New build mortgages

rondunn58

My daughters are interested in buying a new build appartment and went to the HSBC for a mortgage hopeing to put down a 10% deposit for an appartment costing £67000. They were told by the mortgage advisor that they would need at least 25% deposit because the property was a new building. Has anyone else come across this problem and how did they overcome it.

alleycat`

New builds are, traditionally, seen to be overpriced by the region of approx 5% to 10%.

In effect what HSBC are saying is that your 10% deposit is covering that "overprice" and you are asking for a mortgage that is @100% of the "perceived" real value of the property.

In an unknown market they are not going to risk that your daughter is instantly on or near negative equity in case she defaults.

HSBC are also very picky about lending generally.

10 years ago this wouldn't have been a problem but since about late 2007 the games pretty much changed drastically.

I'm sure brokers could get her a mortgage for the apartment but it won't be a "great deal" and certainly not someone like HSBC.

Not that i'm an expert, but that is how i see it.

ACG

HSBC are difficult to get mortgages with at the best of times.

Im not sure many lenders do 90% mortgages on new build flats. I could be wrong but i think they might need another 5% at best, also as has been said HSBC, a great deal but not worth wasting your time with HSBC or first direct.

somethingcorporate

2 ways to get around it:

1) find yourself or use a broker to find you a lender that does 90% LTV on new builds (not many around!).

2) save some more money towards the deposit.