Help to Buy New Build and Options

richc87

Hi there,

Heres my situation. Firstly I want to know if I can put the cost of options, like flooring, white goods etc. onto a help to buy mortgage?

I work for a major housebuilder and am looking to buy one of our houses. I get a decent discount. The details as follows
List price: 180k
After employee discount: 167k

My options i chose (flooring, white goods) come to 11k

So I want a mortgage for 178k. Which is less than the original list price. Is it possible to do this on help to buy?

Or is it that they have to be 'creative' on what how they present it for CML and all that, does anyone have any clues if I can do this?

I am buying from another region in my company and they are trying to fight me on it, if I can get some further understanding on the subject, which ever way, I can know how to play it

kingstreet

Most lenders ignore non-cash incentives, so your flooring and white goods won't be an issue.

Provided the discount is a real discount and the contract price is £167,000 you will get a mortgage based on that, less your deposit and equity loan. Assuming 20% and 5% that means you will need a mortgage of £125,250.

You aren't getting a mortgage of £178,000.

Thrugelmir

richc87 wrote: »

Or is it that they have to be 'creative' on what how they present it for CML and all that, does anyone have any clues if I can do this?

No reputable company will wish to blatantly infringe the rules. Not worth the bother with the risk of being disbarred from a lucrative income stream.

richc87

Thanks for the replies.

So if i understand correctly there is no way that i can avoid having to pay out 11k in cash for options?

The ideal for me is to just put them onto the mortgage.

Mortgage_Mark_2

No you will not be able to get a mortgage to cover that £11k. Most lenders will take builders incentive up to c.5% of contract value, which is what stamp duty is paid on remember.

richc87

Ok cool. Cheers.

So i could say put up to 8k as a maximum on the mortgage and pay for the rest?

I find this confusing as nationwide (who we are getting the mortgage through) state:
Builder Incentives
Builder cash backs/deposits and other financial incentives such a payment towards legal fees, stamp duty or mortgage subsidies will not be permitted in conjunction with a NewBuy application.

The following Non financial incentives are acceptable:
White goods (where not included as standard specification)
Floor coverings
Integrated lighting (down lighters)
Kitchen upgrade, including tiling and worktops
Bathroom upgrade
All electric upgrade – i.e. additional sockets, TV points, etc.
Turfing/landscaping

Mortgage_Mark_2

Not really, by doing that you're effectively using your deposit or discount. The mortgage company will only lend against the value placed on the property by a surveyor, which won't include things like white goods.

richc87

Right. I know that the exact same house, which is attached to the one i am looking to buy was sold for 180k just a few weeks ago. If the issue comes down to valuation then our house will be valued at or near to 180k

Mortgage_Mark_2

If you're paying £180k then yes probably, it's extremely rare that a valuer places a higher value on the property than the sale price, but the mortgage company are concerned with the lesser of the two figures so it would make no difference to you.

richc87

Thanks for the all the advice it is much appreciated. Trying to understand it all before i start saying what i want.

The sale price would be 175k (including 8k of non cash incentives).
In my mind if the exact same property next door was valued at 180k then we should be ok?

kingstreet

richc87 wrote: »

Ok cool. Cheers.

So i could say put up to 8k as a maximum on the mortgage and pay for the rest?

I find this confusing as nationwide (who we are getting the mortgage through) state:
Builder Incentives
Builder cash backs/deposits and other financial incentives such a payment towards legal fees, stamp duty or mortgage subsidies will not be permitted in conjunction with a NewBuy application.

The following Non financial incentives are acceptable:
White goods (where not included as standard specification)
Floor coverings
Integrated lighting (down lighters)
Kitchen upgrade, including tiling and worktops
Bathroom upgrade
All electric upgrade – i.e. additional sockets, TV points, etc.
Turfing/landscaping

Are you using NewBuy or Help To Buy - Equity Loan?

NewBuy permits no cash incentives.