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New (Maybe) Tactic from Housing Developers
obsessed_saver
Posts: 511 Forumite
I don't know if someone posted this already, but I just noticed that Housing Developers have come up with another "scheme" to pull a fast one over people's eyes:
They are now allowing buyers to buy their property at 75% of the value, and the other 25% is on an interest free loan from the developer for 10 years! :rolleyes:
Eg. £200k property can be yours for £150k, and pay them £50k after 10 years.
So in all honesty, new builds are actually 25% overvalued, and they want a share in your profit over 10 years. :rotfl:
Or a tactic to get round the 25% LTV mortgage requirement nowadays.
They are now allowing buyers to buy their property at 75% of the value, and the other 25% is on an interest free loan from the developer for 10 years! :rolleyes:
Eg. £200k property can be yours for £150k, and pay them £50k after 10 years.
So in all honesty, new builds are actually 25% overvalued, and they want a share in your profit over 10 years. :rotfl:
Or a tactic to get round the 25% LTV mortgage requirement nowadays.
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Comments
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Any examples?poppy100
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I saw it in this week's Cambridge Property pullout. I can't remember the developer name.............0
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obsessed_saver wrote: »I don't know if someone posted this already, but I just noticed that Housing Developers have come up with another "scheme" to pull a fast one over people's eyes:
They are now allowing buyers to buy their property at 75% of the value, and the other 25% is on an interest free loan from the developer for 10 years! :rolleyes:
Eg. £200k property can be yours for £150k, and pay them £50k after 10 years.
So in all honesty, new builds are actually 25% overvalued, and they want a share in your profit over 10 years. :rotfl:
Or a tactic to get round the 25% LTV mortgage requirement nowadays.
Is the 25% loan secured on the property? It couldn't be I suppose, otherwise the mortgage lenders would notice the high LTV.
It looks like an attempt to get around the new difficulties in using gifted deposits.0 -
Redrow started doing this in our area just before christmas (I think). Now we have Barratts, Bovis and Ward Homes all doing the same here.0
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obsessed_saver wrote: »I don't know if someone posted this already, but I just noticed that Housing Developers have come up with another "scheme" to pull a fast one over people's eyes:
They are now allowing buyers to buy their property at 75% of the value, and the other 25% is on an interest free loan from the developer for 10 years! :rolleyes:
Eg. £200k property can be yours for £150k, and pay them £50k after 10 years.
So in all honesty, new builds are actually 25% overvalued, and they want a share in your profit over 10 years. :rotfl:
Or a tactic to get round the 25% LTV mortgage requirement nowadays.
I see it as a way to get around the tighter lending criteria being imposed by lenders. The house in your example must still be valued at £200K if your lender provides a mortgage of £150K with a 75% LTV.
Maybe developers are seeing difficulties and are coming up with innovative ways of resolving the problems.
If the house is worth less than £200K, this example only suggests by about £16.6K i.e., the interest on the £50K over 10 years. Maybe £20K if you include risk.
GGThere are 10 types of people in this world. Those who understand binary and those that don't.0 -
It's basically a con on the homebuyer by devlopers/builders who want to maximise their selling prices.
The market won't support the price that the builders are trying to achieve so they 'Do the buyer a favour' and help them take on more debt so that they can pay over the odds for the property.
Crazy, I hope people see it for what it is.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
To get away with it the developers need to have the property valued for the full sale price before the 25% "loan", otherwise the LTV wouldn't be high enough.
I don't think the banks will be indulging in any turning of blind eyes this time. Would they?0 -
what I'm starting see more often is text stating that the incentives will be paid after completionIt's a health benefit ...0
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