Likelihood of negotiating discount on a new build home??

Ljk900

Hi all,

My partner and I have just secured a decision in principal on a £175,000 mortgage. The only snag is they want an 8% deposit which is £14000 and a bit of a squeeze for us. We are wanting to buy a plot on a new development off-plan so just wondered if there's anyone who has managed to negotiate discount/deposit contributions on a new build home recently? Is it the done thing? The mortgage broker said that it's pretty rare for builders to contribute to the deposit, what do others think? Any feedback greatly appreciated.

anselld

Vendor gifted deposit is a non-starter. Discount is a possibility but it reduces the 175k, not the deposit directly.

Ljk900

What makes you say that a vendor gifted deposit is a non starter?

JennGa

Off plan is tricky. Will your mortgage offer still be valid when you are due to complete?

We are having stamp duty paid by the developer as we are FTB and can go as fast as it takes to get the paperwork done, the house is already finished carpets and all.

Ljk900

JennGa wrote: »

Off plan is tricky. Will your mortgage offer still be valid when you are due to complete?

We are having stamp duty paid by the developer as we are FTB and can go as fast as it takes to get the paperwork done, the house is already finished carpets and all.

Not sure, possibly not.

Which vendor is that if you don't mind sharing? We are also FTB so hopefully there's something they can do. Does the stamp duty being paid affect what the lender will offer you?

JennGa

Some lenders stipulate what they will accept as incentives, and it can vary depending on which product you are applying for.

ethank

Have you told the lender it is a newbuild. If buying a newbuild most lenders will not lend more than 85% LTV, and for the majority of those you cannot get a builder gifted deposit of more than 5% - if you want that and Stamp Duty paid as well, there are not many who will lend - one who will is Nationwide - and they want 85% LTV or below.

anselld

anselld wrote: »

Vendor gifted deposit is a non-starter. Discount is a possibility but it reduces the 175k, not the deposit directly.

because most lenders don't allow it and those who do see it for what it is, eg the Nationwide example above - 85% LTV with a 5% gifted deposit is effectively 90% LTV.

Ljk900

Yes the lender knows it's a new build as we have gone through the house builder's broker. As the mortgage is under the help to buy scheme they are offering us 92% LTV as our credit scores are not as good as they could be. We're hoping that when the time comes to complete the sale that we will have sufficiently improved our credit eating for hem to offer us the 95% that we want. Seems unlikely that there is going to be much room for negotiation with the builders but No harm in trying!

Thanks for your input everyone.

kingstreet

Are you sure this is Help To Buy?

At this time, Help To Buy - Mortgage Guarantee is not available on newbuilds and Help To Buy - Equity Loan would mean you had 20% deposit from the loan, plus your deposit.

Do you mean NewBuy, or if in Scotland MI NewHome?

FWIW builder's deposit of 5% is still pretty "normal" if you can get the builder to give you a 5% incentive.

Ljk900

kingstreet wrote: »

Are you sure this is Help To Buy?

At this time, Help To Buy - Mortgage Guarantee is not available on newbuilds and Help To Buy - Equity Loan would mean you had 20% deposit from the loan, plus your deposit.

Do you mean NewBuy, or if in Scotland MI NewHome?

FWIW builder's deposit of 5% is still pretty "normal" if you can get the builder to give you a 5% incentive.

Sorry I'm getting confused, it is help to buy so we would actually have 72% LTV, forgot about the government loan part. They still want an 8% contribution from us though. Off to see what we can haggle with the builder now... Wish me luck!