90% LTV Mortgages on new builds?

baxt3r

Hi,

Am just starting to toy with the idea of moving and have seen a newly built house we like. Only problem is that we would have to have a 90%LTV mortgage but from the research I've been doing it seems lots of lenders won't consider the property at 90% as it's a new build.

Is this the case or is just flats?

Thx

dunstonh

new builds tend to lose money the minute you buy it. So, high loan to valuations can actually put you straight into negative equity.

In a rising price house market, there is not a lot of concern as the losses can often be covered within a short period. However, in a volatile market or one where there is still the prospect of a drop in prices, there is more care taken. And in this case that typically means that the lenders reduce the amount they will lend. New build flats are a double whammy.

baxt3r

Thanks for the reply.

Do you know if it's the same with all lenders or some will consider new builds? I take it the only ones who might would only do so at a higher rate unfortunately?

MrandMrsWoo

baxt3r wrote: »

Thanks for the reply.

Do you know if it's the same with all lenders or some will consider new builds? I take it the only ones who might would only do so at a higher rate unfortunately?

I would suggest that everything falls on the valuation. We are buying a new build house with a 90% LTV. The valuation came back no problems therefor Abbey had no issue in offering us the mortgage.

GMS

MrandMrsWoo wrote: »

I would suggest that everything falls on the valuation. We are buying a new build house with a 90% LTV. The valuation came back no problems therefor Abbey had no issue in offering us the mortgage.

Abbey policy for new build houses is maximum 80%, unless a first time buyer in which case they allow 90%

sophievenusdoom

dunstonh wrote: »

new builds tend to lose money the minute you buy it. So, high loan to valuations can actually put you straight into negative equity.

In a rising price house market, there is not a lot of concern as the losses can often be covered within a short period. However, in a volatile market or one where there is still the prospect of a drop in prices, there is more care taken. And in this case that typically means that the lenders reduce the amount they will lend. New build flats are a double whammy.

I would assume this is also why a lot of property developer's offer to pay the deposit for you or offer shared equity (Persimmon, Barratt etc)

MrandMrsWoo

GMS wrote: »

Abbey policy for new build houses is maximum 80%, unless a first time buyer in which case they allow 90%

We are indeed a first time buyer...

Why do FTB get away with this then? Is there an assumption that FTB are younger and less likely to move anytime soon so they allow a higher LTV?

GMS

MrandMrsWoo wrote: »

We are indeed a first time buyer...

Why do FTB get away with this then? Is there an assumption that FTB are younger and less likely to move anytime soon so they allow a higher LTV?

No idea. Could be for the reasons you say but there are plenty of counter arguments too.

Does not make sense to me. Surely from a lender point of view the security should be the same regardless of FTB or not.

Lender's decide the rules, not always in a logical way!