Woolwich New Buy scheme mortgage application

izzy.gp

I wonder if there's anyone going through the same painful process as I am now

I've applied for New Buy scheme via Persimmon Homes, mortgage broker prepared the mortgage application on 22nd March and submitted to Woolwich.

Since then, it was supposed to be 3-5 working days for decision to be made by their underwriters.

5 working days later they complained they were missing a saving account statement; I provided it within 12hrs; broker advised up to 72hrs extra waiting.

After 72hrs broker came back to us and said that unfortunately we were chosen for random audit so it was going to take longer, however, as Woolwich already had all necessery documents - not too long.

3 days later we were asked for proof of address that they already had + older P60s...(we and my husband, we are contractors)... I delivered accordingly in no time

I chase broker every day, they chase Woolwich every day; they attempted to escalate the case and have been told that escalation is possible 48hrs before completion date... that leaves like years of time for exchange and completion!!! What a nonsense!!!

Their excuse is that they are overloaded... (!!!!!!)...

reservation will expire next week, completion is supposed to take place on 27th April, we have no bank decision and they cannot promise they will have a look at this tomorrow or day after or perhaps ever...

I honestly would prefer them saying "no" from the beginning instead of this horrible waiting... and what if they don't make up their mind before my reservation expires.. the survey has been paid, the solicitor has been paid, the reservation has been paid and due to their lack of response the house might be gone before I realise...

what a ridiculous service Woolwich provides...

The_J

They are usually alright once all the documentation is provided but they have a knack of asking for repeat information and that is what causes delays.

Don't take it personally, I've got clients earning over 500k a year looking to borrow less than 1x income and it's taken months to sort out with them.

brit1234

Its a new scheme with unique rules. It will take a while to set up and run efficiently ie training the staff, understanding the scheme requirements.

Personally though I would use this opportunity to decide if you really want to participate in Newbuy with the problems it will cause you in the future (unless it is a home for life).

brit1234

Does the scheme protect me?

No. The scheme does not change or reduce your personal responsibility in any way.

The lender will still assess you to see if they think you will be able to afford the repayments from your income.

You are responsible for paying your mortgage under the NewBuy scheme in exactly the same way as any other mortgage holder.

And, if the lender has to repossess the property and sell it, you would be responsible for paying any shortfall between the amount you owe to the lender and the amount the lender sells the property for.

:think:

What should I consider when taking out a mortgage under the scheme?

Buying a property with a mortgage under the NewBuy scheme is likely to be more suitable for people who expect to stay in the property for a number of years rather than those who plan to move soon.

If you take out a mortgage on a newly-built property that represents a high percentage of the value of the property – between 90% to 95% in this case - there are some things you should consider. Some new-build properties include an extra premium on the sale price that can reduce as soon as someone moves into the property. This potential reduction in the value of the property is an important factor you should consider when buying a new home using a higher LTV loan. If house prices fall, you may not have enough money from selling the property to repay the mortgage.

If the amount you owe under your mortgage is greater than the value of your home, this is called ‘negative equity’ and could make it difficult to move or remortgage unless you can meet the shortfall from savings or other sources. However, this is a risk of high loan-to-value borrowing (where you borrow a large percentage of the value of the property), not of the NewBuy scheme itself.

You may be able to borrow more (in other words, get a further advance) if your lender agrees, but at this point the scheme would not apply to you, and that may mean the lender will not be prepared to lend.
You should get financial advice if you are in any doubt about whether a low-deposit mortgage is right for your circumstances.

http://www.cml.org.uk/cml/consumers/newbuy

Add on top of this you may have very serious re-mortgaging problems being in negative equity at the end of your mortgage deal.

Is the mortgage deal a 2 year fix?

izzy.gp

Thanks for your replies guys. I know the danger of getting into New Buy scheme but I don't think I will ever buy another house so in this meaning - it will be a home for life.

It is two year fixed rate deal. I expect myself to have some extra cash at the end of that period and lower the mortgage amount. But as for now, I cannot wait any longer to join the property ladder, I have only 5% deposit and the house is ideal. Hence I decided for New Buy scheme. No risk no fun as they say. However, still no reply from Woolwich. I've noticed though that they charged my credit card with mortgage application fee just yesterday so perhaps they are on the case... now is the matter of yes or no

this waiting is killing me though...

The_J

brit1234 wrote: »

Its a new scheme with unique rules. It will take a while to set up and run efficiently ie training the staff, understanding the scheme requirements.

God you talk so much crap.

I'm personally not a fan of Newbuy either but you are so deluded, and ignorant of the basic mortgage process, that when you argue against you highlight irrelevant points.

Izzy, if you are buying this as a long term home then you don't need to worry at all. New builds can lose a little value when you move in because all of a sudden, they aren't new. In actual fact due to the lack of people on the market looking to buy the discount you can get on new build property can easily outweigh any drop. Some builders are incredibly keen to sell but my overriding advice to anyone buying a new property is buy somewhere in a good location.

The irony from bitter, alarmist, HPC people like brit is that they are in the market for investment, they missed the boat first time around and want to catch it again and make money.

izzy.gp

Hallelujah! 5 weeks of nervous waiting and finally the offer has been issued. I almost want to call it a miracle.... me and my husband, we are both contractors... I have a great credit score, his one is far below the average.. and we still got it. Completion on 30th April - woo hoo!

leveller2911

izzy.gp wrote: »

It is two year fixed rate deal. I expect myself to have some extra cash at the end of that period and lower the mortgage amount. But as for now, I cannot wait any longer to join the property ladder, I have only 5% deposit and the house is ideal. Hence I decided for New Buy scheme. No risk no fun as they say.

Good luck ,hope it works out for you but 5% deposit on a newbuild(:eek:) is a risk I wouldn't take as I want the odds in my favour .If that means waiting another 12-18 months then so be it..

May be an idea to search out and read some of the many threads on negative equity that way you'll be prepared if/when it goes Pete Tong..........;)

Be prepared