Advice on New Build Flat Mortgage Please!

gpconfused

Hi

Im due to move into a new build flat June/July this year so ive started to look at mortgages available to me. (i know a lot of people on here are against new builds but if we could keep away from this issue as im very satisfied with the deal i got it would be much appreciated! )

Details:
Purchase Price: £185,000
Developer Discount: £5,000
My funds for deposit come June: £42,500.

Bascially im looking for advice on the mortgages out there! I know certain lenders will accept that developer discount towards the initial deposit which means I could hit the magic 25% mark....but these lenders are few n far between (Nationwide, Llyods and HBOS family i believe)

Another option offered to me by lenders was to reduce the purcahse price of the flat by 5k, making it £180,000.

This is where my problem is. Some lenders demand at least 25% deposit for new build flats...this would be ok for those lenders named above who agree to use the discount towards the deposit...however without this 5k i cant make 25% on my own.

Is anyone here aware of lenders who would accept 20% deposit on a new build flat? Or does anyone know if those named lenders above have changed requirements and will now accept 20% instead of 25%? This is my preferred option as it would allow me to set aside more funds for furnishings etc

Any advice will be GREATLY appreciated!!

beecher2

If you purchase fo £180,000 you will need a deposit of £45,000 as surely the lender will discount the developer discount from the purchase price, rather than add it to your deposit. I'd suggest going to a mortgage adviser, and make sure you don't commit yourself to the purchase until you have a mortgage in place.

edit: just read your other thread - I take it that you have already signed your missives before organising a mortgage. This is quite a risk - I'm quite surprised that anyone would buy off plan in this day and age, with lending criteria being the way it is. You need to act urgently to sort this out, and that means professional advice, rather than this forum

gpconfused

beecher2 wrote: »

If you purchase fo £180,000 you will need a deposit of £45,000 as surely the lender will discount the developer discount from the purchase price, rather than add it to your deposit. I'd suggest going to a mortgage adviser, and make sure you don't commit yourself to the purchase until you have a mortgage in place.

edit: just read your other thread - I take it that you have already signed your missives before organising a mortgage. This is quite a risk - I'm quite surprised that anyone would buy off plan in this day and age, with lending criteria being the way it is. You need to act urgently to sort this out, and that means professional advice, rather than this forum

hi - thanks for your reply.

like i said...some lenders (nationwide, hbos and llyods) will accept this 5k discount and use it as a contribution to the deposit. whereas, like u said, other lenders will simply take this discount off the list price and result in a new purchase price of 180k.

my main query here is the minimum requirements that lenders request for the deposit...

with regards to your other query...yes i have signed the missives. however, i obtained a mortgage agreement in principle from Nationwide just to give myself piece of mind. i know this isnt anywhere near a full proper mortgage agreement but it was all that could be done at the time and it was either that or not buy this flat.

i have a mortgage advisor i met with when i signed the missives, and my lawyer. its only now that im 5months away from completion that i am planning on applying for the mortgage.

Jo_Mc_2

Get advice. And take care if going with Nationwide as we've reserved a new build house and Nationwide have valued it at £25,000 below the asking price. We have a 33% deposit but, because the valuation is much lower, they won't lend us what we need and we've now got a shortfall of £10,000 (and the clock is ticking on an agreed 28 day completion).
The sales advisor on the development says that they always have problems with valuations from Nationwide.

ETA, we also had a mortgage agreed in principal but that all changed once the valuation had been done.

gpconfused

sorry to hear about that! can imagine that is not a good situation to be in! hope you get it sorted on time!

i had it surveyed "off plan" from the drawings and they were happy with the value.....can only hope that this is still the case when it comes to the crunch!

the majority of people on the development have went with Llyods apparently and not had any problems with the surveys/valuations.....the only problem i have is that nationwide products seem to be more attractive! :S

im going to meet with my mortgage adviser this week....afterall, this is his job!

newyear2011

Halifax required 20% for new builds but you need to instruct a valuation through them at around £355 but there is products that include a free valuation. However the halifax LTV bands work under 75% then 75%-85% and that extra 5% deposit makes a massive difference to the interest rate. Also if you have a hbos bank account that will reduce your rate,.

gpconfused

hi newyear2011 - thanks for this.

that sounds quite good! i agree....75% LTV seems to the magic number to reach to get the best deals!

ill do my research on halifax and see what they offer with 80% and 75%

Jo_Mc_2

Thanks gp - I hope we can get it sorted too because I REALLY want this house! We've put in a lower offer to the building company so hopefully we'll get an answer quickly, I'm not optimistic though as they're aware of Nationwide's low valuations. Otherwise we'll have to start the whole process with another lender. The sales advisor seems to think that Halifax are a good bet with new builds.

Arrangements were made, on Dec 23rd when I signed the reservation forms, for a mortgage advisor used by the builders to call us between Christmas and New Year. This call never came (she actually called late on Friday 7th and simply asked if we had our mortgage sorted which was an hour before Nationwide called and dropped the bombshell) but apparantly if we'd managed to speak to her, she would've advised us to steer well clear. Without this advice though, we went to Nationwide as we're existing customers having had various mortgages with them for 20 years and their deals were more favourable to us.

Good luck to you too!

gpconfused

I've also been told, by the developers mind you, that Halifax and Lloyds are more lenient with valuations for new builds, so will be looking at what they can.offer me. I still need to check that they 100% accept developer discount towards deposit! :S

Done a bit of digging on here and it seems that nationwide to have a rather tough name when it comes to their valuations!

Thanks for the encouragement....good luck! to the both of us!

newyear2011

yes Gp Halifax does accept develop cashback incentive towards deposit as long as you are contributing at least 10% yourself which you are. In Scotland the valuers can be really strict with new builds but haven't had one come back with a problem unless its shared equity/ownership which seem to have lots of probs. Guess it depends on area to area though. Sometimes I have found that the developer discount just brings it down to what the house is worth too. Good luck! If your gonna go with halifax look at it asap at there is to be a major rate change upwards keep that quiet though so I have heard anyway early next week.

gpconfused

the flat is in quite a prosperous area with lots of large, older style sandstone detached houses, very close to the west end of glasgow. i really dont envisage any problem with the valuation....fingers crossed.

thanks for the advice....i was looking at halifax last night and the rates are currently attractive...especially for 25% which i think i will just go for....especially with you confirming they accept the discount towards the deposit. my contribution is far higher than 10% so no problem there and its not shared equity/ownership.

thanks again