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Signing contracts on a new build property

  • 23-11-2021 9:34pm
    #1
    Registered Users Posts: 555 ✭✭✭ drunkymonkey


    Hi all,


    Just a question to those that went through a purchase of a new build house and to gain some perspective.

    So after years of saving and climbing the job ladder we are fortunate to become first time buyers soon.

    The development is situated in Cork and is a few phases in since ~2019, we have a deposit down on a house that we're being told will be built approx. Sept/Oct 2022.

    This date has been pushed back a good few months since we first put the deposit down at the start of last summer but they are 'assuring' us that if Covid does not affect things this date or earlier is certain.


    The auctioneer got in contact 2 weeks ago to say that the contracts have been sent to my solicitor, we since got re approved for a higher amount and got the First time buyers/ help to buy grant in place.

    I'm due to meet my solicitor this Friday to sign contracts etc. but he has informed to bring along a cheque made out to the Auctioneers Solicitors for 10% of the purchase value.

    I have also been informed that the remainder of the funds will be required to be paid when the sale is ready to be closed which he mentions could be in a week or two.

    Our mortgage broker has also alluded that we must draw down our mortgage soon when we sign contracts.

    Now my question lies with is the above normal procedure when the house will not be fully built until a full years time?

    Do they require all funds of the house paid at the contract stage and if so, with the mortgage drawn down soon does this mean that we will be paying a monthly mortgage for a full year without even having a house!?


    It seems awfully early to be paying all funds as we have heard from others that have gone through house builds that stage payments, etc. are involved and that this sounds unusual.

    Would appreciate peoples experience, perspective, etc. (Obviously, my mortgage broker and Solicitor are best placed to answer my questions but with it being silly season they are hard to contact on short notice and I will need to organize before this Friday)



Comments

  • Registered Users Posts: 11,002 ✭✭✭✭ Dav010


    Has your solicitor told you the sale will close before the house is completed? That seems unusual as the bank would want a valuation done before funds are released and you would most likely have to begin making repayments. You should discuss this with your solicitor before signing the contracts.



  • Registered Users Posts: 555 ✭✭✭ drunkymonkey


    My solicitor is very hard to get a hold of to ask questions as he is 'regularly in court', but I managed to nail down a time this Friday which is why I'd like to have some questions prepared before we sign contracts on that same day.

    After we were told to bring along a cheque for 10% of the purchase price I did ask when the remainder of the funds would be due which is when we were told the above - approx. 1-2 weeks.

    In the past my broker also mentioned that all funds would be due at contract stage although this was a long time ago so I do need to clarify.

    Are valuations done on new builds?



  • Registered Users Posts: 9 Likethewind


    Maybe your solicitor misunderstood and thinks that the house was completed in October 2021? 10% on signing is normal but the balance wouldn’t be due until the house is built, snagged and signed off by you. I can’t even see how the bank would lend in this situation and yes, they would need a final valuation which would only be done once the house is built and snagged



  • Registered Users Posts: 56 ✭✭ covidcustomer


    This is how our purchase went and I think you could be correct, maybe the solicitor misheard.



  • Registered Users Posts: 555 ✭✭✭ drunkymonkey


    Thanks all. Confirmed that he misheard and thought that it was a secondhand house and we'd be moving on it a lot sooner.

    Much clearer now, thanks again.



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