New build mortgage LTV

wymondham

If it says £500 on the form then that is the penalty I would think would be binding rather than anything verbal.

Since you're looking for imaginative ways out, how about going back saying you you're stressed and can't recall the previous day!

123lushan

The card has been activated again - thanks for all your sensible words

Normally the developer asks for 1k reservation fee and half of that if you withdraw, but for this development they asked for
2k, which was why it was 1k if we withdrew. But they only manually changed the 1k to 2k but didn't change the 500 to 1k for withdrawal. Will I still get off on that?

We did agree the price and it wasn't the full asking price (not far off it - please don't lecture me on that!)

And how best to tackle my problem? I can't get the extra cash. Ideally Nationwide would lend me 85% (don't know how that will happen), and/or the developer will change it to subject to mortgage approval (but we already signed the reservation form)

Thanks very much!

BoGoF

The fact you agreed not far off the full asking price will make the prospect of losing your reservation fee a lot more palatable.

I know you've asked not to be lectured but you will save yourself money by pulling out of this one as you would have been in immediate negative equity. You will see plenty threads here about mortgage valuations coming in at 20% less than the asking price so chances are you wouldn't have got a mortgage anyway.

You need to take a step back, see what you can borrow first and get your finance in place then negotiate hard.

123lushan

Of course I have seen all the threads about new builds being over priced etc. And trust me, in my part of London, you wouldn't go for a new build if there was a nice big Victorian conversion with a garden on a residential street within your means. But we have been seeing properties and there aren't. Of course you can compromise by living somewhere miles from trains/tube and/or a small place but we were not that keen on that. The flat we chose was just about our budget and at 800 sqft, a lot bigger than everything else we have seen. It's 10 mins walk to my station, so for us it was a bit of a no brainer. I agree we should have slept on it a bit more instead of letting the excitement of owning our first place overwhelm us. But when you pay nearly 20k in rent every year you'd want to stop that ASAP!!

We knew how much we could borrow and what the repayment would be...

Just read about government's plan to underwrite new builds so lenders can provide up to 95% LTV and the CEO of Nationwide indicated they would take part. I'm thinking: go speak to sales people and see what we can do there. Speak to Nationwide tomorrow and see if we can get 85% (it's incredibly misleading that they are the only place with no mention of LTV for new builds on customer's website).

Any more suggestions?

BoGoF

Was there a reason you re-posted your 10:46 reply minus one line?

Nationwide aren't going to lend you 85%, they simply don't on new builds.

I can't see the developers changing it 'subject to mortgage' as whilst it's reserved they can't sell it to anyone else. They're not going to wait on you trying to get a mortgage.

BoGoF

"Any more suggestions" - yes stop going back and totally editing your posts to something different.

How do you know how much you can borrow? Do you have an agreement in principle from Nationwide?

For arguments sake let's say you've agreed to pay £200,000 and you have £30,000 deposit (15%). What happens if the mortgage valuation is £180,000 and they will only lend 85% of that to you - £153,000. Simple answer is you can't buy it.

123lushan

Typing on my phone - it crashed on me.

Even if they reserved it for all about an hour? I guess rules are rules. £500 is a loss we can absorb and but definitely won't be able to sleep tonight!! You live and you learn and we have definitely learnt today. I would still like to
blame Nationwide for not telling us because I feel really bad about my stupidity!

123lushan

Nationwide has recently changed their valuations for new builds so it looks at resale price with a new build premium. The valuation issue could occur I agree, but then I'd go back and renegotiate.

And they are definitely participating in the government's new scheme so it's worth asking the developer if they would take part too. If I'm going to potentially lose my £500 I want to explore all options.

And please be nice, as you can see I am a very stressed newbie!

BoGoF

How long is the reservation period?

If it were me I'd be off to a broker to see what could be done then if it were a goer, give up on the £500 you will lose for pulling out then renegotiate a far better deal meaning you will get your £500 back.

Seriously, anybody that doesn't knock at least 10% of asking price is throwing money away.

123lushan

BoGoF, please give your number. Next time I'm off to a new build I need you to come along so you can knock off 10% for me! I dont find negotiating in London that easy due to experience from all my years of renting (obviously buying is different!)

Could you please explain your idea a bit more - I'm not sure I fully follow...thanks a lot.