A step-by-step guide

Purchasing a new build property can be a whirlwind of emotions, least of all if you are first-time buyers. From mortgages and buyer initiatives to conveyancing and stamp duty, there’s a lot to consider. But don’t panic, we’ve put together a list of a key steps below:

1. Your mortgage

Obtaining the right mortgage is vital. You may need to do quite a bit of research to determine the best lender for you. You may find it useful to seek guidance from a specialist new homes mortgage adviser as they will assist you when finding a suitable mortgage.

Consider obtaining an Agreement in Principle at the earliest opportunity as this will allow you to budget effectively and purchase a property you can afford.

2.Buyer initiatives

There are a several schemes available which are designed to assist you to get on the property ladder. These include:

Shared ownership

This allows you to purchase a share of your dream home from a Housing Association and pay rent on the rest. You must, however, meet the eligibility criteria, so research is essential before considering this option.

Help to Buy equity loan

Help to Buy equity loans are set up to assist first-time buyers to buy their first new build home. An equity loan allows you to pay a deposit of 5% of the purchase price, with the Government providing a loan of up to 20% of the purchase price to assist with the purchase of the property. The Help to Buy equity loan is interest free for the first five years; and thereafter interest will be charged on a monthly basis. From year six, it is an “interest only” loan. This means that your monthly payments only cover the interest and do not reduce the capital loan.

You can only use a Help to Buy Equity Loan to purchase a new build home.

Until recently, to benefit from an equity loan, the builder would need to finish your new home by the end of December 2020. As a result of delays to building because of the Covid-19 pandemic, the Government has extended this to include homes built up until 28 February 2021. You will need to complete the purchase by 31 March 2021.

Lifetime ISA

This type of ISA is available to anyone aged between 18 and 40 purchasing their first home in the UK. These are offered at most banks and allow first-time buyers to save money to contribute to the purchase of your home whether new build or an older property. You can contribute any amount to your ISA at any time or pay one lump sum of up to £4,000. Then, at the end of each year, the Government will contribute up to a £1,000 bonus to use towards your purchase.

3. Instructing a solicitor

The next important step is to instruct the right solicitor. Your solicitor will conduct all the legal work on your behalf and act as an agent between you and the seller.

Our experienced conveyancing team are happy to offer you a quotation whether you are purchasing a new build or second-hand property. We have a wealth of experience in dealing with all property transactions and will ensure that you are allocated to the solicitor with expertise to handle your purchase.

4. Exchange of contracts

This is the most significant step in the conveyancing process; and it is the point where your sale or purchase becomes legally binding. Once you have exchanged contracts you have made a legal commitment to purchase the property.

If you are purchasing a new build property, there is usually an exchange deadline to work towards. The deadline will be noted on the Reservation Form that you complete at the point of reserving your property.

Exchange of contracts will not take place until you and the contract are completely prepared, and any enquiries are resolved. We will advise you whether it is a condition of your mortgage to have appropriate buildings insurance in place either at the point of exchange of contracts or before legal completion takes place.

5. Stamp duty

There is currently a stamp duty holiday, which is due to end on 31 March 2021. This means that home buyers do not have to pay any stamp duty on properties costing up to £500,000. The rate of stamp duty for properties over £500,000 has been significantly reduced.

We understand that from 1 April 2021, stamp duty will go back to its pre-Covid rates. This means that first time buyers get a reduction on the stamp duty payable on properties up to £500,000. Properties costing less than £300,000 attract no stamp duty for first time buyers, with 5% payable on the price between £300,000 and £500,000. If the property costs more than £500,000, first-time buyers will pay the same rate of stamp duty as previous homeowners. Stamp duty has to be paid within 14 days of legal completion of a property.

You can calculate how much stamp duty you could be paying here.

6. Legal completion

Congratulations, you are now officially a homeowner! Legal completion can take place at the same time as exchange of contracts but can also be some time after, particularly if you are purchasing a new build.

Patience is key when purchasing any home, as overall it can be a lengthy process. However the most important thing to remember is to trust the whole process as your solicitor only has your best interests in mind. Get an instant conveyancing quote online, or call us on 0800 988 7756.