First Time Buyer - Easy mover scheme

TonicG

I'm at the very early stages of enquiring about a mortgage for a George Wimpey home through their easy mover scheme for first time buyers. This involves them putting me in touch with their chosen financial advisors and giving me support throughout the process.

The value of the properties I've enquired about are valued at around £110k.

When I got in touch with the mortgage advisors, they concluded the most I (single) could be loaned was around £82,000. When I then went back to the George Wimpey sales executive, she acknowledged that and said she could discount the property down to around £87,500 leaving me having to stump up only 5% as a deposit.

I then went back to the mortgage advisor and he said going on those figure with me paying £5k deposit and being loanded the other £82,500, over a 30 year period, i could get a rate of paying back £437 a month - which I'm more than comfortable with. He said this would be a mortgage offer "based on valuation". But as he would be lending this amount for a property that is actually valued at a lot more, despite the discount, he said he'd have to investigate further. Something to do with seeing if the other properties in the area valuations are going a similar way.

Can someone explain to me what he means by this?

He also metioned getting the key facts evaluation to me for the mortgage offer. Is this simply just more terms related to the mortgage?

Any help for a novice on mortgages would be much appreciated!

Thanks

TEDDYRUKSPIN

Valuation they means < Loan to Valuation??>

Two scenario's:

Basically means you borrow £82,500 over a property value of £87,500 = LTV of 95%. This means you will usually obtain a mortgage rate of around 6.5%-6.7% in the current market.

The other:

£82,500 over £110k (property) = 75% LTV. Which means a better interest rate around 4% to 4.5% depending on mortgage package you want.

I can tell you now some companies will always value the first scenario. Until you go through a mortgage application and pay for a survey, you will not be fully sure.

Good luck.

TonicG

Thanks for the quick reply TEDDYRUKSPIN.

So scenario 2: How does this apply to me as there is no way I can pay 25% deposit. Is that what you mean?

Scenario 1 is actually what he described to me. But it was when he explained that he would have to find out whether this was possible by assessing other similar valued properties that it confused me.

I'm thinking very simply here, but if the sales exec is willing to sell me the property for £87,500 and he's offering me a mortgage of £82,500 and i'm willing to pay the rest up front then what's the issue? :rolleyes:

Admittedly there are issues regarding the massive discount being offered by the sales exec but i'm not quite sure how to explain these effect my getting a motrgage.

Again, appreciate the help. cheers

TonicG

Ok, So I received the Key Facts Illusatration of the Mortgage.

What they are proposing is as follows...

A Mortgage of £82,500 (75%) with deposit of £27,500 (25%). The deposit is effectively made up of £22.5k discount and £5k of my own personal savings.

So, since I'm being offered the property at the value of £87,500 (discounted heavily), I only have to deposit £5k to take the £82.5k up to £87.5k.

So to take it to the next stage, my advisor said they need to wait to hear back from the property valuers. If they do indeed find the value of the house to be £110,000 they we can proceed with these figures.

Can anyone give me anymore info on the process behind this? What are the chances?

nw_man

My own opinion, for what it is worth :

I would smell a rat.

Here is why : lenders are demanding larger and larger deposits. The builder knows this. So the builder inflates the purchase price and offers his 'discount' ... is it really a discount or does he know the property isnt really worth that much ? This way the lender believes that they are only lending on 75% loan to value ( in your case ) and they allow it.

If they thought they were lending 95% loan to vlaue they almost certainly wouldnt entertain the deal.

If however, the lenders own valuer goes out to value the property and it indeed is valued at what the builder says it is valued at, then I dont see a problem.

Of course, the only person at risk here is YOU ! I suppose you have to pay the valuation fee to the lender upfront ? If so, if the valuer doesnt value it accordingly I cant see them returning your money.

Just my view, thats all.