5% deposit + 5% gifted deposit = not allowed?!

lucyw88

Hi there,
Me and my husband went to look around a new build development the other week and liked the look of one house. One reason we looked is for part ex; our current property isn't getting much interest and there are now 5 other identical properties on the market not getting interest either. We do like the new build homes a lot (those who will comment on quality; our current property was a new build and we had no problems at all. Husband is good at snagging and not being pushed!).

Anyhow back to the point. We began speaking numbers etc with the developer and they forced us to ring some new build mortgage broker there and then (we have a broker who they said probably wouldn't know about new builds) firstly why would they do this? Secondly they said we needed a 10% deposit not 5% and here's the main question I'm going to ask; she said we can't have a 5% gifted deposit if we lay 5% cos it's impossible. Is this true? I've never heard this but I'm not au fait with the mortgage market.

We really became suspicious because we wanted a specific plot and she kept saying there was a lot of interest on the plot. She wanted us to have a different plot and we said no and that's when she said the 5%+5 gifted was impossible. She said she would see if there's "something she could do" and would call back. No surprises; she hasn't.

Any help would be appreciated

kingstreet

When you say 5% gifted deposit, who is providing the gift?

There are very few lenders offering 90% on newbuilds and I've just checked one and it states "customer must provide 10% deposit in addition to any builder incentives" so the answer to the above question is vital.

Builders want you to speak to a newbuild specialist because we understand which lenders will do what, and which won't. We often end up sorting out problems weeks down the line with buyers who have gone direct or used non-specialist brokers when a problem is uncovered which we would have known about and avoided in the first place. One of the most common ones is duration of mortgage offers. One lender which does offer 90% on a newbuild house only issues an offer for three months. Not much help if the build end-date is eight months away...

lucyw88

It would be from the builder. They have said that we could do 5% deposit mortgage (as our broker had said) but said we could borrow around 20k less than our broker has told us, even though my salary has gone up since! Our friends just under two years back got 5% with 5 gifted from the same builder but on a development the other side of town.

kingstreet

So, the plan was to use Help To Buy - Mortgage Guarantee at 95%, but now that would become a 90% mortgage with 5% builder's deposit and 5% from you?

Two years ago we weren't working in a post-MMR world, so I'd take what your friends did back then as happening in a different world.

It is the builder's choice to offer a 5% deposit (or any incentives at all TBH) and a lender's whether (or not) it accepts that as part of your deposit, or simply treats it as a price reduction as many will do who don't accept any incentives.

FWIW the builders we deal with aren't having to offer any kind of discounts or incentives as they have buyers queueing down the road and they are in a proceedable position without a property to sell.

lucyw88

The original plan was part ex and 5% deposit. We were originally told by our broker we could lend up to 300k on 5%. We got an agreement in principal for close to the amount we need with the house with just 5% (I recognise new build mortgages are different). When mortgage advisor said you need 10% the builder kept umming and ahhhing if they could give us 5% to make up the 10. When we said what plot we wanted she said no.
In around 6 months they've sold 3/8 of these houses and in around a years time they will have 11 more. So there's still plenty of them left. We have written off her calling back and offering us a solution so will either save the extra 5% and extra for next years new phase or just drastically drop the price on current property and by a lived in house (we will lose out there)