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Mortgage application for new build

  • 02-10-2018 12:29am
    #1
    Cork981
    Registered Users Posts: 744 ✭✭✭


    I recently placed a deposit on a new build that will not be ready for 12 to 24 months.

    I’m currently in probation in a new job which I expect to end in 4 months.

    I’ve had no issue paying the 10% deposit to the builder but they are now putting us under pressure to move ahead with mortgage drawdown/approval.

    Anyone know if it’s possible to get a letter of approval from the bank indicating we have approval but can’t be drawn down until probation is complete ?

    With our combined salary we can borrow more than we need.

    The house foundation hasn’t even started so I’m not sure why they have us under pressure to move ahead with the mortgage draw down.


Comments

  • #2
    alan partridge aha
    Registered Users Posts: 3,195 ✭✭✭alan partridge aha


    My advice would be to talk to a reputable broker


  • #3
    catrionanic
    Registered Users Posts: 2,091 ✭✭✭catrionanic


    Should be fine. We had AIP but couldn't draw down until my husband was out of his probation period . Not an issue with bank.

    Annoying though, and most AIPs last 6-12 months, so you'll have to reapply when the houses are actually ready.


  • #4
    GingerLily
    Registered Users Posts: 4,767 ✭✭✭GingerLily


    catrionanic wrote: »
    Should be fine. We had AIP but couldn't draw down until my husband was out of his probation period . Not an issue with bank.

    Annoying though, and most AIPs last 6-12 months, so you'll have to reapply when the houses are actually ready.

    You generally need to have your loan pack approved when you sign contracts for a new build. Contacts are generally issued within a few weeks of booking deposit and returned usually 21/56 days later.
    If be surprised if they let him progress with only AIP, as that means nothing, it's a rough guess of what you can borrow if you're approved.


  • #5
    Cork981
    Registered Users Posts: 744 ✭✭✭Cork981


    GingerLily wrote: »
    You generally need to have your loan pack approved when you sign contracts for a new build. Contacts are generally issued within a few weeks of booking deposit and returned usually 21/56 days later.
    If be surprised if they let him progress with only AIP, as that means nothing, it's a rough guess of what you can borrow if you're approved.

    Worse case scenario and we have to wait for my probation to finish, what would happen with the contracts and deposit? Would the builder be willing to wait?


  • #6
    GingerLily
    Registered Users Posts: 4,767 ✭✭✭GingerLily


    Cork981 wrote: »
    Worse case scenario and we have to wait for my probation to finish, what would happen with the contracts and deposit? Would the builder be willing to wait?

    No idea, but the booking deposit is always refundable. A clause in your loan offer might work, I don't know, I just know AIP is not enough


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  • #7
    Gumbo
    Moderators, Society & Culture Moderators Posts: 38,424 Mod ✭✭✭✭Gumbo


    Cork981 wrote: »
    I recently placed a deposit on a new build that will not be ready for 12 to 24 months.

    I’m currently in probation in a new job which I expect to end in 4 months.

    I’ve had no issue paying the 10% deposit to the builder but they are now putting us under pressure to move ahead with mortgage drawdown/approval.

    Anyone know if it’s possible to get a letter of approval from the bank indicating we have approval but can’t be drawn down until probation is complete ?

    With our combined salary we can borrow more than we need.

    The house foundation hasn’t even started so I’m not sure why they have us under pressure to move ahead with the mortgage draw down.

    Who is pushing for drawdown/approval? The bank or the builder?

    The builder has no part to play in drawdown/approval, he just wants his booking deposit. Talk to the bank, and if they are confident that your application is good to go after the probation period, then just pay the booking deposit for the new build. This is the non-refundable payment and it locks you into the purchase so beware here.

    The builder most likely wants confirmed sales for his lending institution, and if you play hard ball, he may just give your house to the next person.


  • #8
    omega666
    Registered Users Posts: 595 ✭✭✭omega666


    Cork981 wrote: »
    I recently placed a deposit on a new build that will not be ready for 12 to 24 months.

    I’m currently in probation in a new job which I expect to end in 4 months.

    I’ve had no issue paying the 10% deposit to the builder but they are now putting us under pressure to move ahead with mortgage drawdown/approval.

    Anyone know if it’s possible to get a letter of approval from the bank indicating we have approval but can’t be drawn down until probation is complete ?

    With our combined salary we can borrow more than we need.

    The house foundation hasn’t even started so I’m not sure why they have us under pressure to move ahead with the mortgage draw down.




    All the builder is interested in would be getting you tied into signing the contracts. You don't draw down the mortgage until the house is built and ready to hand over to you.


    1) You pay a booking deposit to the builder(usually a few grand).

    2) The builders solicitors send out contracts to your solicitor, this usually takes about a week.

    3) In the meantime you should talk to your bank and inform them you intend to buy this house and ask them for an official loan offer letter. They may then inform you about the probation period as a condition of the loan offer or they may not. It will take a few weeks for the loan offer to be issued.

    4) You Solicitor will wait for the loan offer from the bank and when they
    receive this they then go through both the contracts and loan offer and call you in to sign both. Persuming they have no contract questions for the builders.

    5) You go to your solicitor and sign both documents and pay the remainder for your deposit(10% - the booking deposit paid earlier)

    6) Wait for your house to be built, you will prob need to apply for mortgage approval again if it's longer than 12 months.

    7) When the house is ready your solicitor draws down the money, pays the builders solicitor and you get the keys.


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