New Build – Answering questions you need to know

by | Monday 31st Jan 2022 | Mortgage Insights

New builds under development

The UK government has pledged to try and build 300,000 new homes every year by the mid-2020s to hopefully bring the price of houses down and provide more people with the ability to purchase their own home sooner and easier. In London alone there are over 100 new build developments currently selling and with other government purchase initiatives such as help to buy and shared ownership available, it’s a great time to explore the option of buying a brand-new home. In this blog we will go through some of the most common questions people have when they first start looking at new build homes. If there are any questions you have that we don’t cover, you can always give our friendly team a call on 02088771169 who will be more than happy to help.

What exactly is a new build?

Now despite this question seeming straight forward, it’s a little more complicated than some people might think. The simple answer is that it’s a brand-new house. Mortgage lenders and insurers and other bodies associated with house purchasing define a new build property as a house or a flat that has been built by a developer and has never had anyone live in it. That means that if the property was bought and someone moved into it for six months and then sold it again, this property is no longer a new build despite it technically still being quite new! If you are purchasing using the help to buy scheme or shared ownership, the property you are purchasing will need to be a new build where no one has previously lived in it.

Where things can get a little bit more complicated is when it comes to things like property conversions for example, if a factory was converted in to 20 apartments by a developer and guided by the National House Building Council this would be considered a new build purchase however if a developer purchases a block of flats and redevelops the original apartments then this could be considered a non-new build purchase. The best thing to do if you are unsure is to either speak to the developer directly for clarification or speak to a financial advisor who will be able to check for you.

Where can I find out about new builds in my area?

Google. It’s as simple as that. Google is a great resource and all you need to do is search for ‘New Homes in my area’ are it will bring up all the websites for each development. You can also search specifically for new build properties on things like right move or sometimes estate agents will work with a developer to market their properties so you could always pop down to your local branch and have a look around. If you don’t have a particular new build development in mind another option is to give your financial advisor a call to talk through your finances and then when you do know the price range you should be looking at, your advisor will be able to give you some recommendations of properties you might be interested in.

How do I view the properties in person?

Most new build developments will have pictures, descriptions, and virtual tours of show homes on their websites, but you can never really make a definite decision until you see the property in person, so we recommend that you do this before making any decisions about purchasing. The developer’s website will either have a direct number for the sales office that you can call or an enquiry email address where you can express your interest. Either way, a member of the developer’s sales team will call you back to answer any questions you have and arrange a face-to-face viewing with you at a time that suits you. When you go to view the properties, you will normally have a chat with the sales negotiator who will tell you more about the properties and the development before they show you around the show homes and if its safe to, the site where the homes are being built.

What questions should I ask?

It really depends on what is important to you to be honest, but we recommend asking the following questions:

  1. What does the new home warranty include?
    All new build properties should have a warranty issued by the NHBC and are there to cover you if anything goes wrong with the property when you purchase it. It is important to find out what exactly the warranty covers so that if anything does go wrong, you will know that you are not going to be stuck!
  2. Is the property freehold or leasehold?
    Leasehold flats often come with rules and regulations from the freeholder when it comes to things like major alterations or keeping pets – often due to the fact other people reside in the building, too. Find out what you will be paying in maintenance and ground rent, and whether it rises every few years, and go through the terms of the lease to make sure you are happy with everything before committing.
  3. When will the property be built?
    Sometimes builders will sell properties over a year before they are even built, that’s why you should always have a clear idea of roughly when the property will be ready to move in to. If you are moving because you can’t stay in your current home anymore then it is probably not a good idea to buy a house that you can’t live in for 18 months. Also, when you are securing a mortgage on a new build property, you will need to know when the home will be built because your mortgage offer could expire if it takes too long.
  4. Are you open to offers?
    Despite generally having a fixed sale price, sometime builders who are looking to make a quick sale or are struggling to sell the last few properties on a site may be open to offers so you could get yourself an unexpected bargain.
  5. Are there any restrictive covenants?
    Sometimes new build properties come with restrictive covenants that will stop you from making any dramatic changes to the way your property looks in the future such as adding extensions or making changes to the front facias. Although this is uncommon, it has caught some people out in the past, so it is always good to check.
  6. What do I get with the property?
    A lot of new build properties are basic when they are completed. I don’t mean that they are badly constructed, I mean that they are a blank canvas for you to make your own mark and design it how you like. Sometime however, as part of the purchase deal, the developer will offer to do things like add a specific flooring or carpet in the house, they might add some kitchen appliances to sweeten the deal or landscape the garden for you. There really are plenty of things that can be included with the property, and you should always speak to the sales representative to see what exactly is included and what might be on the table to make a deal!
  7. Can you tell me more about the area?
    The last thing you want is to buy your dream home to find out that the area is a nightmare! If you are making the commitment to buy a new build you want to make sure that the area is safe first and foremost so you can talk to the salesperson about this. And, if its important to you, you can speak to them about things like local schools, shops, restaurants, parks, leisure facilities etc… to get an idea of where you will be living.

If I like the property, what is next?

If you like the property and want to purchase it, you will need to officially reserve the home with the sales negotiator. To do this, they will normally insist that you speak to a mortgage advisor and secure a credit check (sometime called a mortgage in principle/decision in principle) to show to them that you can get a mortgage. Often the developer will have a mortgage advisor that they recommend however you do not have to use their recommended advisor and you should choose whoever you feel is most knowledgeable and will help you the most. Once you have found your mortgage advisor, they can run the credit check for you and will be there every step of your property buying process to guide you and advise you.

How long do I have to get a New Build mortgage?

That’s an interesting question as with a new build purchase, the timeframes can vary quite a bit and it’s a bit different to buying an older home. With a new build purchase there are normally two key dates: Your exchange date and your completion date. The exchange date is when you will need your deposit money ready, and your purchase becomes legally binding. The completion date is when your mortgage will need to be paid to the builder to officially buy the property and you can move in. With new builds, the exchange date comes around quickly as the builder wants to receive your deposit for the home and legally sell the property as soon as possible. On average the exchange date is usually set for 28 days after you reserve the home. As well as having your deposit ready, the builder will also expect you to have your mortgage offer in place and if you are using any schemes like help to buy, they will expect your help to buy application to have been offered as well.

Although the exchange date is stringent, the builder can be flexible if there are any issues with the mortgage application and the 28 days can possibly be extended but your advisor should discuss this with the builder. The completion date is a lot less strict and depends entirely on when the property is finished being built. As we have mentioned earlier, you could reserve a home, pay your deposit at exchange date 28 days later and then your house or flat might not be built for another 8 months! If it is going to be a few months before your home is ready to move in to, your advisor will need to monitor your mortgage offer and make sure that it doesn’t expire before completion date. When the completion date does come around, your mortgage lender will transfer the mortgage to the builder’s solicitor who will in turn pay the builder and you will be able to move into your new home!

So those are the most common question our clients have before and during the new build house buying process but as we mentioned in the beginning, if there are any more questions you have that you don’t feel we have covered above, please feel free to give us a call to talk through any queries. We are experts in the new build mortgage field, and we know exactly the way that everything with new build purchases works. Don’t get caught out by speaking to an inexperienced mortgage advisor who doesn’t know their way around new builds. Speak to Oportfolio today!

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