Builder/lender limitations

Arcanum

I have a fairly large problem with my attempt to obtain a mortgage for a new-build one-bed flat. Apologies if this has been asked and answered previously, but there are 3,000 pages of threads, and a search showed nothing similar to my predicament.

I am a potential FTB at 24; saving since I was young will allow me to put 5% towards a deposit, and my parents have said they will match that to make it 10%, along with the Help to Buy 20% equity loan. I found a mortgage from Nationwide - also where my current account is - which looks ideal for me: 4 year fixed at 3.49%, repayment (I just don't like the idea of interest-only), standard solicitor's fees paid, low fees, along with a few other bits I can't remember. I believe this one got some awards in Which? magazine or something - it might instead have been the current account it's attached to.

The process in trying to obtain a mortgage with the Help to Buy scheme has been deceptively tricky - no-one will start discussing anything until I've been approved for the scheme, though I have little doubt I can get that once things get started properly.

The main crux of the matter is what I was only informed about this morning by the builder's preferred financial advisor over the phone: I was told that "The builders of the block of flats would not accept a mortgage from Nationwide unless it was for a ground-floor flat" - I can't remember whether the exact wording was "would not accept", "would generally not accept", or "would rather not accept", but that is what the builder's preferred financial advisor told me.

Considering the fact that, as a FTB, not many mortgages are available to me, and even fewer allow me to keep saving even after I'm paying for the mortgage (along with bills, council tax, etc), this is basically the one obstacle standing between me and my first step on the property ladder - and being a very logical person it's one of the most idiotic-sounding things I have ever heard in my life. The builder's representative even knows that I'm looking at both a non-ground-floor flat and a Nationwide mortgage, and I've not heard anything along these lines in the slightest.

Is there any credibility behind the statement? What would the builder stand to gain by limiting which lenders can lend? Why only allow them for ground floor flats? Is Nationwide's money somehow inferior to another lender's?

After numerous hoops I've had to jump through already to get the ball rolling in the first place, I've just hit a brick wall before it's even got up to speed. The only hopes I have right now are either that the statement is completely false and ludicrous, or that, if it is true, I can just insist on the Nationwide mortgage and hope they buckle. After months of looking, I doubt I'd be able to find another mortgage that suits my needs as well as this one.

I know my first step is to ask the builder's representative, but he is on holiday, and I won't be able to contact him for the next week. Hopefully this is all just complete hogwash, but if it isn't, I need to know as quickly as possible so that I can find another suitable mortgage in a timely fashion - if it is utter rubbish, I can steam ahead with the mortgage, and hopefully we'll have another person putting their feet on the property ladder for the first time.

amnblog

Perhaps the financial adviser did not explain the situation very well. The builder just wants the cash form the sale. It is the lenders concern if the property is suitable as security.

There could be factors that make the apartments on the ground floor acceptable to Nationwide, whilst first floor and above properties are unacceptable - this may be what your financial adviser was getting at.

If the property is not suitable to Nationwide you will have to find an alternate lender or an alternate property.

Having to wait a week as your adviser is on holiday is really not on.

It is a problem if you deal with 'one man bands' - especially at this time of year.

Arcanum

amnblog wrote: »

Perhaps the financial adviser did not explain the situation very well. The builder just wants the cash form the sale. It is the lenders concern if the property is suitable as security.

There could be factors that make the apartments on the ground floor acceptable to Nationwide, whilst first floor and above properties are unacceptable - this may be what your financial adviser was getting at.

That's exactly the reasoning I used in my own mind to question it. However, I'm pretty sure I'm not mistaken in the way the advisor explained it: I definitely recall them saying "the builder would (or may) not accept a mortgage from Nationwide for anything above ground floor". That may be their mistake, and I sincerely hope it is.

amnblog wrote: »

If the property is not suitable to Nationwide you will have to find an alternate lender or an alternate property.

This, I can understand. They won't be able to see it before it's fully built, but I have confidence that the property will be built to standards, and also some confidence that the property will be a worthwhile investment in the long-term - it has easy access to both Manchester city centre and Manchester airport, not to mention being in one of the region's more desirable areas. Of course, Nationwide will only care about getting their money back, and the value could go either way anyway; I'm just somewhat sure it won't drop like a rock.

amnblog wrote: »

Having to wait a week as your adviser is on holiday is really not on.

It is a problem if you deal with 'one man bands' - especially at this time of year.

I suppose I may have neglected to mention one detail - the representative I've had contact with since initiating the process is going on holiday. I would assume that he will have someone in as a replacement for a week, so that will only mean that this person does not fully understand my situation right from the start.

Then again, the second perspective may offer a new opinion on certain things. I'll have to see how it plays out. I just generally prefer working with someone I've already met and spoken to numerous times, especially when large sums of money are involved.

Anyway, thank you for your response. At least I feel more confident now that a builder restricting which lenders they allow mortgages from is not common practice.

kingstreet

The builder's issue may be experience of Countrywide (or another panel surveyor) downvaluing their flats.

In my experience, the only time builders get nervous at the name of a lender is when they've had valuation problems with them elsewhere.