New Build Mortgage

rcopus

Hi All.

I called NatWest today to get an AIP before I start looking properly at houses. They will lend me 290k on a 10% deposit and 317k on a 15% deposit, I know the AIP is not any sort of commitment on their part.

I have looked at a new build house where the list price is 209k, however NatWest said they will only provide a mortgage on houses built before January 2006 unless I have a deposits of 20%. At the end of this month I will have a 15% deposit.

I understand that you pay a slight premium for new builds and that people here may be against them totally. However, whats the point in valuations etc saying its worth X only for the bank to not believe this and require a higher deposit.

I find this slightly frustrating because the builders and government, in fact even NatWest, are providing 95% mortgages under 'New Buy' yet someone comes along with a higher deposit and they're not interested. That and they *could* be willing to lend me way more than I want as long as the property is older.

When I enquired with the builder late last month they made the following comment:

We’re hoping to utilise the Government Mortgage Indemnity Scheme to provide 95% mortgages, however we await full details.

Could this mean potentially they could be selling people the very same properties with a 95% mortgage of which I've just been told I wouldn't get unless I had a 20% deposit?!

Is it just NatWest that have this 20% requirement?

Any advice is appreciated before I waste any time looking at properties or getting a broker.

kingstreet

Many lenders have a maximum loan to value of 80% or 85% for newbuild houses. The maximum is often lower for newbuild flats, sometimes 75%.

If they decide to be part of a Government scheme like Newbuy, this will be a different proposition and will have its own terms and conditions. It won't mean the lenders (Barclays, NatWest and Nationwide to start with) will change their maximum LTVs across the board.

You need to establish what your developer is offering on the Newbuy scheme. As it costs the developer money, it may well be selected plots only as it has been for Homebuy properties.

kingstreet

From lender criteria to give you an example;-

Halifax - Maximum LTV on new build properties (houses and flats) is 80%

Nationwide - New Build Flats & Houses - Valuations
The maximum loan to value on New Build Flats is 75%.
The maximum loan to value on New Build Houses is 85%.
The maximum loan to value on NewBuy Houses or Flat 95%.

Abbey/Santander - Standard new build LTV limits (all borrowers including First Time Buyers)
House 80%
Flat 70%

Higher new build LTV limits (First Time Buyers only up to 4 x income)

House 90%
Flat 80%

rcopus

Thanks so much for the advice kingstreet.

I've been in touch with the developer, they're still awaiting information on the scheme it would seem.

However, looking at the information you've provided from various lenders, it would appear I may be able to obtain a mortgage with a 15% deposit.
It looks like their SVR's will are higher than NatWest's though, which is currently 4%. The NatWest mortgage I was looking at was a 2-year fix at 3.95% leading to 4% SVR.

Looks like my next step is to find a mortgage advisor/broker

brit1234

rcopus wrote: »

The NatWest mortgage I was looking at was a 2-year fix at 3.95% leading to 4% SVR

I can't see the point of 2 year fixes. They seem to just away to milk mortgage fees. Surely if you are after the security of a fix 5-10 years are better, a 2 will just drop you in when rates are higher or about to go up and you will have to pay another high mortgage fee.