Yet another help to buy question!

okborednow

I've been researching whether house builders are allowed to offer incentives if you're using the help to buy scheme so if they claim they can't as some other posters have stated i'll have an idea whether it's the case or not.

I've had a poke around on the intermediary sire for halifax and this is what i found....

" Builder cash incentives include but are not limited to deposit contributions, cash-backs, contribution to legal fees/stamp duty, mortgage subsidies.

Cash incentives for shared equity applications are acceptable provided the total value of the loan plus incentive together does not exceed 95% of the value of the equity share being purchased."

So does that mean offers to pay stamp duty or legal costs can only takes us up to 95% of our equity but additions like carpets, appliances, turf etc would not have to be included?

Noddy32

We are currently going through HTB. We're told by the sales staff that they couldn't offer incentives under the scheme, however when we received pack from the local HTB agent, following approval, it states within there that incentives are allowed up to 5% of the purchase price of the property. We went back to sales staff and have now been offered £2k towards 'extras'.

Noddy32

That should say 'we were'!

kingstreet

The often get confused as NewBuy allows no cash incentives. They can offer non-cash items such as floor coverings and white goods. AIUI on HTB they can offer incentives if they choose to...

okborednow

Thanks kingstreet but now something completely unexpected has happened and i'd love your advice...here's what i posted on the housing board

As i said in previous posts my fiance and I are looking to buy a new build property using help to buy later this year. We found a house we were interested in but it's in a later phase of the development and weren't expecting it to be released for a few months giving us time to get enough for our deposit.

Today however the sales woman from the development has called and said it's available now! I initially said we were sad but we couldn't proceed as we simply didn't have the money in place to exchange in 28 days which i believe is standard with these purchases. She called back and said that she had permission from head office that we could exchange on a much smaller amount and would only need the full amount when the house was completed in Nov or Dec.

I'd love to believe her as we really want this house but from what i've read a sales person will generally swear black is white if it gets them a sale. Can you all give me your thought on how i should proceed please?

Thanks

Yorkie1

okborednow wrote: »

Thanks kingstreet but now something completely unexpected has happened and i'd love your advice...here's what i posted on the housing board

As i said in previous posts my fiance and I are looking to buy a new build property using help to buy later this year. We found a house we were interested in but it's in a later phase of the development and weren't expecting it to be released for a few months giving us time to get enough for our deposit.

Today however the sales woman from the development has called and said it's available now! I initially said we were sad but we couldn't proceed as we simply didn't have the money in place to exchange in 28 days which i believe is standard with these purchases. She called back and said that she had permission from head office that we could exchange on a much smaller amount and would only need the full amount when the house was completed in Nov or Dec.

I'd love to believe her as we really want this house but from what i've read a sales person will generally swear black is white if it gets them a sale. Can you all give me your thought on how i should proceed please?

Thanks

Personally I think this is risky, unless your solicitor is clever and manages to include a get-out clause if for any reason you are unable to complete at the end of the year.

Once you have exchanged, you are legally bound to buy the property. Any mortgage offer you try to obtain now, will expire before completion is due. You could find yourself trying to get a mortgage in the autumn but not being eligible for any reason. Or values locally may have fallen meaning the lender won't lend the amount you need / values the property below what you've agreed to pay. Anything could happen in the intervening period e.g. redundancy, which would lead to any offer being withdrawn.

fragmast3r

we have just purchased through HTB and we had £8k off the house price and TW are paying our valuation fee and £650 towards solicitors fee's , so there's dealing to be had.

on another development (barratts) that house wasnt ready until october, they would allow us to reserve for £500 until then, is that what your sales person was meaning?

and get everything in writing

kamb1ng

We're in negotiations with Bloor. Sales people said they're not allowed to give financial incentives on HTB deals but can negotiate on "extras" (flooring, turf, burglar alarm, etc). Having said that they offered £500 towards legal fees.

When I called NatWest I confirmed this with the mortgage consultant. She said any financial incentives need to be reflected on the house price. So if the builder agrees to give you £2k of incentives then it's implemented as £2k off the house price.

My only guess why this is the case is to ensure that the government pays 20% of the actual house price, and not a fraction more.

What I mean is. If the house price is £100k, govt pays £20k and you pay £5k. If you get £2k of incentives that means the house price is actually £98k and the govt's share is 20/98 = 20.4%.

So in the above example what the govt wants is for the house price to be £98k so that they pay £19.6k, which is a true 20%.

Bottom line is, try to knock the house price as much as you can before discussing incentives/extras.

Does that make sense or am I making this up?

kingstreet

okborednow wrote: »

Today however the sales woman from the development has called and said it's available now! I initially said we were sad but we couldn't proceed as we simply didn't have the money in place to exchange in 28 days which i believe is standard with these purchases. She called back and said that she had permission from head office that we could exchange on a much smaller amount and would only need the full amount when the house was completed in Nov or Dec

There would be nothing worse for a newbuild sales consultant to get a reservation, then lose a sale. Ask for the confirmation in writing and you should be fine.

Applying for a mortgage now should be okay if you're going for something like a Halifax stamp duty incentive product. These offers last until Feb 28 2014.

Just one note of caution. What happens if the lender asks for proof of deposit, before it will issue a mortgage offer?

okborednow

Thanks again kingstreet. We did wonder about that ourselves! I'm going to speak to my mortgage broker today to see what she thinks before we go down to the development tomorrow

CluelessFTB_2

okborednow - we have had a builder offer us exactly the same thing. That we could reserve the plot then keep saving till they are completed in November. When I spoke to the mortgage broker they said not to risk that. I am meeting with Halifax next weekend (first appointment I could get) I am going to ask their advise on that idea.

Let me know how you get on!