Buying a property off-plan?
What is off-plan? – This is where you are buying a property before the build has completed.
The developer will give you an indication of when the build will be complete – this can be from 12-18 months but will depend on when you decide to purchase and how far along the developer is with the build.
We suggest speaking to us or your mortgage broker to find out the process of purchasing an off-plan property, and what questions you need to ask and what information you will need from your developer/ agent.
How long are mortgage offers valid for?
Generally, mortgage offers are valid for six months, however some lenders’ timescales can be longer. You may also find certain lenders are happy to offer allowances for extending your mortgage offer, as long as your circumstances haven’t changed from the original application.
Your initial rate offered may also need to be changed if rates have changed since the original application.
It is not uncommon for your lender to request a re‐inspection or re‐valuation of your property once it is completed or if the mortgage offer needs to be extended. The reason for this is it for their surveyor to confirm the property’s expected/current value is still in line with the amount you need to borrow and the lenders criteria. You may need to factor in re valuation fees charged by the lender.
London FS have specialist and experienced advisors who deal with off-plan/new build mortgages and we also have access to exclusive rates and products from some lenders. By using us to arrange your mortgage, it can streamline your whole buying process and improve the likelihood of a successful purchase.
How does the deposit requirement and loan to value (LTV) work on new builds?
It can sometimes be difficult working out the value of a new build property, especially if it is a new development in an underdeveloped area. It is always recommended to check online and see what similar properties in the area have sold for in the last 12 months for example.
Some lenders will restrict the maximum loan to value [LTV] on new build properties to increase their security and minimise their risk. In the current climate it is not unusual for lenders to apply additional limitations, – if you’re buying a flat for example, you may need a larger deposit than if you are buying a house.
If you are a first-time buyer and as long as you have a minimum of a 5% deposit, it’s worth looking at whether you are eligible for the Governments’ help to buy schemes.
For more information on financing new builds, off-plan properties, help to buy mortgages please get in touch with us:
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Call us on: 0208 427 5057