then, surely? So is it right for the builder to ask for a 10% payment 6 months before the build is complete?
Any help would be great appreciated

prosaver

theres a big con about leasehold.... be careful be for you buy

aneary

It's a flat it will be leasehold. The con is around leasehold houses.

Chickenman1108

Yes, it'll be leasehold.
I'm wondering if the percentage would be negotiable (which I guess would be something that my solicitor would have to sort out?)

csgohan4

aneary wrote: »

It's a flat it will be leasehold. The con is around leasehold houses.

also flats, service charges, lease length e.t.c

alex_163163

Yes if the developer offer the help to buy scheme then they should expect that you will only be exchanging with 5% deposit. I bought with help to buy and it was fine.
But to answer your other questions - yes you will need the full 5% ready at exchange day.
And yes it is completely typical for developers to require exchange after 28 days and then completion is 'on notice' once the build is complete. However, if there are some slight delays with exchange the developer would usually be ok to give an extension as long as their solicitors can see things are moving along. That will all be negotiated between the solicitors.

andyf1980

Our developer let us pay 5%

We have had lots of problems with build delays (6 months and counting). I couldn't recommend buying a new build; everything is stacked in favour of the developers. The 28 day exchange is a nonsense and should be banned. It is common with all developers. We are on our third mortgage application.

Thrugelmir

The 28 day rule is not hard and fast. Providing the purchase process is proceeding you'll encounter no issues. It's in place to weed out time wasters. As the developer may possibly need to sell units in order to keep their bank manager on board.

kingstreet

The MAXIMUM deposit for an HTB newbuild purchase is 5%.

Any builder suggesting otherwise is going to get the documentation back from the HTB Agent for correction, so let them find out the hard way...

Lucifa42

kingstreet wrote: »

The MAXIMUM deposit for an HTB newbuild purchase is 5%.

Any builder suggesting otherwise is going to get the documentation back from the HTB Agent for correction, so let them find out the hard way...

I bought a new build 2 years ago with HTB equity loan and paid a 8% deposit... ?

nikkih72

we are paying 10% deposit on HTB, minimum is 5%,, max is what ever you want to pay, having more than 5% gives u more choice of lenders