What is classed as a "New Build" for a mortgage?

Gizmo777

Please can anyone help, I have trawled the internet for a fixed definition in the UK and cannot find an answer.

Does anyone know what the definition is of a "New build" property to get a mortgage with a high LTV is? By high, I mean we have a mortgage in principle agreed of 95% (£237,500.00) with Clydesdale (we are FTB's - nothing found in the contract and leaflets they sent with our application). The property we have found is £250,000.00 built 2.5 years ago (first sold in June 2008 for £305,000.00!) so this is the first time it has been sold since the first occupants bought it from the developer in June 2008.

I found online that cambridge building society has the definition of any property built within the last two years. Does anyone know if it differs between lenders or if there is a standard definition?

Any advice greatly appreciated

Many thanks all

DJ1UK

Hi

Not sure about Clydesdale terms, but Yes it does differ between lenders.

E.g
HSBC - New build is any property built within last 2 years (lived in or not)
YBS - New build if you are the first person living in the property.

I'd phone Clydesdale and ask.

Gizmo777

Thanks for your reply DJ1UK that is slightly re-assuring but as you say I will be on the phone first thing tomorrow to confirm. Just wanted to try and clarify in my mind before getting too into this property, I have a feeling the offer we put in will be accepted tomorrow, fingers crossed.

Thanks again

Richard_Webster

Seems mad for lenders to be loaning high percentage values on new builds when to some extent the prices are invented by the builders rather than being true comparables in the local market. More logical for a lender to lend a higher percentage on a property at least 2-5 years old.

The general point holds true as ever with these kinds of criteria - that there is no standard definition of any such terms - witness all the confusion with people thinking that just because they are getting a FTB mortgage they won't have to pay Stamp Duty Land Tax because lenders and HMRC have used different definitions of FTB.

Gizmo777

Thanks again for your reply, it seems absolutely mad that some of the 1930's properties we have been looking at in our price bracket need absolutely everything doing to them and yet the bank will lend us 95% on that rather than this newer property which needs nothing doing to it.

For anyone that might search in future for this question relating to Clydesdale, they won't lend on a new build on 95% LTV. They will only consider 90% LTV depending obviously on the circumstances. Also, "New Build" according to Clydesdale means: Any property constructed within the last 3 years, whether it has had one owner or is being bought straight from the developer, if it is under 3 years old they say it is a "New Build".

Burridge60

Gizmo777 wrote: »

Thanks again for your reply, it seems absolutely mad that some of the 1930's properties we have been looking at in our price bracket need absolutely everything doing to them and yet the bank will lend us 95% on that rather than this newer property which needs nothing doing to it.

Until you have a valuation done and the Valuer recommends withholding some of the advance for essential repairs.

There are normally quite a lot of issues with "new builds" and definitions and often the seller must have had the property for more than 6 months too.

Good luck with your purchase.

olias

OK, noboby else has said it yet, so I will!

I think you should think very carefully before taking out a 95% mortgage for nearly quarter of a million pounds in the current market. Property only has to drop 10% and you have not only wiped out your deposit (which presumably you have saved long and hard for), but you will be into negative equity.

I don't know what rents are like around your way, but around here a property of that value would rent for about £650 (as opposed to £1100-£1500 for a £230000 mortgage!). Personally I would do that and save the extra £800-£900 per month. That way in say 2 more years you will have about £20000 more saved, and I don't think that house prices will have changed that much from today, in fact there may even have been a drop if interest rates rise. You will then be in a position to put down a much larger percentage deposit, have more equity, and a better mortgage rate meaning cheaper monthly repayments.

Olias

Gizmo777

I fully expected to get shot down in flames on this forum for even daring to mention 95% LTV. I fully accept and take on board your comments, we have been looking at property whilst saving for 3 years, reading as much as we can, utilising Property Bee, nethouse prices, Globrix, Zoopler etc etc. We have fully researched the area we want to buy in and it is our opinion (and only our opinion) that this is a very good opportunity.

Firstly, we do not care with this house if we get into negative equity, it is a 3 bed home large enough to have a family and sit comfortably in for at least 10 years, we see this as our future home, not a cash cow. In all honesty if in ten years we needed to sell and only broke even we would be very happy as this property enables us to carry on saving whilst owning our home. Whilst we know the risks with high LTV, whatever stage of the market we choose to get on the property ladder will always pose a risk. That is why this isn't just a house, this is a future home!

Again, thanks for your comments it is much appreciated and one of the great things about this forum is people's opportunity to be as honest and frank as they like

Gizmo777

Well, after much deliberation, we have had an offer accepted of £250,000.00. We are putting down 10% which we know is better for us in the long run. I know this is very early day's and that anything can happen between now and getting the house so I'm not counting my chickens and trying not to get too excited. This is the very first step, one of many, just glad we don't need to go and view anymore houses (for now at least!). Thanks for the advice posted :j

olias

If you are sure you have thoroughly done your homework, then good luck and go for it, but I have to just say the following. Paying the asking price in the current market is madness, unless it is a very unique property, or they are in short supply, or there are several people interested etc. In some areas it is not unusual for propertys to be going for at least 10% under the asking price - and vendors and agents are expecting this when they price a property. Admittedly in some areas the market is still fairly keen, but still, even offering 1% under the asking price would give you £2500 more in your pocket, and I don't think the vendor would have flinched. In my area, If a buyer offered the asking price, I would either think them very naive, or that there was something odd - most in my area go for about 5-7% under asking which on your property would be about £12000!

As I said, if you are happy, then go for it, but please double check your sums and your research.

Olias

Gizmo777

It has been on the market since April 2010, went under offer in September and fell through in December. The initial asking price was £299,950.00 in April, gradually it has been reduced ever since (property bee). As I said initally it sold for £305,000.00 in June 2008. We have seen a variety of ages and sized properties accross the area (about 20 in total!), we have viewed above and below budget, newer and older style, semi, terraced and detached. This is by far the best thing we have seen, it is vacant and had only just been reduced from £269950 to Guide price £250,000.00 - £260,000.00 last Thursday. We have been watching it for a long time and after viewing it twice, think that this is the one. As I said, we are far from it being our home yet, many things can happen but at this stage of the purchase we ar satisfied with our offer. Plus, if it is not worth £250K then it won't be valued as such at which point we have no choice but to just walk away unless the vendor would reduce their price further (doubt it very much). Thanks for your advice, it re-assures me talking it through and seeing it on paper if that makes sense, your advice is appreciated.