Mortgage on a newbuild

mrmarcus

Hi all,

After some advice. We are buying a new build property and have been strongly advised by the builder to use there IFA which is a company specializing in new builds.
The house is 220000 and we have 10% deposit from the sale of the current home which we are part ex-ing and an offset account.
The builder are paying the stamp duty as part of the deal. I have 4 weeks from last Saturday to exchange contracts.
I already have my own IFA in place who I trust.

The builder recommended IFA have stated that I cannot get 10% LTV with any of there mortgage offers as the gifted stamp duty is taken into account meaning that I need to put 11% down instead of 10%. Apparently they have a panel of 30 lenders to choose from. They want to call the builder to get my stamp duty paid offer to be changed to a gifted deposit.

My current IFA has said the opposite and that a gifted deposit affects your LTV and the stamp duty paid does not and this to me sounds much more plausible.

Has anyone else come up against similar problems when buying a newbuild.

Kind Regards
M

kingstreet

There are only a handful of lenders who will lend 90% on a newbuild. None of them like builder cash incentives at that LTV.

If you proceed on this basis, the incentive will be deducted from the valuation and you will have to increase your deposit by the equivalent amount to enable the purchase at the agreed price to proceed.

TBH it doesn't matter whether it's stamp duty or a deposit contribution, it all goes down as a cash incentive on the CML Form which is given to the surveyor.

Here's the Halifax criteria note for 90% newbuild, which is only available if your builder is on the approved list, but for information;-

Customer must provide a minimum of 10% deposit in addition to any builder incentive

The loan and any builder financial incentive must not exceed 90% of the lower of purchase price
or valuation

As we don't know which lender either of the brokers you have spoken to are planning to use, it's impossible to give you a definitive answer.