90% LTV Mortgage on Persimmon New Build - Please help

Banxy

Hi all,

I'm new to this so apologise in advance for any missed info.

My husband and I are in the process of purchasing a New Build property which won't be ready to move in to until approx Dec 2011.

It is Via Persimmon and the only financial incentive they have offered is 50% of stamp duty paid.

They are part ex-ing our property which gives us £20k equity and we will be able to gather 10% in the time we have before the property is built.

Property value is £249,950
Our combined earnings are £77,500
Both have car finance (£188pcm each)
Both have credit cards (£65pcm each)
and sadly an usecured loan with Northern Rock which my hubby and his ex took out 6 year ago. That will increase to £230pcm.

Both have good credit - no missed payments etc.

Apart from Insurances and mobile phone bills, that's about it from the Loans perspective.

We really need to find a 90% from a lender who is willing to maintain the rate for as long as possible and provide a good rate.

I'm completely new to all this as I just moved straight in with my hubby ad his ex pretty much did it all when they bought together so I'm feeling completely lost. Not only that but Persimmon require the completion within 28 days and we're already 5 days down, so I'm fretting.

I look forward to hearing from you......sorry if I've drivelled on!!

Thanks in anticipation.

BoGoF

You say the proprty value is £249,950 - is that the total purchase price?

When it comes to a mortgage then the lender will have their own valuation done and when it comes to new build properties then they are in the habit of valuing them less than the building company - for obvious reasons!

So the point is if the lender values the property at say £230,000 and will only lend you 90% of that then would you be able to make it up to the selling price?

Banxy

BoGoF wrote: »

You say the proprty value is £249,950 - is that the total purchase price?

When it comes to a mortgage then the lender will have their own valuation done and when it comes to new build properties then they are in the habit of valuing them less than the building company - for obvious reasons!

So the point is if the lender values the property at say £230,000 and will only lend you 90% of that then would you be able to make it up to the selling price?

Hi Bogof,

Sorry - Purchase price £249,950

No we wouldn't be able to find the difference. I'm hoping the valuation is going to be ok..... an identical house on same development went for £265k .....so keeping fingers crossed.

This is the final phase so think they just want to sell and move on to next development. Ours is one of the final 8 houses to be build and sold.

BoGoF

The one that sold for £265k - was that a new build, first sale as well.

TBH, I wouldn't place to much reliance on that as you don't know how much of a mortgage the buyer needed - perhaps they had a 50% deposit and only needed a much smaller mortgage.

Have a search on 'new build valuations' on the forum and you will see the problems other have encounterd.

Not saying yours won't be ok.....hopefully will be

And if they want to move on to the next site there is usually scope to negotiate....never pay asking price for a new build

Banxy

Thanks BoGoF. Yes that was new build first sale but your right - we don't know their circumstances. Will go anh have a looka thte forum you suggest....and try not to get too upset lol.

Thank you for your advice.

BoGoF

Here's some threads

https://forums.moneysavingexpert.com/discussion/3284186

https://forums.moneysavingexpert.com/discussion/3196412

https://forums.moneysavingexpert.com/discussion/3170646

brit1234

Be careful many economists are predicting a 10% fall in house prices this year with further falls after.

Now new builds tend to overvalue them selves verses the lender valuation. That becomes increasingly more dangerous in a falling market when your home won't be ready for 6 months or longer with delays.

Are there any conditions in your deal that if you can't get mortgage finance when built that you won't be sued by the builder. Many people are being sued now for not being able to complete.

If you want a new build get one which is already built, its safer in these economic turbulent times.

Banxy

Hi Brit,

I'll double check the contract but the only thing I can see it that we will lose £250 of our reservation fee if it does not complete but will double check - thanls for the heads up! Scary stuf!!

ManicMum

They are only offering 50% stamp duty paid? Walk away!

Have you tried to negotiate? If they are at end of build you are in good position surely? I'd be putting in a cheeky offer to start with. They can only say no. Prices are going to fall from what I've gleaned.

I keep getting calls from a new build near us. The price has dropped once from £228 to £217. I said no to that. Now they have left message to say they are willing to tailor make us a deal. Still might not be a good deal for us but we can see. Ball in your court not theirs!

tleefox

Banxy - it may not be what you want to hear, but what similar houses have gone for is irrelevant with new build properties.

We purchased a new build in May 2009, when the market was pretty much rock-bottom in terms of average selling prices. We managed to negotiate £76k off the asking price, but despite that our lenders valuation under-valued it by £15k. This is despite the house next door (exactly the same) selling for £22k more than we paid. Since we have come to know our neighbours we have discovered that their valuation came back at exactly £15k less than the agreed price too, and we have heard of many others who found themselves in the same situation. It would appear that at this point in time the surveyors had been told to undervalue the properties at £15k less than the agreed sale price, regardless of what the agreed sale price was.

Thankfully we were able to make up the £15k shortfall - but this could have been make or break for us in terms of purchase. Unfortunately, be prepared for a few stumbling blocks along the way.

Good luck!

Yorkie1

If you exchange now with a completion date of Dec 11, you are really really opening yourself up to potential trouble if your solicitor isn't on the ball about securing you a penalty free get-out of the contract if you can't find an acceptable mortgage.

You are unlikely to get a mortgage now which will be held open until completion. So you will be bound into a contract after exchange, with no guarantee that you will be able to get a mortgage nearer the time - or it will undervalue the house as described above, leaving you committed to the purchase and insufficient funds to make up the difference.