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Making a 'silly' offer on a new house?
dancingsammyt
Posts: 49 Forumite
Hi,
We are currently looking at buying a house with the Homebuy direct scheme. Our salary is low enough to be accepted within the scheme, and we are currently renting, but due to high rental prices and our specific housing needs, we are unable to save for a deposit, hence choosing this particular scheme as it is possible to get a 70% mortgage with certain banks without a deposit. Our position is frustrating as we can afford the monthly payments for mortgages but have to pay so much for rent each month that we can't get a deposit together to get onto a mortgage!
Anyway, we went along to look at a couple of developments yesterday and came away with a few options and some figures to mull over. We then got a call from a developer offering us a house which is really nice. Apparently someone was buying it but has since changed their mind so it's due to be ready for completion in December and they are now panicking cos they are now really pushed for time to sell it without making big losses.
Our problem is that we would go for the house, but have only got around 5k deposit (we'd need around 11k in total for deposit and all related fees). Would we be silly to say that we're happy to go for the house, BUT as we'd be moving earlier than planned (and therefore causing hassle on our rented house) and because we'd have had no choice on the fixtures and fittings, we could ask for the developers to help us out, i.e. pay the 5% deposit/fees/both??!! One thing to bear in mind is that the deposit is 5% of 70% of the house price (as the other 30% is provided by the Homebuy scheme)
They have already said that they're happy to consider dropping the price of the house to get it sold quickly and to compensate for the fact we've had no choice on what is going inside it.
The other alternative is to get the mortgage without a deposit, but the monthly payments would be pretty high - not an option we'd want to go for! The house is also bigger than we were originally planning to go for and we do have alternative houses we'd be happy to go for with rival developers. Can we use this as a bargaining tool?
Anyone had any experience with things like this? We are visiting them tomorrow to talk it over so it'd be good to have some ideas up our sleeve!
We are currently looking at buying a house with the Homebuy direct scheme. Our salary is low enough to be accepted within the scheme, and we are currently renting, but due to high rental prices and our specific housing needs, we are unable to save for a deposit, hence choosing this particular scheme as it is possible to get a 70% mortgage with certain banks without a deposit. Our position is frustrating as we can afford the monthly payments for mortgages but have to pay so much for rent each month that we can't get a deposit together to get onto a mortgage!
Anyway, we went along to look at a couple of developments yesterday and came away with a few options and some figures to mull over. We then got a call from a developer offering us a house which is really nice. Apparently someone was buying it but has since changed their mind so it's due to be ready for completion in December and they are now panicking cos they are now really pushed for time to sell it without making big losses.
Our problem is that we would go for the house, but have only got around 5k deposit (we'd need around 11k in total for deposit and all related fees). Would we be silly to say that we're happy to go for the house, BUT as we'd be moving earlier than planned (and therefore causing hassle on our rented house) and because we'd have had no choice on the fixtures and fittings, we could ask for the developers to help us out, i.e. pay the 5% deposit/fees/both??!! One thing to bear in mind is that the deposit is 5% of 70% of the house price (as the other 30% is provided by the Homebuy scheme)
They have already said that they're happy to consider dropping the price of the house to get it sold quickly and to compensate for the fact we've had no choice on what is going inside it.
The other alternative is to get the mortgage without a deposit, but the monthly payments would be pretty high - not an option we'd want to go for! The house is also bigger than we were originally planning to go for and we do have alternative houses we'd be happy to go for with rival developers. Can we use this as a bargaining tool?
Anyone had any experience with things like this? We are visiting them tomorrow to talk it over so it'd be good to have some ideas up our sleeve!
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Comments
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I weould stay away from home buy direct with a barge poll, its effectively a 100% mortgage on a overpriced property. You may be trapped in a large amount of negative equity stoping you move up the ladder.
Prices are set to start falling shortly, so becarefull. If you don't believe me look at a;ll the money RBS and LLOYDS needed this week in a emergency bailout. The banks loses are increasing fast. Another 5 US banks collapsed this week alone. Be very careful,:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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Prices are set to start falling shortly, so becarefull. If you don't believe me look at a;ll the money RBS and LLOYDS needed this week in a emergency bailout. The banks loses are increasing fast. Another 5 US banks collapsed this week alone. Be very careful,
Hmmm.. I'd struggle with taking financial advice from someone who is unable to spell or use upper and lower case characters on the keyboard.
You know the rules brit1234 - you should stay over on the Debating house prices thread, where your rants are ripped apart within minutes.
:cool:0 -
Don't mean to sound ungrateful but this kind of reply isn't really very helpful?! brit1234 I realise that you feel very strongly about this, but the fact we're using Homebuy isn't really the aspect of the situation I'm asking the questions about, and whether or not you two have similar views (or not!) is none of my business and doesn't really help my situation! Sorry if that sounded rude... (rant over!)0
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Just to warn you, brit is a hater of all shared ownership/equity schemes. Please take any advice with a pinch of salt, he(she?) is desperate for a crash, as they want to buy but can't afford to, so just screams a crash will happen constantly in the hope it will influence people. He has as much idea of what is happening in the housing market as the rest of us - i.e. none whatsoever. Look at some posts in the house price debate forum before believing anyones advice.
