What's the builder got to do with the mortgage?
With a deposit (refundable) on a new build just out of the ground, now delayed by Covid, the builder is pushing for a full deposit to secure the mortgage. Would you or wait to renegotiate? ( Not for me by the way but a younger couple in their thirties)
What's the builder got to do with the mortgage?
I would wait, unless the property is in a very sought after location. Most news feeds are reporting price drops at present(?) although that will reverse if sufficient buyers can retain their mortgage offers. Apparently lenders are scrutinising house prices also so this couple's lender may adjust downwards also. New builds historically come with a 10% builder's premium which is fine in a rising market, with of course the convenience of no chain breaking down. If they are currently renting then of course that will add to financial considerations.
How secure is the deposit if the builder goes bust!
Last edited by Suds; 4th June 2020 at 13:35.
He's only pushing to secure your hard earned now before the price inevitably falls. I'd hold.
I would have thought the builder has already had the couple go through the pre-qualification process before they accepted the reservation fee. We bought a new build 8 months ago and before they would accept our 500 quid reservation fee we had to spend around an hour on the phone with their advisor to assess finances and get agreement in principle before they would accept our money.
Ball ache at the time, but it makes sense to do it that way.
In your case also, the full deposit is only ever needed prior to exchange and would be held by the buyers solicitors NOT the builder. The solicitors will require proof of funds initially and then just prior to exchange they’ll need the money. Nothing to do with the builders. Sounds weird, and also sounds like the builder has a cash flow issue they’re trying to address with this odd approach.
We paid a 10% deposit on a new build in Dec 19 for Completion May20. Due to cv completion is potentially delayed until early 2021! Delays due to site closure then revised working practices. We are not happy and would suggest the op urges the buyers to firmly establish the completion date.
Not all lenders will provide an “in principle” letter. When I recently went through the process fairly recently they just wanted an application, and then you could take it up or not. Both the banks and my mortgage adviser simply said if you use their on line calculator you’ll see if you qualify.
It's just a matter of time...
Thank you for your advice. Will pass it on.