Newbuild Offer

djsban

Hi all,

I was hoping that I could make use of the experience and knowledge on these forums with regard to purchasing a new build home.

I am looking to purchase on a small newbuild development on the outskirts of Reading (South-East). There are 23 plots on the site and all have been completed since early December, there are 10 plots still available.

The property that I am interested in is a 2-bed mid terrace house which is listed at £225,000 and I am looking at purchasing two of these and have mortgage arrangements in place.

I am at a point now where I am looking to make an offer imminently but was wandering what you think would be a good offer to go in with bearing in mind that I am ready to go ahead with the purchase of two of these.

I look forward to getting your ideas?

socrates

Are these to live in or for BTL?

If BTL - whats the yield including any service charges

Do you have the mortgages/finance in place?

djsban

socrates wrote: »

Are these to live in or for BTL?

If BTL - whats the yield including any service charges

Do you have the mortgages/finance in place?

One of these properties would be to live in and the other would be BTL. Rental yield on the 2nd property is 6.2%.

Funds are in place and ready to go and as such should be no problem in meeting the exchange in 28 days ideal that they have!

socrates

So whats the rent pcm?

Is there a mortgage, what rate/arrangement fee etc or is this a cash purchase?

What was the original price before the £225k

djsban

socrates wrote: »

So whats the rent pcm?

Is there a mortgage, what rate/arrangement fee etc or is this a cash purchase?

What was the original price before the £225k

The expected rent is £925.

Mortgage re-payments will be £680 in total, arrangement fee for the mortgage is £499 and will be at 3.44%.

As far as I am aware the £225 is the initial list price and has not been reduced. Can't be certain of this though.

pixiepie99

I'd go in with a really cheeky offer to start with especially as you're planning to take 2 of them off their hands. If they've already been reduced maybe £180k apiece. If they're still at full price then maybe £150k. Bearing in mind that newbuilds are losing value at a faster rate than the rest of the market.

Are there any other similar developments in the area that you can make price comparisons with?

socrates

Is this the rate for the BTL mortgage - how much deposit do you have to put down. Try and give us a full breakdown on both mortgages so we can give you a better answer.

djsban

Ok. I have £85k deposit available (hoping this will equate to at least 25%)

- The live in property will be funded by a residential mortgage at 3.44% with an arrangement fee of £499.

- The rental property will be funded by a second mortgage with the same arrangement fee but a higher rate of 4.1%.

Obviously the exact payments will depend on what the agreed purchased price could be.

Hope that's enough information for you.

socrates

Is the BTL mortgage fixed/tracker - its more the BTL I am worried about here.

Its about 3% above base if rates go up this will be sky high

djsban

BTL mortgage is fixed for 3 years.

I am not especially concerned about the monthly payments increasing as I am more interested in the long-term equity gain on this property. If they were to increase significantly beyond my means in 3 years time then I am comfortable that there would be an increase in the equity if the property needed to be sold.

socrates

I really think you need to do the maths - this plan is doomed - I would put all these figures on the mortgage board and let one of the expert mortgage advisers show you why

From a BTL point of view its not 6.2%. Plus I would not touch anything on BTL unless it is nearer 10% yield i.e an absolute bargain.

Plus BTL leans towards 2 bedroom flats - the rent from a 2 bed flat and 2 bed house would be the same.

There are so many reasons why an inexperienced investor should not jump into the market right now