However, I tend to find new builds quite overpriced. Be sure it is worth the cost, then be ansolutely positive you can afford the repayments. Can you get a decent fixed rate? Interest rates have only one way to go, don't kid yourself this will last. I believe prices will fall, but interest rates will rise accordingly, so you'll pay the same regardless. Times of low interest always seem to have high house prices, just as times of low house prices seem to happen in times of high interest. Just my opinion of course.0 -
Cool, thanks. Had kind of guessed from the little comments at the bottom of brit's post that they are not the biggest fan of this kind of scheme...! I have no doubt that we can knock the price down, my issue was do you think that instead of taking say 10k off the total price, they'd pay our fees and deposit? So overall they'd end up having the same money paid to them, but they'd have to pay out to start with rather than us.0
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dancingsammyt wrote: »Cool, thanks. Had kind of guessed from the little comments at the bottom of brit's post that they are not the biggest fan of this kind of scheme...! I have no doubt that we can knock the price down, my issue was do you think that instead of taking say 10k off the total price, they'd pay our fees and deposit? So overall they'd end up having the same money paid to them, but they'd have to pay out to start with rather than us.
You have to declare that to your mortgage provider as that would be a form of 'gifted deposit' AIUI.0 -
dancingsammyt wrote: »Cool, thanks. Had kind of guessed from the little comments at the bottom of brit's post that they are not the biggest fan of this kind of scheme...! .
Indeed.
It's probably safe to ignore any advice from the "debate house prices" board regulars.
Myself included.:D“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
dancingsammyt wrote: »Don't mean to sound ungrateful but this kind of reply isn't really very helpful?! brit1234 I realise that you feel very strongly about this, but the fact we're using Homebuy isn't really the aspect of the situation I'm asking the questions about, and whether or not you two have similar views (or not!) is none of my business and doesn't really help my situation! Sorry if that sounded rude... (rant over!)
It is important to listen to listen to advice from all points of the compass when making big decisions. It is very easy for you to have your judgement clouded by 'buying fever' at the prospect of owning your own home.
brit1234's concerns about Homebuy direct are reasonable. If it takes a 30% subsidy to bring house prices within the affordability range of first time buyers, this suggests that houses are at least 30% over priced. The fact that some of the 'subsidy' comes from the builders themselves is not good news (in fact conflicts of interest like this were supposed to be forbidden). If the scheme was genuine, it would be available to buyers of both new and old properties but it is not.
The banks are awash with money. The reason they are only lending to people with big deposits should be obvious. House prices are interest rate sensitive and right now we have the lowest interest rates for 300 years. In two years time, interest rates could be anywhere between 2 and 12%. If they reach the mid point (7%) the roof will fall in on the housing prices. Bear in mind that interest rates will be forced up if the £ gets much weaker. House prices are also sensitive to employment and incomes both of which are going down.
Home buyers with large deposits can get good morgage deals at the moment. I would urge them however to look at the small print. Many of these 'good deals' metamorphose into dung beetles after 2 or 3 years (especially if interest rates go up).
I have not written this to put you off. I am simply trying to flag up the issues that any prospective buyer should think through before taking the plunge. Plenty of people buy houses with the aim of staying put for 20 years and have no interest in house price movements. For them, risk analysis only goes as far making sure they can cover the morgage payments. If you do intend moving in a year or two however, or house value is important to you, you should take a very cold hard look at where the market stands. We have a nation mired in debt, falling incomes, rising unemployment, house prices at near historical highs and interest rates with only one direction to go. It is difficult to imagine a more negative outlook for house prices.0 -
I thought Homebuy Direct was a government scheme, not a builder one?
However, do heed the above advice. If this is a temporary home, be VERY careful. I don't plan on moving for 10 years, maybe 15, so am less fussed. I also got a 10 year fixed rate, so know my position for a decent timeframe. Also, do you have a plan to buy back the equity? Or will you just stick with owning 70%?0 -
HBD is good for SOME people. You need to assess what the situation will be in 5 years and then 10 years. Are your jobs going to be the same. If so can you afford the rental payments after 5years and where will you find the rest of the money after 10 years. You can't solely rely on house prices increasing to help with it because that will also increase the amount you owe.
Alot of housebuilders now think the market is on its way up for good now so may be unlikely to do much of a deal esp if your doing hbd. You may find that you could get 10% off the property in question not going with hbd and maybe nothing if going with hbd. Its a difficult one to call and only you know to answer. Its what you feel comfortable with. You must have some idea of how your going to repay the 30% hbd over the next 5-10 years. If you don't then thats your answer.0
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