Mortgage on a new build house

gray821

Apologies, another dumb question. I'm looking at a new build estate where the houses will be ready next year (hopefully!). In terms of trying to buy one, I know I pay a reservation, then the deposit, I'm close to having 10%.

When do I need to have the mortgage agreed? Do I need mortgage acceptance now, even though it's not ready, and I assume not completed until next year? Or do I start looking at the mortgage situation next year and get acceptance at that point? 

I have a real mental block over this process, so any thoughts would be very much appreciated. 

lancslass26

Most new builds require £500 reservation and will ask that you exchange within the month. However I don’t think that will be the case if their build completion timescales are over 3 months away.
if you’re planning on using Help to Buy then the process looks like:
1) find property and reserve 
2) apply for the HTB loan online - long pdf to complete and send your reservation form.
3) within 4 days you’ll receive your Authority to Proceed (ATP) you have to exchange contracts within 3 months though so only move to this stage when nearer to house being ready.
4) Find Broker and apply for mortgage. Most mortgages offers are valid for 90 days
5) mortgage confirmed - instruct solicitors - searches etc and they will then request for Authority to Exchange.
6) once exchanged and monies requested then you move to complete. 

So step 2-6 all need to be within 3 months of the intended construction finish date.

mortgagetakingages

Right now the timelines like ATP are more than double. Not sure it will matter but sharing up to date info.
Oh and new build mortgages generally are valid for 6 months.

gray821

Thanks lanclass that's really helpful. So, from your list, it sounds as though I would do 1) now, then wait until closer the time to proceed with the rest? 

FTBin2020

gray821 said:

Thanks lanclass that's really helpful. So, from your list, it sounds as though I would do 1) now, then wait until closer the time to proceed with the rest? 

Do you know when next year the houses are due to be completed? Not sure if this will help but I'm literally just going through the process; our house is due to be completed late December this year.

1) Went to new build site to look at show homes and site map. Picked the plot we liked most, was told we'd need to speak to a brooker and get an AIP/DIP before we could reserve.
2) Spoke to brooker. They got an AIP with Natwest.
3) Reserved the property - £500 fee with the agreement that we'll exchange within 28 days
4) Brooker submitted Help to buy application and mortgage application for us.
5) Spoke to recommended solicitors, done all required paperwork and searches started.
6) All underwritting has now been done with Natwest, mortgage has been approved subject to valuation.

Now, I'm not 100% sure if these next steps are correct (as we haven't quite got there), once mortgage is completely approved we should exchange contracts by the 28 day deadline, we then will not complete until towards the end of December once the house is built.

gray821

FTB, many thanks, that's extremely helpful. So sounds like you've had to do everything now, up front. 
In terms of when the property will be ready, I think I saw June or July 2021. I'm not sure if that affects HTB and things like that, I need to look into that more. 
Just starting to think about these things, and happen to have seen something we like. 

FTBin2020

gray821 said:

FTB, many thanks, that's extremely helpful. So sounds like you've had to do everything now, up front. 
In terms of when the property will be ready, I think I saw June or July 2021. I'm not sure if that affects HTB and things like that, I need to look into that more. 
Just starting to think about these things, and happen to have seen something we like. 

No problem! Yep, we've had to do everything up front, but completion is just less than 6 months away, so maybe that has an effect? I'd say give the housing company a call, they're usually really lovely and will hopefully give you some clarity... Good luck

lancslass26

I guess it’s just a matter of speaking with them and seeing how they’d prefer to proceed given that the buildings are still 10 months away to completion. 

Personally - I wouldn’t exchange on a house that’s 10 months away. Your mortgage offer will have expired by then, but you would be legally bound to purchase. A lot can change in 10 months and it is a risk I wouldn’t be prepared to do. 

lancslass26

FTBin2020 said:

gray821 said:

Thanks lanclass that's really helpful. So, from your list, it sounds as though I would do 1) now, then wait until closer the time to proceed with the rest? 

Do you know when next year the houses are due to be completed? Not sure if this will help but I'm literally just going through the process; our house is due to be completed late December this year.

1) Went to new build site to look at show homes and site map. Picked the plot we liked most, was told we'd need to speak to a brooker and get an AIP/DIP before we could reserve.
2) Spoke to brooker. They got an AIP with Natwest.
3) Reserved the property - £500 fee with the agreement that we'll exchange within 28 days
4) Brooker submitted Help to buy application and mortgage application for us.
5) Spoke to recommended solicitors, done all required paperwork and searches started.
6) All underwritting has now been done with Natwest, mortgage has been approved subject to valuation.

Now, I'm not 100% sure if these next steps are correct (as we haven't quite got there), once mortgage is completely approved we should exchange contracts by the 28 day deadline, we then will not complete until towards the end of December once the house is built.

Just double check your mortgage offer expiry - I very much doubt it would be 6 month. This means, you’ll end up exchanging in September but your mortgage could expire prior to completion. They could extend the offer but they’re not bound to do this. You don’t want to be a few weeks from completion with an expired mortgage offer. 

FTBin2020

lancslass26 said:

FTBin2020 said:

gray821 said:

Thanks lanclass that's really helpful. So, from your list, it sounds as though I would do 1) now, then wait until closer the time to proceed with the rest? 

Do you know when next year the houses are due to be completed? Not sure if this will help but I'm literally just going through the process; our house is due to be completed late December this year.

1) Went to new build site to look at show homes and site map. Picked the plot we liked most, was told we'd need to speak to a brooker and get an AIP/DIP before we could reserve.
2) Spoke to brooker. They got an AIP with Natwest.
3) Reserved the property - £500 fee with the agreement that we'll exchange within 28 days
4) Brooker submitted Help to buy application and mortgage application for us.
5) Spoke to recommended solicitors, done all required paperwork and searches started.
6) All underwritting has now been done with Natwest, mortgage has been approved subject to valuation.

Now, I'm not 100% sure if these next steps are correct (as we haven't quite got there), once mortgage is completely approved we should exchange contracts by the 28 day deadline, we then will not complete until towards the end of December once the house is built.

Just double check your mortgage offer expiry - I very much doubt it would be 6 month. This means, you’ll end up exchanging in September but your mortgage could expire prior to completion. They could extend the offer but they’re not bound to do this. You don’t want to be a few weeks from completion with an expired mortgage offer. 

Hi, thanks for your reply - Our mortgage offer expiry is 6 months. It'll expire end of January.

RelievedSheff

Our mortgage offer on our new build had a six month expiry but with the option to extend it by an additional 90 days if required.