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Questions to ask when buying a new build house
Buying a new-build house comes with its own issues and processes to follow. Here are the answers to questions on buying a new build house and some tips when buying a new build house.
I’ve reserved my new property, what do I need to do now?
Now that you have reserved your property and paid your reservation fee, it’s time to instruct your solicitor.
Contact our conveyancing solicitors for a quotation and our award-winning conveyancing team at Crombie Wilkinson will be happy to assist.
What do my solicitors need?
You’ll need to provide the following for your solicitor when buying a new house:
- Engagement letter: We’ll provide you with an engagement letter that sets out what we’ll do for you along with the process that needs to be followed during the purchase.
- Paperwork to sign: There’ll be some paperwork with the letter which you’ll need to complete, sign and return.
- Money on account: We’ll ask you for some money on account so that we can order the searches (these are needed by your mortgage lender and even if you’re a cash purchaser, are necessary to ensure we can properly advise you).
- Identity: It’s important that we verify your identity before we start work on your purchase. This is a requirement of our regulator and also the UK government. Our CW App can be downloaded from the App Store (search Crombie Wilkinson Solicitors) so that you can deal with the ID requirements directly from your mobile phone or laptop.
Getting a mortgage – do I need to send the solicitor a copy?
If you’re arranging a mortgage, please ensure you have your decision in principal, and speak to your broker about securing your formal mortgage offer.
Once that offer is issued, we will receive our solicitors instructions directly from your mortgage lender (bank or building society).
When do I need to give you my deposit money?
We can’t accept any deposit money from you until we have verified your source of funds (that is, where the money for the house purchase is coming from) and also your source of wealth (this is how you have accumulated your money over the years).
The UK government and our regulator place stringent requirements on us, and our directors and individual solicitors can be prosecuted and imprisoned if we fail to satisfy these requirements on each purchase we deal with.
You might feel like we ask a lot of questions about your money, and we appreciate this can feel intrusive. However, we have to do this as it’s against the law for us to deal with money if we haven’t verified where it’s come from, or how you have grown your wealth.
If you don’t provide the information we need as soon as possible after reserving your property, it can cause delays in getting the keys to your new home.
How do I prove where the money for the purchase is coming from?
Source of funds is the money being used for your purchase.
- Mortgage buyer: If you’re getting a mortgage then this is the deposit you’re contributing to the purchase price.
- Cash buyer: If you’re fortunate enough to be a cash buyer, then we are looking for evidence for the entire purchase price.
Documentary evidence could be a completion statement and letter from a solicitor who dealt with a previous property sale or the payment of inheritance to you. Perhaps you have saved from your salary or earnings, in which case we will look at your payslips for the past three or four months along with bank statements for your savings and current from employment.
We will need to see you have the funds so we will always need bank statements for the accounts in which the money is in, and these will need to go back usually three months.
What about source of wealth – what will you need from me for this?
Source of wealth is us coming to an understanding of how you’ve accumulated your money. This could be as simple as a previous property sale, or perhaps you’re a first-time buyer who has saved regularly each month for the past few years. If that’s the case, we’d need to see your payslips, current account and savings account bank statements to verify that your earnings are sufficient to allow you to save the funds you have each month.
Other sources of wealth may be a little more complicated. For instance, if you’ve invested your money and this has seen a substantial return, or you have sold shares in a business. In these cases, we will ask for documents to outline your investments and share sales, alongside copies of your bank accounts.
Please note, as solicitors we are under a legal obligation to check your source of funds and source of wealth. This is to ensure all funds being used are from a legitimate source. The details you provide are confidential and will be treated as such.
What if I’m using money that has been gifted to me?
If you’re receiving a gift towards the purchase price, we will need to carry out all of the checks listed above, on the person who is giving – or has already given – you the money. This is just as important as the checks we’re required to make in respect of your own identity and source of funds and wealth. Any delays in the person making the gift providing the information to us, will delay your purchase.
Please note, we may need to report the gift to your lender depending on your lenders particular requirements, so the sooner we have the details the better. We won’t be able to discuss any dates for getting the keys to your new home, until your mortgage lender is satisfied with the information we provide to them.
What happens after these checks have been made?
The developer’s solicitors will issue contract papers to us, and we’ll review the contracts and search results for the property.
A detailed property report will be produced for you, which is lengthy but contains important information that you need to read before you commit to the contract.
If you’re obtaining a mortgage, we’ll review the mortgage offer and send you a mortgage report outlining the terms and conditions. We also need to make sure that we comply with your lender’s requirements. These are different for all lenders and as we act for them as well as you, we can’t proceed unless they confirm they’re happy.
Once we have all the paperwork in order, we will send you documents to sign and return.
Once we have completed paperwork, we can exchange contracts (this is the point of ‘no return’ – you pay a 10% deposit and become legally committed to the purchase) and completion will either take place on a fixed date (if the house has already been signed off as complete by the building control officer), or on notice (where the house is still under construction).
What does completion ‘on notice’ mean?
This means that the house is not yet ready to live in at the point we exchange contracts and because of this, the developer can’t confirm the day on which you can move in. Instead, their solicitors will give us a copy of the final building control certificate as soon as it’s issued, and will at the same time give us ‘notice’ to complete the purchase.
This will usually give us ten working days to complete. This time gives us chance to request funds from your mortgage lender, carry out final Land Registry searches, and obtain any outstanding funds from you. You can also arrange removals, etc., at this point.
At this point, is it possible to confirm when I’ll get the keys for my new home?
No, it’s a little too early for that, even if your property is built and ready to move into. All of the checks we’ve outlined above must be completed and your mortgage lender needs to be happy with the information we provide to them.
Our team at Crombie Wilkinson will work together to provide you with the best possible service during the purchase but we can’t guarantee any moving dates just yet.
