Buying from a Developer

When buying a new home from a Developer it is important to act quickly. Normally, a developer will expect to exchange contracts within 28 days – and you will normally need a formal mortgage offer on the table to do this. Even though you may need to wait for the property to be completed, mortgage lenders will make a formal mortgage offer where you are using a reputable new build developer, which is based on the specification of the property.

Mortgage lenders take a different approach to lending on new build properties, even where you are making a traditional purchase rather than a shared ownership or buying under the New Buy Scheme. There are more aspects to consider than a tradition purchase of a pre-owned home bought through an Estate Agent. Be sure to use a mortgage broker who is fully conversant with the requirements.

A few of the points to note are as follows:

The requirement to exchange quickly:

Under normal circumstances, a new build developer will make it a condition of your purchase contract that you can exchange contracts in 28 days. This is a realisitc time frame if you use a broker experienced in dealing with new build, and one that is used to moving quickly. You can also help the mortgage application being processed quickly by making sure you have all the documents your mortgage advisor needs organised and ready.

Loan to Value restrictions

Lenders typically restrict the loan to value on new build flats, meaning that you have place a larger deposit in terms of percentage than with a house. Lenders also have other loan to value restrictions if you are buying from a lesser known developer, however, if you are using Wimpey, Barrett, Persimmon and the other reputable major names, these further restrcitions may not apply.

Incentives to Purchase mortgage broker cardiff

The developer maybe offering incentives to you for the purchasse, such as 5% deposit paid or offering to pay the stamp duty for you. They may even be taking your existing home in part exchange. On every transaction, the Developer must complete an incentive form for the solicitor who is dealing with the purchase; who will then check that these incentives have been declared to the mortgage lender. Any mortgage offer that is issued without the lender knowing about the incentives may become nul and void. This is nothing to be concerned about, as long as your mortgage advisor is aware of the process and provides the lender with details of the incentives up front. Some incentives maybe acceptable to one lender, but not to another. It is really important to use a mortgage advisor who is familiar with the process when buying from a developer. Contact Harvey Bowes today to talk through the options on 02921754150.

Exposure

Lenders implement restrictions on the amount of properties on a development they are willing to lend on. This is a way of spreading their risk. As a buyer, it may mean that there is not a full range of lenders to consider as some lenders have already agreed mortgages for other buyers and filled their quota. Again, this is very different from a traditional purchase on a pre-owned property. And this is something an experienced mortgage advisor will research for you, to make sure time is not wasted on an application that cannot be successful, even for the ‘model’ mortgage applicant.

Exclusive Mortgage Deals for New Build

There are often exclusive deals avaiable for New Build properties. Firstly, many lenders will allow a new build developer to pay towards your deposit, incentives such as 5% deposit paid or ‘deposit match’ are available. Lenders also offer exclusive mortgage products with special rates – and some deals are only available through a limited number of brokers. Why not talk to the team at Harvey Bowes today and find out what deals are available? Call 02921754150

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Your home may be repossessed if you do not keep up repayments on your mortgage

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