Do we need legal fees ready for a loan offer if the house won’t be completed for 7 months?

[mygaurdianangel15]

We have a booking deposit made on a house. Currently we have all the deposit saved including a 3k gift from her parents. But now we’re thinking we may need the legal fees before we get a loan offer and sign contracts.

Is this the case?

If so, I’ll probably try to get a gift of 7-8k from my parents to help with that but then we will have two gifts and I’m unsure if that’s a bad look for us.

The house wouldn’t be complete until November so we would need to renew the offer anyways, hence why I’m confused why we would need the fees so far out.

I get paid a lump sum in April of 12k, that’s what we were going to fund the legal fees with but seems we may need the money earlier than that.

 

[onlyloveisreal]

@mygaurdianangel15 We just got loan approved last week. In the application process, the bank asked to show proof of funds - including the legal fees even if the turnover is not until late summer.

 

[jefhe08]

@mygaurdianangel15 We didn’t have legal fees included in the proof of savings etc that we sent to the bank and they didn’t bag and eyelid but I will say we had a very strong application with very good savings so I’m not sure if that makes a difference.

 

[christina27]

@mygaurdianangel15 Legal fees aren’t required until you close the sale (get the keys) - your solicitor will send you and bill with their fee / stamp duty / land registry etc.

 

[mygaurdianangel15]

@christina27 I understand this but I mean when we’re trying to get a loan and showing the banks our savings… will they want to just see the 10% deposit or 10% deposit + fees?

 

[edgar77]

@mygaurdianangel15 Just the 10% deposit, the other fees are an accepted part of the transaction so not needed to have just yet to get a loan from the bank

 

[jhonn]

@mygaurdianangel15 You pay it at closing contracts.

 

[thrivenotjustsurvive]

@mygaurdianangel15 The answer kind of depends. The bank may ask for proof of funds for legal fees, stamp duty etc before sending out the letter of offer to your solicitor but I don't think this is very common. What a bank asks for can depend for each application.

Your solicitor will always need to satisfy the bank that you have enough money to cover stamp duty, legal, land reg etc before final drawdown (mortgage monies being transferred into your solicitors account to close the sale) or the bank won't release the funds but this does not occur until the near the end of the transaction.

Getting gifts usually doesn't seem to be an issue or a bad look but those who give you a gift will have to sign a deed basically saying they will have no claim over the property or no expectation of the gift being paid back this needs to be done with a different solicitor than the one handling the purchase - so don't forget to budget for that too.

When you say the house won't be completed for seven months is it still being built? Are you getting your loan in stage payments or do you mean the sale won't be closed until November? Because assuming your mortgage approval will only last the standard 6 months all of this may have to be re-evaluated anyway.

 

[mygaurdianangel15]

@thrivenotjustsurvive Yeah you’re correct on the last paragraph.. we will need to redo the whole thing anyways in October but unfortunately we need to sign contracts in the next 4 weeks.

Thank you for the information!

 

[thrivenotjustsurvive]

@mygaurdianangel15 Something sounds off about this just so you know. It seems very odd that you would be signing contracts for a property in 4 weeks when you think the sale won't be complete until November and your loan offer will expire.

I'm sure your solicitor will explain this but just as a heads up.

 

[mygaurdianangel15]

@thrivenotjustsurvive The developers words were “As I have previously stated you must be ready to sign contracts within 4-6 weeks of the booking deposit being paid. This would mean getting your loan offer issued immediately from your mortgage provider. If contracts are not signed within this timeline I will issue a refund cheque for the booking deposit and post it back to you. Due to the high demand for these houses I cannot keep a property off the market with no contracts signed for more than 2 months. Once the booking deposit is refunded to you the property will go back on the open market for sale.”

“Please be aware that most mortgage providers issue loan offers with a 6 month time limit on them. This means that your loan offer will expire during the construction process and if this happens then you will need to reapply for your loan offer before the house is ready for handover. Unfortunately there is no way around this as we require contracts signed in the coming weeks, this is so we can proceed with our site schedule based on the finishes pack you have opted for. This requires you to submit up to date documents to your mortgage provider so they can reissue the loan offer. If you do not want to sign contracts now and you want to wait until closer to completion then I cannot reserve a property in your name and the booking deposit will be refunded. Let me know if you have queries on this.”