First time buyer,New Build,90%LTV

Fern0305

I have put a deposit down on a new build home and provided a decision in principle from nationwide which I completed online. I've been told that most banks require a minimum of 15% deposit for a new build - I only have 10%. Not once did Nationwide online decision in principle ask me if the home was 'New' so I assumed I was eligible.

I also have a save to buy account with Nationwide which I have been saving in for 6 months so I'm not sure if I qualify for 5% on new builds - Nationwide call center couldn't advise me on this and told me to make an appointment in branch.

Is there any 90%LTV mortgages for first time buyers and new builds? or does anyone know how the Nationwide Save to Buy works with new builds.

Thanks

dgtazzman

Can't be of much help, but I did go through the save to buy information on the Nationwide website a few times a while back and as far as I remember it doesn't differentiate between new builds and older properties.

If you get stuck, you could always consider using Help to Buy and only borrowing 15% via the equity loan, putting down 10% yourself. I think this is possible...

Georgesmum79

I'd be a bit careful with the Help to Buy; I have been told that once you start paying back that part of the loan (in 5 years?), you will be paying back based on the value of the house at that time. So, if prices have gone up in those 5 years you will be paying more than you actually thought when you bought the house. Also, some bank won't give your a mortgage for a deal like this, it is kind of shared equity, right? My lender is First Direct and they said that they would not mortgage a deal like this, but they only do up to 65% LTV anyway.

Paully232000

first direct do up to 90% LTV mortgages according to this website

http://mortgages.firstdirect.com/mortgage-rates?WT.ac=MRP1382

dgtazzman

The repayments of the equity loan are over the 'loan value'. They don't clearly define this definition on the Help to Buy website (at least not that I can find) however, but I think it's unlikely they'll be sending somebody round every few years to value the properties, so I'm guessing the interest will be paid over the actual amount of equity loan taken out and only the actual repayments will be based on the current market value.

Also, at a starting interest rate of 1,75%, you're not going to beat that with a mortgage, even if your property does double in price and the amount to be paid in interest is based on the current market value at the time. I expect by that time mortgage interest rates will have gone up again. Granted, the interest rate does go up every year, but not by a huge margin. Can't recall the calculation sheets some people round here have made, but I think even with current low interest rates, for the first 10 years it was cheaper to keep the HTB loan and pay the interest on that, while using extra money to overpay the mortgage itself.

You are correct not all bank will provide a mortgage using Help to Buy, but I was just suggesting it as a fallback option as it could work out ok if used correctly and you know what you're getting yourself into with an equity loan.

On another note, the initial interest rates for the save to buy mortgages from Nationwide are a lot higher than their regular products (more than double in some cases) and are fixed for at least 3 years from what I can see. That in itself might make using Help to Buy financially more viable if you can't secure a regular mortgage at a decent rate.

P.S. I'm not saying HTB is the way to go, but I would have somebody who is good at numbers go through all the options as the most obvious road isn't always the best one...

kingstreet

Fern0305 wrote: »

I have put a deposit down on a new build home and provided a decision in principle from nationwide which I completed online. I've been told that most banks require a minimum of 15% deposit for a new build - I only have 10%. Not once did Nationwide online decision in principle ask me if the home was 'New' so I assumed I was eligible.

I also have a save to buy account with Nationwide which I have been saving in for 6 months so I'm not sure if I qualify for 5% on new builds - Nationwide call center couldn't advise me on this and told me to make an appointment in branch.

Is there any 90%LTV mortgages for first time buyers and new builds? or does anyone know how the Nationwide Save to Buy works with new builds.

Thanks

A lender's decision in principle system is designed to work out that you are mortgage-worthy and the maximum amount you can borrow.

It cannot work out, nor take into account, all the possible variables in your property selection - short-lease, non-standard construction, newbuild, flying freehold, S106 agreement, above commercial, unadopted road, tower block, above sixth floor etc, so that is left to the criteria at full application.

You would obviously be advised to discuss your property's "issues" if you know of them, before you embark on a DIP.

There are one or two lenders who will lend on a newbuild house at 90%. Nationwide's maximum is 85% for a house, 75% for a flat, unless you are taking advantage of the NewBuy scheme, then you can borrow 95% on a house or a flat, subject to the builder offering NewBuy on that particular property.

Save To Buy provides access to higher loan to value funding, but it does not supercede Nationwide's policy on property/loan to value.