FTB Questions

welshwizard1927

The OH and I are I'm the process of looking at mortgages to buy a new build. We have a deposit. We are already aware of the difficulties relating to FTB mortgages, particularly for new builds. However it would help if someone could answer the following:

1) Due to the nature of the project i'm working on at present, I am on a fixed term contract. I'm a solicitor and am reasonably confident I may be made permanent at the end (in 2years). How much on an impact will this have on any mortgage applications?

2) The sales person at the development (Redrow) said they were open to offers regarding the price (it's a huge site). While we were there, another couple were basically told that the developer provides the best offers in the run up to Christmas as nobody buys. I appreciate a lot of this may be sales nonsense, but how low should we go into when discussing prices? I was thinking £10k (about 7% of current price).

I'm a newbie so any help would be appreciated!! :money:

opinions4u

1. Get a reputable local broker. Has your contract ever been renewed with the same employer? This could be a deal breaker. How big is your deposit?

2. I'd start at 20% off. And work upwards slowly. Research other sales on the site via property web sites which will tell you how much similar plots have gone for.

ognum

welshwizard1927 wrote: »

The OH and I are I'm the process of looking at mortgages to buy a new build. We have a deposit. We are already aware of the difficulties relating to FTB mortgages, particularly for new builds. However it would help if someone could answer the following:

1) Due to the nature of the project i'm working on at present, I am on a fixed term contract. I'm a solicitor and am reasonably confident I may be made permanent at the end (in 2years). How much on an impact will this have on any mortgage applications?

2) The sales person at the development (Redrow) said they were open to offers regarding the price (it's a huge site). While we were there, another couple were basically told that the developer provides the best offers in the run up to Christmas as nobody buys. I appreciate a lot of this may be sales nonsense, but how low should we go into when discussing prices? I was thinking £10k (about 7% of current price).

I'm a newbie so any help would be appreciated!! :money:

I think it is much more of a problem to get an enormous discount on large developments simply because everyone buying looks at land registry to establish value and once your price is logged it will be difficult for them to sell at a higher price.

On small developments where everything is sold quickly no one gets to know what anyone else paid until too late.

I think the developer may give you incentives like paying your legal and stamp duty fee, adding carpets and fittings but actually pushing the price down by 20% is unlikely.

kingstreet

In my experience, the best deals are made by builders;-

- towards the end of its financial year
- towards the end of a development.

Hominu

kingstreet wrote: »

In my experience, the best deals are made by builders;-

- towards the end of its financial year
- towards the end of a development.

I agree. I analysed a development site through the Land registry and was surprised at the results:

The bulk of the property sold for £119,950 (I assume this was mostly pre-built property, as in, people buying from the strength of the show home).
Then some were sold at £115,000 about 6 months later (I assume this was when development was finished and they wanted them sold, so were more flexible on the price)
Then a few months after that, 2 were sold at £110,000. I assume these were the last two on the site.
I've actually visited the site (sad, I know), and they all seem exactly the same house, semi-detached, small, drive footpath width (everyone parking on the road).

So I'd say even 10% might be pushing it a little.

Zero_Sum

Hominu wrote: »

I agree. I analysed a development site through the Land registry and was surprised at the results:

The bulk of the property sold for £119,950 (I assume this was mostly pre-built property, as in, people buying from the strength of the show home).
Then some were sold at £115,000 about 6 months later (I assume this was when development was finished and they wanted them sold, so were more flexible on the price)
Then a few months after that, 2 were sold at £110,000. I assume these were the last two on the site.
I've actually visited the site (sad, I know), and they all seem exactly the same house, semi-detached, small, drive footpath width (everyone parking on the road).

So I'd say even 10% might be pushing it a little.

Don't believe what the LR says. As house price discounts, don't always come off the price, but rather as a contributuion towards your deposit.

rodenal

Zero_Sum wrote: »

Don't believe what the LR says. As house price discounts, don't always come off the price, but rather as a contributuion towards your deposit.

Indeed, a thoroughly shady practice that's been going on for years. Another favourite is to over value part ex properties rather than show discount on sold prices.

There is a massive (if the development is on build cost target at least) % profit on newbuilds - far more than even 20% so don't be afraid to lowball them, of course the popularity of the rest of the site will affect what you'll actually get but try and aim for as close to any comparable non newbuilds as you can.

welshwizard1927

Thanks everyone for the advice.

What follows may sound like a thoroughly daft question, but what comes first - mortgage agreed in principle at the asking price, then negotiate down, or the other way around?

Hominu

welshwizard1927 wrote: »

What follows may sound like a thoroughly daft question, but what comes first - mortgage agreed in principle at the asking price, then negotiate down, or the other way around?

Once they know you are happy with a price and can afford it, why would they bother to reduce it?

Its like showing an estate agent a MIP of 200K and then offering 150K on a property - they'll always try and push you up further, knowing you can afford it.

MIPs can be generated online without seeing anyone, so you can easily get a couple of them sorted. I wanted something a little more authentic, so took my bank statement into Barclays, and they printed off a standard letter and then scribbled an amount 3 times my salary on the page and signed it, without asking a single question. Said they'd only bother with a credit check if I actually went ahead with the application.

samtoby

Start low and go up x