There are various reasons why you might want to buy a new build home. Many people like the fact that the property comes with a safety net of guarantees, plus you won’t need to compete with other buyers or end up paying over the asking price. But the real question when it comes to buying a new build is: how does the mortgage process differ?
In the majority of cases, the mortgage process for a new build isn’t any different to that of an older property. There are just a few extra things to be aware of before you get started.
Mortgage in principle
Once you’ve worked out your budget and have your deposit ready, the first step (as with any new purchase) is to get a mortgage in principle. This provisionally confirms how much your lender is willing to loan to you. Having a mortgage in principle can make things a lot easier - it shows developers that you’re a serious buyer, as you already know how much you can afford to borrow.
Make an appointment with a builder’s sales office. You can discuss what plots are available and when the houses are likely to be completed. While visiting, you can view the show home to get a feel for what the finished house will be like.
Negotiate developer offerings
Some property developers have been known to offer incentives if you buy their property. This is definitely worth exploring as it could potentially save you a lot of money. Typical incentives can include: wavering stamp duty (unless you’re a first time buyer), reducing legal fees, including fencing or integrated appliances, to name just a few. Developers tend to do this rather than reduce the price of the property, and these incentives can work well, especially if you’re a first time buyer looking to cut costs wherever possible.
Reserve the property
Once you’ve found a home that’s right for you and your offer has been accepted, you’ll need to pay a reservation fee to secure the property until the time of exchange. The reservation fee is usually around £1,000, but can vary depending on the developer.
Apply for your mortgage
Once you’ve paid the reservation fee, the builder will need to see proof of your mortgage offer within a month or so. Generally speaking, a mortgage offer is only valid for six months, so you’ll need to bear this in mind when it comes to applying for your mortgage. If you complete after the six month period, some lenders will extend the offer, but there may need to be a reassessment to review your financial position if a certain period of time has passed. If you’re buying a property off plan, this shouldn’t throw up any additional problems, as the same rules apply.
Your mortgage adviser will help you through this stage and can let you know how long your mortgage offer is valid for.
Speak to a solicitor
Finally, your solicitor will discuss the conclusion of missives with you. This is a contract between you and the developer to confirm that you’re both happy with the agreement you’ve come to. This also confirms that you’re now legally bound to purchase the property.
To speak to our new build mortgage specialists, feel free to contact us today so we can help get you one step closer to being in your new home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.