CALL USWhen buying a new build home it is vital that you get impartial advice from a mortgage broker that understands the differences involved in the purchase process. In this article we explore what the main differences are purchasing a new build property versus a second-hand property.
Timescales
House builders will normally ask you to pay a reservation fee to secure your property, if you subsequently change your mind or are unable to complete on the purchase on time you may lose this fee. Before paying the reservation fee, speak to us to get a mortgage 'Decision in Principle'. This will provide you with an approximate idea of the size of mortgage you would qualify for.
The builder will usually require exchange of contracts to be within 28 days and this is something Bennison Brown may be able to help you achieve as we work with lenders who specialise in the new build market and understand these requirements. We have online tools, so you can check the progress of your application and will work with your developer, keeping them and you informed every step of the way.
Buying “Off plan”
You may be purchasing a property “off plan” which wont be available for several months so it is important that the most appropriate lender is selected. Some lenders mortgage offers are only valid for six months. Which would require you to re-apply for your mortgage causing unnecessary uncertainty. If there is a change in your circumstances during this time your lender may refuse to extend the mortgage offer.
Lender restrictions
If you have a relatively low deposit, some lenders may restrict the number of schemes available for the purchase of new build homes. We have access to the whole of market including a number of exclusive deals not available from high street lenders and may be able to better tailor a mortgage to your requirements.
Incentives
Incentives offered by house builders, such as paying your legal fees or granting you a 5% deposit, can be an attractive reason to buy a new build home. However, lenders may not accept these incentives and may ask for a bigger personal deposit. We will work with you and the developer to confirm the acceptable incentives and help you get the best outcome.
Help to Buy
The Help to Buy scheme could help you buy a new build home with as little as a 5% deposit but you must buy your home from a registered Help to Buy builder. To qualify, the home you are looking to purchase must be a new build, your only home (not a second home or a property you plan to rent out) and must not cost more than £600,000. You can read more about Help to Buy in this dedicated article.
Sub-sale
In some cases, you may be buying from someone who has already agreed to buy the property from the developer. They would have usually agreed this a number of months (sometimes years) ago. They have then decided to sell the property to you without ever taking ownership. This is classed as a sub-sale and introduces an additional layer of complexity. Many lenders exclude sub-sales in their policy and others have a valuation based on the price the original purchaser agreed. This can have a dramatic impact on the Loan to Value you can arrange, which may mean a larger deposit than you expected is required. We have access to lenders that will base their lending on the price you are paying for the property, which may allow you to secure a mortgage for the required amounts at a competitive rate.
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Summary
Buying a new build home is a dream for many and working with Bennison Brown who understand the specialist nature of this market will help make this dream come true.
Contact us today to discuss your circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
