New build mortgage LTV

123lushan

Hi

We are first time buyers and just put down a £2k reservation fee on a new build in southwest London. We had spoken to Nationwide beforehand and knew that we could borrow enough to fund the purchase on a 85% LTV deal.

Only after paying the reservation fee and looking on the internet, did I realise that Nationwide probably requires a 25% deposit for a new built flat, which we don't have!

We found a site on Nationwide-Intermediary which said it's 75% LTV for new build flats and 85% for house. Why isn't that on the normal Nationwide site? (I did a thorough search)

The mortgage advisor we spoke to didn't mention it either!!!

So what to do?! We can't afford to lose £2k. The money isn't supposed to go through til Monday and we're going back tomorrow with my other half's mother. Can we ask them to change the reservation fee to subject to mortgage approval? Will they do that, given that they have nothing to lose? The development only launched last week, and the larger flats (which we want) have been selling well so far, and we were only keen on buying a particular flat. But that's not enough reason to lose out on £2k!

wymondham

Not sure that theres much you can do other than find extra funds. There is a sound reason why new build flats need a higher deposit and I doubt Nationwide will budge on this due to the higher risk .....

Could you try another lender?

Out of curiosity, how do you know the flats are selling well?

123lushan

Here is an idea - given that the money will not go through until Monday, I have called up my credit card provider, pretended that I couldn't find the credit card, and they have put a temporary blackout on it, which means no transaction can go through. So if I go into the sales office tomorrow and they refuse to amend the offer, then at least if they tried to take my money they wouldn't be able to.

Very immature of me, and I deserve to be punished for not being better informed, but it's £2000!

But can the developer sue me for this? The reservation form said if we withdraw, they'd retain £1000, and they do have our address and phone details....

BoGoF

Was it a chip and pin transaction? If so, chances are it will still go through.

You have signed a contract and the developer will be able to pursue you for the money.

123lushan

No it wasn't a chip and pin, they just took our details onto a piece of paper. We would still like to purchase the property but if you can't (and we won't be able to raise the extra 10% in deposit) then I'd rather dodge the £2k hit first, speak to the sales people tomorrow and find out what we can do....

wymondham

So your idea is to make it look like someone stole your card and attempted to use it to reserve a flat??? I think you should wait a few years before buying so you have have time to grow up. I think you've just learned a valuable lesson and are now £1,000 lighter for it.

BoGoF

You're digging a bigger hole for yourself by reporting that card stolen/lost but that aside they aren't going to change it 'subject to mortgage'......and why on earth are you taking the mother in law!!!

The reservation fee is just that, reserved for you and they can't sell it to anyone else. You're effectively stopping them selling it to someone else for hat period of time.

123lushan

I didn't say the card was stolen, I said I have misplaced it and can't find it at the moment, they've only put a temporary black out on it anyway which can be removed at anytime.

The mother in law just happens to be in London tomorrow.

Should we struggle with Nationwide, can anybody offer any brighter suggestions? Their rate is around 4% which we think is quite good for 85% LTV

123lushan

Wymond, please, I feel bad enough as it is!!!!

We reserved the flat at 4pm today, the office shut at 5pm, and I will speak to them first thing tomorrow at 10am - fingers crossed they will be reasonable!!!!

Funnily enough, the reservation form I have actually says they'd keep £500 and not the £1000 they verbally told us. Still a hit but I'm trying to make myself feel as good as possible.

GMS

Be very careful here.

You have presumably signed and agreed to the terms and conditions of the reservation?

Not allowing any payment due to be taken will most likely end up with you being pursued for what you owe plus any associated costs to the developer. Ultimately this could lead to court and a CCJ is possible which will prevent you from obtaining a mortgage for a period

BoGoF

So what will you tell the credit card company if they ask if this was an authorised transaction.

Nationwide are no use to you.....you don't have a 25% deposit. Did you agree a price when you paid the reservation fee? Please don't say you agreed the full asking price.........