Builder Gifted Deposit on Help to Buy..........

Izzy2011

Hello

We are looking at a new build house (already built and sitting empty). It is the last one on the street and developers ( redrow ) are keen to do a deal and have offered a gifted deposit of up to 5%. As the house is already build it has flooring etc so we will not be asking for any incentives on top of this.

Halifax who we have a DIP with accept builder gifted deposits of up to 5% with the help to buy scheme which us what we are using. My question is do we still have to contribute to the deposit ourselves also even though we have got the minimum needed from the developer (5%)?

Thanks in advance

kingstreet

Izzy2011 wrote: »

Halifax who we have a DIP with accept builder gifted deposits of up to 5% with the help to buy scheme

I suggest you check this carefully, as this is not my understanding. Cash incentives (this is one) are limited to 1% on shared equity as the mortgage and incentive cannot exceed 95% of the 80% share on HTB.

This would best be treated as a price reduction, although the builder may not like that if it still has property to sell on the site.

In addition, to use the HTB - Equity Loan scheme you must put down 5% personal deposit form your own resources. Check with your local HTB Agent.

Izzy2011

Ok thanks, Halifax have confirmed they will accept up to a 5% gifted deposit, even using the Help to Buy. However I will look at negotiating with the builder as it may be more beneficial to get a price reduction as you say. If I still have to put 5% down myself then the funds could probably be used in a better way.

Thanks for your advice and I will speak with the HTB agent also.

kingstreet

Halifax criteria;-

Shared equity (including Help To Buy)

Lets your clients buy a home by sharing the equity with a third party.

Halifax must have first charge. The seller secures their interest by way of a second charge.

We will consider lending up to 95% of the value of the share that is being purchased.

The maximum equity share a builder or private company can retain is 25%.

Client must pay a 5% personal deposit towards the purchase of the share (excluding any deposit provided by a builder or housing association).

The mortgage must be on a repayment basis. (A request to transfer to a full/part interest only basis as a means of reducing outgoings for customers in financial difficulties may be considered.)

We do not allow any remortgage applications, where there is any element of debt consolidation.

The term of the mortgage must be shorter than or equal to the equity loan term.

and

Builder cash incentives include but are not limited to deposit contributions, cash-backs, contribution to legal fees/stamp duty, mortgage subsidies.

Builder cash incentives will typically be acceptable provided the value of these does not exceed 5% of the lower of purchase price/valuation. Cash incentives in excess of this amount may result in a reduction in the maximum loan available. All builder cash incentives must be declared at the point of sale.

Cash incentives for shared equity applications are acceptable provided the total value of the loan plus incentive together does not exceed 95% of the value of the equity share being purchased.

You may wish to check the source of your information as you may find things are rather different when someone tries to key the application.