With the housing stock still not large enough to meet demand in the UK, housing development sites will be a feature of the landscape for some time to come.
Due to the surge in demand for new homes, it’s important you are in the most proceedable and qualified position when looking to reserve one yourself as competition for the property you have earmarked may be intense.
Home Group Advisors have years of experience in managing new build mortgages and are able to support and arrange help to buy applications and, most importantly, understand the timescales and turnaround times developers require for reservation and exchange of contracts.
A help-to-buy equity loan is a government-funded loan combined with a deposit and a mortgage and is available only on new build properties. You will need to put down a minimum 5% deposit and the government will top this up by 20%. With a 25% deposit in place, you will require a 75% mortgage.
London Help-to-Buy works in the same way as mainstream help-to-buy but with the government offering a 40% deposit as opposed to 20%, in attempt to make homes more affordable in one of the most expensive parts of the country for property.
In April 2021, the government introduced price caps by region across the UK, to ensure the scheme reaches the people who need it most. These are currently due to expire in March 2023.
The maximum purchase price by region can be found below:
London: £600,000
East of England: £407,400
South East: £437,600
South West: £349,000
North East: £186,100
North West: £224,400
Yorkshire and the Humber: £228,100
East Midlands: £261,900
West Midlands: £255,600
A property information form is to be completed when making a help-to-buy equity application. This is similar to a mortgage application and you will be required to supply personal details and income details, to assess the affordability of the equity loan.
It also includes information on the developer and the plot and house being purchased, to ensure the help-to-buy funding is allocated to the developer. Solicitor details will also be provided to ensure the funds are managed accordingly.
This form is sent with the Developer Reservation Form and will be reviewed by the help-to-buy underwriting team. Once this has been reviewed and accepted, an Authority to Proceed is issued.
A Home Group Mortgage Advisor will be able to complete the help-to-buy affordability checks on your behalf. This calculation takes into account income and expenditure and is different from the lender’s affordability check.
In order to qualify for a ‘Help-to-Buy equity’ mortgage, you must pass this affordability check prior to lender approval.
Authority to Proceed is essentially the formal Help-to-Buy Equity loan document from the government. This is sent to the developer, customer and the mortgage advisor managing the process. Once accepted, your full mortgage application can be submitted.
Reservation Financial Qualification
In order to reserve a plot, housing developers will require you to have a completed financial qualification, via a Qualified Mortgage Advisor. This is to ensure the plot you are reserving is affordable and you have the level of deposit required.
Home Group Advisors will then ensure you have a decision in principle, verify deposit information for the developer and, if applicable, complete all the necessary help-to-buy affordability checks and any other paperwork involved in the application process.
Housing Developers 28-30 day exchange
Most housing builders have a 28 or 30-day exchange target from the point of reservation, to ensure the plot is reserved and not sold to another buyer. This is especially true for first-time buyers and in cases where there is no chain.
Longer periods between exchange and completion are therefore not unusual, which can add more anxiety to an already stressful time in your life because mortgage offers only have a limited shelf life.
However, we can take some of that time pressure away by working with mortgage lenders to ensure that your mortgage offer is long enough to align with your designated completion date, or in the event of a delay in completion, the mortgage offer is extendable.
Relationships with Housing Developer
From initial financial qualification to completion, we will work with and update your housing developer on the progress of the mortgage application. We are experienced in managing expectations of timelines and understanding the ‘need for speed’ when working with new build mortgages.
Our First Time Buyer Stamp Duty Calculator helps to show you the Stamp Duty costs associated with a new or first-time buyer.
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