Nationwide refuses first time buyers

pocketsempty

My step-son & his girfriend have decided now may be near enough to the bottom of the market to buy a place of their own and stop existing in his room in our house.
They found a place they liked (newbuild apartment), negotiated the price down and have been saving hard so they have the 15% deposit required by Nationwide. They completed all the application admin, paid their valuation fee and waited. Imagine how surprised they were when the local branch of Nationwide came back to the a few days later and said that they couldn't have an 85% mortgage because the property is under two years old. This was a ruling by the Nationwide "powers that be" last July but which had not been communciated to the branch, they said.
So now they have so save another 5%, which is going to take some time.

I wonder what can be the reasoning by NW? I would have thought a newbuild would be the best security as it would still have its NHBC warranty.

Unfortunately it seems that all other lenders want 20% anyway so there is nowhere else for them to turn to

unite79

Check with Nwide, think max is 75% ltv for New Build flats!

unite79

Think its worth checking Woolwich!

daveb975

pocketsempty wrote: »

I wonder what can be the reasoning by NW? I would have thought a newbuild would be the best security as it would still have its NHBC warranty.

They should have made that clear at the outset, and I hope there has been no issue with getting the fee refunded!

The reason that banks are running scared of new builds is that so many have been put up in the last few years that no-one knows the real value.

A lot of them are built in less than ideal locations, but still marketed at higher prices than the local averages on account of them being 'luxury' or 'executive'. Most people's expectation is that a lot of these flats will actually end up being worth a lot less than established flats after this downturn.

beecher

New builds immediately lose value, so the decision could be doing them a favour as they'd be likely to lose their deposit fairly quickly as prices continue to fall.

could they find a property which is more than 2 years old instead? Keeping saving is probably a good idea though, as I doubt very much that this near the bottom of the market

dwsjarcmcd

Nationwide are by no means alone with this rule, and frankly I would suggest that the branch staff are covering up their own error and blaming 'H.O', which I don't believe for one second!

It is something they may be able to turn to their advantage to get the developer to reduce the price until they can achieve a 75% LTV. That could happen in today's market for new build flats.

SouthCoast

Old news but relevant:

Glut of flats
Some lenders now no longer lend to people who wish to buy newly built city-centre flats. In some parts of the country, such as Manchester, Birmingham, Leeds and Nottingham, this has led to a highly visible glut of properties which can no longer find a buyer at their original price.

http://news.bbc.co.uk/1/hi/business/7592106.stm

pocketsempty

Thanks All for your replies. The girlfriend was spurred into calling in a few favours from relatives with the result that the now have 20% deposit. This has opened up the possibility of other lenders. In addition one of the rellies had a mortgage advisor contact who is doing the arranging for them.

I know this may not exactly be the bottom of the market but it's not just about value, it's also about not living with parents any more. there's a balance to be met between price and having your own space and, for them this balance is now.

koexelek

dwsjarcmcd wrote: »

Nationwide are by no means alone with this rule, and frankly I would suggest that the branch staff are covering up their own error and blaming 'H.O', which I don't believe for one second!

Agreed. They should have known they could not do 85% mortgages on new properties. It's such a hot topic at the moment.
They should ask for their fees back, as they were badly advised by the branch staff

Robert_Sterling_3

pocketsempty wrote: »

I wonder what can be the reasoning by NW? I would have thought a newbuild would be the best security as it would still have its NHBC warranty.

Unfortunately it seems that all other lenders want 20% anyway so there is nowhere else for them to turn to

New houses, like new cars, are over priced.
Nationwide have about 100 years experience of the mortgage market so I think they know what they are doing.

They have not turned down the FTB they have turned down a mortgage on a NEW PROPERTY.

Wickedkitten

pocketsempty wrote: »

Thanks All for your replies. The girlfriend was spurred into calling in a few favours from relatives with the result that the now have 20% deposit. This has opened up the possibility of other lenders. In addition one of the rellies had a mortgage advisor contact who is doing the arranging for them.

I know this may not exactly be the bottom of the market but it's not just about value, it's also about not living with parents any more. there's a balance to be met between price and having your own space and, for them this balance is now.

Even with a 20% deposit they still more than likely will not be able to do it. Most places might do it if it was a new build house but for a new build flat you would probably need more like a 30% deposit.