Mortgage offer reduced because of incentive

tinkerbell1985

Hello all, just after some advice please.

Has anyone come across a lender reducing their mortgage offer because of an incentive by the developer?

In this instance, I had a sale agreed with a newbuild developer who offered stamp duty paid. This was all declared on the CML form to the lender and the surveyor valued at the purchase price, stating he had taken into account the stamp duty incentive. Now the lender is saying they will lend me less than I need to buy the property, therefore I need to find another few thousand pounds!

I have come across this before where the property has been down valued because of the incentive and therefore the lender had lowered their offer accordingly, but I've not heard of this scenario where the surveyor is saying it's worth what I'm paying for it, yet the lender is still not prepared to lend the full mortgage amount needed.

My broker is trying to reason with the lender (Halifax), but he's not holding out much hope in them changing their minds. Has anyone (in in particular any other brokers/IFAs, come across this before and overcome it? If so, how?

Any help would be appreciated!

Many thanks,

Tinkerbell1985

Thrugelmir

Lenders are increasingly strict when it comes to incentives. Lender aren't bound by the valuation when it comes t the offer they make you.

tinkerbell1985

I may be being naive, but I don't understand the difference it makes to them (not if it's not been down valued). What's the difference here between the developer paying the stamp duty and (for example) my parents?

PeacefulWaters

If the developer is giving you money for nothing it means the property can't be worth what you're paying for it.

Thrugelmir

Developer is giving you your own money back.

Parents will be out of pocket.

tinkerbell1985

PeacefulWaters wrote: »

If the developer is giving you money for nothing it means the property can't be worth what you're paying for it.

I fought tooth and nail for the stamp duty, the developer had a buyer previously secured who fell out of bed at the last minute due to his personal circumstances. Because of this and the fact the developer wants to get off the site now, we managed to secure the stamp duty paid, but this was not easy.

Anyhow, it's been valued by the lender's surveyor (taking into account the stamp duty) at the purchase price - he hasn't down valued it, which he could have done, thus confirming the purchase price is the correct open market value. The surveyor has to use comparable evidence to support his valuation.

tinkerbell1985

Thrugelmir wrote: »

Developer is giving you your own money back.

Parents will be out of pocket.

But how is it affecting the lender? They're at no more risk in either scenario

ethank

If Halifax won't accept this. Try Nationwide.

Thrugelmir

Nothing to do with risk per se. Just commercial judgement. Lenders have rules, simple as.

JennGa

tinkerbell1985 wrote: »

I fought tooth and nail for the stamp duty, the developer had a buyer previously secured who fell out of bed at the last minute due to his personal circumstances. Because of this and the fact the developer wants to get off the site now, we managed to secure the stamp duty paid, but this was not easy.

Anyhow, it's been valued by the lender's surveyor (taking into account the stamp duty) at the purchase price - he hasn't down valued it, which he could have done, thus confirming the purchase price is the correct open market value. The surveyor has to use comparable evidence to support his valuation.

So why did you have to "fight tooth and nail"?

kingstreet

Is this a shared equity case?

If so. Halifax limits incentives to 1% of the purchase price, or using its rather clunky formula, the mortgage plus incentives cannot exceed 95% of the share being purchased.

If using HTB - Equity loan, 95% of 80% leaves you 1% of incentives if you are borrowing 75%.