builders not keen on new buy ?

droiderm

I understand that there is a cost for builders for a newbuy mortgage .
I also understand the risks involved in it . .

However , after finally being given a dip via the builders recommended mortgage adviser I feel like the games have already started .

I haven't been to the site for a number of months , and have had no contact with them lately.
But the mortgage advisor rang me to tell me that they don't do newbuy on the site as it costs them 3 percent. However if I can raise 10 percent deposit , they can gift 5 percent. I told her i can't magic 8 grand. She said she will speak to the sales director and see what he says .

Firstly , what's all that about ? I will speak to them . Seems the advisor works for the builders more than the client.

Secondly 5 percent gifted deposit is surely worse for them than 3 percent for new buy for 3 years ? !

Is it some kind of sales tactic ?

olly300

Off course the advisor works for the builders. That's how she gets her continued work.

And yes it is a sales tactic.

droiderm

What they hoping to gain ?

kingstreet

5% of the gross price of the property is within the likely "marketing budget" and easily swallowed.

Newbuy requires the builder to deposit the cash in the mortgage guarantee fund and that actually costs them.

TBH I'd think about using HTB instead. The interest-free loan for five years will see you get a 75% mortgage at a much better rate. Put away the savings and use them to pay down the equity loan as fast as you can in chunks.

droiderm

What do you mean by it costs them ? More than 3 percent ?

kingstreet

No. They actually pay out 3% from their revenue.

The builder's deposit isn't real money, as it's debatable whether the property is actually worth the selling price in the first place. The notional sum is an accounting exercise.

Handing over £4,500 for a £150k property hurts more...