HELP NEEDED ASAP: Mortgage refused from HSBC due to new build..!!

Glyyde

something I do not quite understand....

I know that house price are falling. But if someone need a place to stay, and if they could afford the deposit and mortgage etc, is it really a bad idea to buy a house now? I mean instead of paying rental of say £600 for a studio or 1 bedroom flat, is that better than paying £850 for a repayment mortgage of a £130k mortgage, where you are actually paying to something you own rather than paying to other people?

_Andy_

Glyyde - buying a new build (apologies to OP for going OT from original point of thread) at 95% when prices (esp for new builds) are dropping, you can risk being in negative equity very quickly. So yes although you'd be paying back capital each month towards the house, you could easily find yourself owing thousands more than the property is worth in a short amount of time.

grade15

can u ask, y HSBC left it soooooooooooooooooooooooooooooooooooo late to refuse u.....and stupid question..does it matter if its a new build or not..cos with new built have 10 yr guarentee with it..?

Glyyde

_Andy_ wrote: »

Glyyde - buying a new build (apologies to OP for going OT from original point of thread) at 95% when prices (esp for new builds) are dropping, you can risk being in negative equity very quickly. So yes although you'd be paying back capital each month towards the house, you could easily find yourself owing thousands more than the property is worth in a short amount of time.

But new build generally requires a bigger deposit and presumably this is the reason of doing so? How about a 15% deposit? would that make much more sense? say one is going to live there for at least 2 years?

Treadmill

Leeds Building Society are happy to lend 100% of your part of a shared equity deal @7.64. Not a good rate but its fixed for 3 years and your repayments will be lower as you are only borrowing 75% or 85% or whatever the value is

See if the builder will do an equity split and try that, you can use your 5% to reduce the amount you borrow.

In 10 years time just remortgage for the full amount including the builders equity, where theres a will theres a way.

lisyloo

is that better than paying £850 for a repayment mortgage of a £130k mortgage, where you are actually paying to something you own rather than paying to other people?

Hi Glyyde,

Several reasons.

Firstly as someone else has already pointed you can get into negative equity and be unable to move. Fine if you don't want to move, but there is always the chance of something unplanned like your job relocating.

Secondly, if prices fall say 50% (exmaple) then why not wait a few years and THEN buy.

I would not be suggesting thislightly for a family with kids in school etc. but max sounds like a single guy (I'm inferring from what he's said).
I am not a fan of taking huge risks so I would never sell my dream home to STR (sell to rent) however max is currently OUT of the property market, so its different.
If he's a single guy who's not in property then it IS a bad time to get in.

paying rental of say £600 for a studio or 1 bedroom flat, is that better than paying £850 for a repayment mortgage of a £130k mortgage

I havent' done the cals but in the first case you are renting space.
In the second case a large part of your £850 will be interest (so you are renting money not space). Don't forget that in the latter case you have to pay for insurance adn all maintenance and repairs.
To compare "like with like" then you need to compare mortgage interest PLUS insurance PLUS maintenance with rent.
I think you won't find a huge difference except the capital risk which is hugely to the downside at the moment.

maxkpp

Treadmill
Thats sounds like a bit of a stepping stone,..but i cant find this on their website? Might be worth to look at...

Treadmill

Ring them on 08450 50 50 62 maxpp, worth a shot. A friend of mine was in the same boat as you and shared equity is how he got around it, worked out less per month too which gives you the oppurtunity to save or invest the money and maybe buy out all or a share of the equity the builder holds before 10 years.

maxkpp

I just had this thought of getting personal loan to cover the 20% (75% mortgage, 20% personal loan, and 5% deposit). Do you guys reckon it will worth a shot? I have done a quick math and it worked out not far different with what i would need to pay each month, rather than get a 7. whatever rates?

_Andy_

HSBC won't allow a loan as the deposit.