Builder said they will pay legal fees

monkeyman905

Hi,

I have a question me and my girlfriend are buying a new build at the minute and we are at the point where the bank are doing the valuation! The builder said they would pay £1000 legal fees and the mortgage lender is paying the stamp duty. With this in mind we thought we would put the money we would have been for these into the deposit.

The issue is now that the builder is saying they will just take £1000 from the value of the house rather than actually paying the costs. So now we are down £1000. Can we take £1000 back from the deposit to pay the fees or will the mortgage lender not allow this?? Or can we argue with the builder to actually pay the fees and not take it off the price??

monty-doggy

If you take it from the deposit it may alter your loan to value ratio and make your interest rate higher, or at worst the lender withdraw their offer of mortgage.
I would check carefully the criteria for you rate, and then speak to an independent mortgage advisor.

If you can convince the builder to pay the £1000 upfront this will make things much easier. I would make it clear you feel you have been misled and he may think twice if he thinks you may pull out of the sale.

Hope it works out for you.

monkeyman905

Thank you for the reply. That's what I'm worried of the lender pulling out. But we now have a mortgage offer of 115.000 which we are borrowing but the builder wants to take £1000 legal fees of the price and £500 deposit. Surely that messes up the loan as we will have borrowed £1500 more than needed, this part is confusing me how they can change the cost when bank/ solicitor think its a different value?! (Hope that makes sense)

G_M

I hope there is no link between the legal fees payment and the choice of solicitor.

You must choose yourown solicitor, NOT use one used by, or recommended by, the builder.

monty-doggy

Essentially you won't see any short term saving by him knocking anything off the price of the house. Surely he was offering the incentive to make it easier for you to make the purchase? The loan amount can be changed, as it would be if perhaps a survey led to negotiations in asking price, this happens all the time, but where does that leave you with your loan/deposit ratio? How much of a deposit are you putting Down?

monkeyman905

They did recommend a solicitor but the legal fees would be paid if we went with them or if we went with our own.

We are doing a help 2 buy scheme and we are putting £10,000 down. The actually price of the house minus the 20% loan is £125,000. We only need to but 5% down but have gone for £10,000. Least that's good to know we can negotiate.

monty-doggy

If your loan is 20% and you take £1000 off the deposit then you risk the interest rate rising as you won't be 80% loan to value.

I would def try to renegotiate!