hardly any 'disposable' income, but still had 100% mortgage offer - how?!

AbbieCadabra

i really don't understand the current financial market out there in the big bad world!

i know a young'ish couple buying their first house (new build), it's got a 100% mortgage deal thru' the builders with no desposit - basically every incentive going to persuade a sale!

just how are mortgages decided these days, because as far as i can make out, they've got hardly any disposable income between them per month & currently spend just about everything they earn! (which is fine when you have no responsibilities ).

i just don't understand? :eek:

i know they'll make cut backs on their present spending but i'd estimate it will cost around £800-£1000 to cover all bills etc per month & i just don't see how this amount is going to 'appear' out of thin air...

Cannon_Fodder

I doubt it was really *no* deposit. More likely a gifted deposit from the developer.

When their lender looks at it properly, they may get turned down or told to find 5% deposit of their own. I don't think there are many lenders accepting only a gifted deposit. Some accept a mix of gifted and own.

Find out the name of the lender!

If their rent was also eating up their disposable income, it might work out that a mortgage is just as affordable.

Could even be a part-buy, part-rent or somesuch. Lots of complex deals, being given to FTBs who don't fully understand the implications, or appreciate the potential pitfalls.

AbbieCadabra

thanks for the reply

i know it's definitely 100% mortgage with no deposit as that's the main reason they went for it. Yorkshire Bank is the lender. its not a part own/rent scheme or anything similar either.

no rent being paid at the moment, (well, a small amount of board as they're both still living with parents).

Pee

Depends on their nature, but I found that when I moved out of home I spent a lot less money on going out even though household expenses were obviously more.

I wish them the best of luck. I can understand your concerns, but £85k doesn't sound like they are stretching themselves too much.

AbbieCadabra

i really, really hope it all turns out for the best for them too!

i suppose it's just another level of worrying like watching a toddler on their first steps! we've all got to grow up at some stage & take on some responsibility...

not too sure about £85k not being a stretch, our 1st house cost £24k back in 1991 - so perhaps it's all relative.

Cannon_Fodder

The only Yorkshire mortgage product that mentions anything about 100% is where you have Right to Buy and a hefty discount from the Council, but they cannot be benefitting from that if they are at their parents...

And some of those Council schemes "lend" the discount, rather than give a true discount.

I'm sure there would be hundreds of people interested to know of a "totally clean" (to use Martin's catchphrase) 100% mortgage product, so if you can find the product name and whether it is still available, please let us know...

It may be this, which does not require a deposit;

"What is the Open Market HomeBuy Product in Partnership with Yorkshire Building Society?

The product in partnership with Yorkshire Building Society offers the largest loan. Yorkshire Building Society will offer a 15% equity loan while the Government will offer an additional 17.5% equity loan. The means the borrower will only need to get a mortgage for the remaining 67.5% of the property value.

There is no charge on any of the products except the Yorkshire Building Society Loan which includes a charge of 3% after the first five years.

If your property increases in value once it is sold the loan providers i.e. the Government and Yorkshire Building Society or Advantage/Halifax Intermediaries/Nationwide, will be entitled to a share of the increase."

TrickyDicky

AbbieCadabra wrote: »

i had to just bite my tongue & smile this morning when i asked if they got the valuation info back yet, "no but i'm not worried about that. they're selling the last ones at £10k more than we're paying, so ours MUST be worth £85k..." hmmm.

Be prepared for whining when they do get their valuation back and it comes in 10% under offer price!

AbbieCadabra

the mortgage was a 'special' deal arranged via the builder, Strata, just checked & it's no longer on the developers website (which doesn't surprise me, it wasn't going to last forever & it was back in July when they had the mortgage agreed in principle).

i'll be very interested to see what the valuation comes back at. Strata have increased the prices since July, it's only a small site & they've supposedly all been sold (but is that sold as in reserved or sold as in a definite mortgage offer received? ).

no doubt, all will be revealed shortly. if everything goes ahead at the prices etc agreed up to now & they're moved in for January, i'll be shocked - but happy! (i think?!).

AbbieCadabra

update: happy couple moved into their new home in Feb, all going well as far as i know. 'sold' boards all up at the remaining propeties.


advert in today's local press, all the 2 beds have 'sold' signs outside but the new advert is for these properties - back to 100% mortgage on offer & the selling price has reduced to £80,000 (so what happened to the final phase being sold at £95k??), with a 3 year fixed term at 5.99% over 25 years for the mortgage.

i know buyer's make their choice & nobody is forced to buy etc., but this just feels like a bit of a con aimed at the FTB's who don't know any better...

azazle

The bank offering this product is yorkshire bank/ clydesdale bank (both owned by national australia bank) not yorkshire building society and its a standard 100% mortgage not a homebuy/part buy part rent scheme. It has nothing to do with the government in anyway shape or form. It is only available on selected developments across the country and it works for me but i have few outgoings to my incoming wage.

Trollfever

Thanks for the update.

Caveat Emptor.


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