Builders may be willing to wait for sale

Prospective buyers can now look forward to better treatment from builders as many eye the future of the housing market with caution.

Builders, who a year ago would have held a new home for a maximum of 14 days, are now effectively holding homes for people for several months and in some occasions longer.

The withdrawal of the banks from the open-ended bridging market has effectively forced many builders to be flexible.

In the past, those looking for a new home may have signed up expecting to sell their own home within weeks and would then use bridging finance to cover the price difference for a month or two. However, all banks are now insisting that contracts must now be in place before they will release any money.

Mr Brian Maloney, managing director of Maloney Mortgages in Donnybrook, said he has dozens of clients who are waiting to move to new homes but have yet to sell their own.

"Most builders are giving people the time to sell but if they do find someone else you will be given your deposit back and the house will be gone," he added.

He added that best advice is still that people sell their own home before they go seriously house hunting.

Of course the extent of flexibility depends on the level of demand for a particular scheme.

And according to Mr Maloney it is now worth buyers time negotiating for extra allowances, although again this depends on the particular site.

Many builders are throwing in electrical equipment, carpets and even furniture to speed up sales.

Buyers should ensure that their loan approval is current when signing up for a house. Some buyers have recently found that loan approval has been withdrawn after they have signed up.

Generally, loan approval is valid for three months, but if it takes longer than this to sell your home you may need to reapply to ensure it is still valid. Some lenders are getting increasingly tight in the current market and are no longer willing to lend as much as previously.

Approvals are also generally dependent on no change in circumstances.

Many lenders will ring and check with an employer both before the initial approval is given and before a cheque is issued. This is protection for both the lender and the borrower but can have serious repercussions in recent months when the numbers of job losses are growing.

With interest rates still on their way down all existing borrowers should check what rate they are paying. Many are being charged over the odds.

All existing borrowers should be getting the new lower rates. But, according to Mr Maloney, a random check of about 10 mortgages is likely to throw up at least three which are being charged over the odds.

Most lenders will immediately reinstate the lower amount when this is pointed out to them and pay the difference. They all blame a combination of IT systems and human error. But some are better than others about acting quickly.

According to Mr Maloney, the usual difference is about half a percentage point although some borrowers find they are being charged significantly more than this. If this has continued over a longer period of time a substantial refund could be due.