New Build Mortgage w/ Builder Contributed Deposit

Millz

Hi all

I currently have a new build property reserved, but have been refused a mortgage twice now (from Accord and Nationwide).

Both have said my credit history is fine, I can easily afford the payments and have little outstanding debt (my car, pretty much).

I've been refused as I have 15% deposit, where 5% is builder contributions, and 10% is from part-ex'ing my house.

New house = 149,995
My house = £15,000 equity
Builder contribution = 5%

The lenders have said both times they don't want to lend on that percentage LTV as it's high risk (why advertise it then!).

I've just been looking at HSBC but they need £25,000 deposit where the LTV is over 75%. I can get the extra £2500 I need from family. Do HSBC allow builder contributions as part of the deposit? I've checked the site but can't find it anywhere.

Any other lender I should look at? With C&G at the minute but they want minimum 20% deposit - same goes for Halifax.

Thanks in advance.

kingstreet

So, you have 10% deposit from your own resources and 5% builder gifted deposit?

From Nationwide's lending criteria;-

The maximum loan to value on New Build Houses is 85%.

and

Incentives offered by a builder such as offers to pay stamp duty, legal costs, the purchase of white goods are acceptable provided the applicant provides a minimum 5% deposit from their own resources.

Which makes your decline by Nationwide somewhat puzzling.

kingstreet

Abbey/Santander criteria;-

Builders may offer sales incentives to prospective buyers to encourage them to purchase their properties. An incentive is anything the builder gives or provides to the buyer in cash or goods.

We will accept up to 5% cash back towards the purchase price (no financial limit) and builder’s payment of legal fees and stamp duty only. Any reasonable non-cash incentives, eg white goods, carpets, curtains etc. will be ignored.

Standard new build LTV limits
House 85%

This is purely an example. I'm sure there will be other options. Cannot comment on HSBC.

Millz

kingstreet wrote: »

So, you have 10% deposit from your own resources and 5% builder gifted deposit?

From Nationwide's lending criteria;-



and



Which makes your decline by Nationwide somewhat puzzling.

Yep, I know. No idea why they've declined it when they're advertising that they'll do it.

kingstreet wrote: »

Abbey/Santander criteria;-


This is purely an example. I'm sure there will be other options. Cannot comment on HSBC.

Will look into them, thanks.

harvey115

If you are doing this without a broker, stop here and consult a good broker.

If you are doing this on your own, you are potential trashing your credit history by having multiple credit searches (you already have two). Although a couple of Credit Searches won't harm your credit history, doing it again and again will for the short time (6 to 12 months).

Best of luck

Millz

harvey115 wrote: »

If you are doing this without a broker, stop here and consult a good broker.

If you are doing this on your own, you are potential trashing your credit history by having multiple credit searches (you already have two). Although a couple of Credit Searches won't harm your credit history, doing it again and again will for the short time (6 to 12 months).

Best of luck

I'm using a broker which has been set up by the builder, however he's a nightmare to get ahold of and I'm not 100% convinced with him considering he was off to apply to Halifax the last time we spoke when they don't do 85% LTV on new builds.

Accord are 'soft touch' as he explained so drops off after a few days. Nationwide aren't - so that will leave a mark.

This is why I'm researching going alone - but trying to gather as much info as I can before I put in another application. I'm aware of the damage it can cause

harvey115

Well, I think your broker needs a bit of kicking!

In general it is not a good idea to use brokers from estate agents and developers. However some brokers in their network can be very good indeed.

Looking at your scenario it seems like your broker is doing no good to you and I would advise you to look for some other broker as soon as possible.

I would expect the broker to have spoken to the underwriter before putting in an application regarding the incentives. I am also buying a New Build and as incentives I am getting Stamp Duty paid, £1,000 towards legal fees and flooring. My broker first checked with the underwriters if they would be happy with these incentives and only then they put in a full application. My mortgage approved last month and I am now waiting for the house to be completed in August end to move in.

Millz

Interesting turn of events. Just had a call from the broker to say Halifax (who claim on the website to only do 80% LTV max) have agreed the mortgage in principal at 85%.

Thank god for that!

kingstreet

Does the Halifax AIP system ask if it's a newbuild?

TBH I can't remember. If it's keyed as a standard case, it will accept it now because it doesn't know it's a newbuild.

The minute the full application reveals it's a newbuild, it will be kicked out on LTV.

Just make sure the broker know this and has checked it out first...

Millz

kingstreet wrote: »

Does the Halifax AIP system ask if it's a newbuild?

TBH I can't remember. If it's keyed as a standard case, it will accept it now because it doesn't know it's a newbuild.

The minute the full application reveals it's a newbuild, it will be kicked out on LTV.

Just make sure the broker know this and has checked it out first...

He's coming to see me over the weekend with the details. I'll be checking over the documents and will ask the question then.

I'd imagine it must ask if it's a new build. It's a fairly standard question.

harvey115

I think the broker is doing no favours to your application, actually he trashing it. Also any new applications are going to waste your time and money if any.

I would search for a good broker and meet him today to discuss the possibilities.

PS - an AIP is worth nothing, for all it is like a computer generated figure without considering detailed information of the applicant. Its just an outlook.