1st time buyer - feel misled on deal

sri

I would greatly appreciate any advice. I am a first time buyer and negotiated a deal last Sunday for a new Barratts terraced property. Barratts told me that I have to source my mortgage only through their broker. I spoke to the broker and they said I had to put a 15% deposit which I agreed. They mentioned that I had options with NationWide and Abbey but finally only NationWide as only they lend towards new builds with 15% deposits. As I have a good credit rating, I assumed my mortgage should go through.

I reserved the property (paid £1000) and then got the broker to process my mortgage. 3 days gone today the Barratts sales lady called me and mentioned that NationWide would value the property for very less so we should be looking at 20% deposit for more options. The broker called me up and mentioned the same thing. They suggested that the property price be increased and Barratts pay my 5% deposit however I disagreed as my deposit would go up by £1500. I asked the broker if he had got the bank to run my credit check but he said he would not want to do it as he knows that the lender will value the property far less however he said Barratts are confident they can sell the property for the price we agreed.

I am feeling very misled and I think they are manipulating things.

Can one of you please advice me what would be the best approach now that I have to re-negotiate? My £1000 is locked with them.

Do different lenders value the property differently?
Should I ask for any proof of their valuations with other lenders?

I am also conscious of the fact that if NationWide (such a big lender) will value the property for less, then I will be in negative equity straightaway after I complete.

Thanks in advance.

mynameisdave

You have to use their broker?

I'm not sure this is correct. You are the one that pays the mortgage you should be able to source it from where you want

Mrs_Bumble

You don't have to use their broker, you can use whoever you see fit.

With a 15% deposit on a new build however your choices are limited but speak to a good independent whole of market broker.

Nationwide are very, very particular about new builds and they instruct the valuers to value on the immediate resale price of the property which inevitably means the property is down valued, bit like a new car driving out of a showroom, so unless you have really made the developer cry with your offer then there are problems.

Buying any new build means that chances are you will be in negative equity straight away in the current market. New car analogy above! If you are buying on a new build site will you want to buy the second hand property that someone else has lived in or will you want to buy the nice shiney new house the developer has just finished? Second hand new builds will shift slower.

bigw81

You definitely don't have to use their broker - although that's what they'd like you to believe. Go get some independent advice from a broker who can source the 'whole of the market' so can see ALL the deals available. Good luck!

mikthe20

Better a £1000 lesson than a £30,000 (or whatever) one. Nationwide are down-valuing because they know new builds sell for much less second time around. Now you have learnt this, you need to decide whether to lose the £1000 and pull out or whether you are willing to overpay by tens of thousands of pounds (don't forget to add interest over 25 years or whatever) just because you're the first person to live there.

(although hopefully you can get your £1000 back as their broker, which you should never use anyway and you are not forced to, has been unable to get you a mortgage. Also, it looks perhaps like they are asking you to take part in committing fraud by saying you could increase the purchase price of the house and then giving you back the extra).

DeadCat

This has happened to me but I am a few weeks down the line from you. I took up the developers incentive of 15% shared equity, I went with the developers recommended mortgage broker (New Homes Mortgage Helpline (Beware!)) who recommended a mortgage with Nationwide (only 2 lenders offer deals based on shared equity). Nationwide instructed the valuation and the result came in £12k lower than the original purchase price.

The irony is that my opening offer which was flatly rejected was 5k higher than the valuation. Had they accepted this I wouldnt have needed the shared equity and I wouldnt have gone to Nationwide for the mortgage!!!

sri

Thanks so much to you all for your time. As mentioned, I have already digested the fact that it is £1000 lesson as a first time buyer. I will go and speak to the sales department and try to come out of the deal in a nice way (and get back as much of the £1000 as possible). I am really glad that I posted my problem here...

I also plan to speak to the sales person's manager and let her know that I have been thoroughly misled (first that I have to go through their broker and secondly that they are manipulating things).

I will keep you all posted.

Richard_Webster

Anyone buying a new build now should go in with the attitude of "there's this 20 year old house down the road that's very nice and I'm thinking of buying it and it costs £X. I can't really afford £X but your houses are smaller so I was wondering whether I could buy one for £X-£Y." (Builder actually wants £X + £Z for the comparable house.)

Howls of derision from sales office lady....

Until builders realise that not everyone wants their boxes with postage stamp gardens they will carry on being able to sell them for inflated prices.

ILW

sri wrote: »

I would greatly appreciate any advice. I am a first time buyer and negotiated a deal last Sunday for a new Barratts terraced property. Barratts told me that I have to source my mortgage only through their broker. I spoke to the broker and they said I had to put a 15% deposit which I agreed. They mentioned that I had options with NationWide and Abbey but finally only NationWide as only they lend towards new builds with 15% deposits. As I have a good credit rating, I assumed my mortgage should go through.

I reserved the property (paid £1000) and then got the broker to process my mortgage. 3 days gone today the Barratts sales lady called me and mentioned that NationWide would value the property for very less so we should be looking at 20% deposit for more options. The broker called me up and mentioned the same thing. They suggested that the property price be increased and Barratts pay my 5% deposit however I disagreed as my deposit would go up by £1500. I asked the broker if he had got the bank to run my credit check but he said he would not want to do it as he knows that the lender will value the property far less however he said Barratts are confident they can sell the property for the price we agreed.

I am feeling very misled and I think they are manipulating things.

Can one of you please advice me what would be the best approach now that I have to re-negotiate? My £1000 is locked with them.

Do different lenders value the property differently?
Should I ask for any proof of their valuations with other lenders?

I am also conscious of the fact that if NationWide (such a big lender) will value the property for less, then I will be in negative equity straightaway after I complete.

Thanks in advance.

So even the developer admits that they are overpricing their own product. Amazing.

poppy10_2

he knows that the lender will value the property far less however he said Barratts are confident they can sell the property for the price we agreed.

So Barratts are basically saying they know the property isn't worth what they are charging, but they are confident that they can find some mug punter to pay the overinflated price.

pinkshoes

When you handed over the £1000 deposit and signed something, what exactly did the contract you sign say? Did it mention exchange/completion dates? Sometimes there are loopholes to get a "non refundable" deposit back, as they word their paperwork so badly...

I would still heavily barter on the price though. They only want you to use their broker so they can find out how much money you have, and then try and scam you with tempting sounding "deals".