People are nuts for new products. From iPhones , television sets, shoes, etc. When you plaster the word new on it, most likely, people will buy it. But I’ve often wondered if this rule also applies to newly built homes. Would first time home buyers benefit from purchasing newly built homes or are they better off buying previously owned houses?
My colleagues and I got together to answer this question and we thought that it’s better to leave the decision making to you – the buyer! But to guide you through the decision making process, here are the pros and cons of buying newly built homes:
Benefits of buying newly built houses
Probably the biggest benefit of newly built homes is its lack of wear and tear. You get everything brand new, so you won’t have to worry about conducting any major repairs or renovations for the first few years of your occupancy.
Newly built houses registered with the National House Building Council (NHBC) also come with a 10-year warranty and protection scheme. If your house isn’t registered with the NHBC, there are other institutions like the BLP which offer building protection insurance for new homes.
If you’re buying a house off-the-plan, you may ask the developer to tweak the building plans to your preference. For example, you can ask them to reposition the electric sockets and doors or request for additional cupboards to be installed in your kitchen. Just keep in mind that some builders won’t agree to modify the building plans until you’ve signed a contract and this extra work on your house isn’t for free.
On the financial side of things, some colleagues of mine believe that it’s easier to secure a mortgage when you buy newly built houses. This is true when the developers include for a mortgage payment scheme in their contracts and if the deposit payment required is smaller compared to the traditional 25 per cent rate.
Drawbacks of newly built houses
As I’ve mentioned earlier, it’s common that people buy off-the-plan. This means that you can’t move in the house even if you have no current residence. Hence, you’ll have to wait for a couple of months until construction is finished before you can finally enjoy your house.
Some buyers compel their builders to agree to a ‘long stop’ completion date to minimise the delay of their move. Under this agreement, builders are bound to pay the buyer compensation if they fail to wrap up construction on the agreed date.
On the financing side, it’s possible that you won’t receive a mortgage during the period of construction, since many lenders refuse to release the final loan until construction is 100 per cent complete. You may also face difficulty during the application process itself, because you’ll only have the site and the plan to show to solicitors and mortgage lenders during interviews.
I hope that this blog post helped you decide if you are going to buy a newly built home as your first purchase. For more first time home buyer tips, just watch out for my new blog post next week!Tags: buy newly built homes, first time home buyer, newly built homes, newly built houses, pros and cons of buying newly built homes, purchasing newly built homes