Help to Buy and Builders Deposit Contribution

daz_79

Hi, does anyone who if you can use a builders deposit with the Help to Buy equity loan scheme? I have emailed them direct but won’t hear back until they open and reply after the weekend.

I know you can’t use it with part exchange so we are currently using assisted move but our property isn’t budging. The developer said they will contribute towards our deposit if it helps. The only way I can think of doing it as our current property sale price will give us the 5% deposit we need once our mortgage is repaid is to further reduce our asking price to achieve a quicker sale and for the developer to make up this amount with a deposit contribution. That way we will still have the 5% deposit required. Another option would be for the developer to cover legal and/or stamp duty which we have money saved for and we can then in turn cover the shortfall when reducing our asking price. I hope this makes sense and thanks in advance for any help.

kingstreet

You can have a builder deposit contribution on HTB as long as it is in addition to your minimum 5%. Ensure your lender is happy with it, as some aren't.

As an example, if you are putting down only 5% deposit, Halifax will accept only 1% builder cash incentives.

Some will allow SDLT, legal fees etc but not builder deposit, nor builder cashback.

daz_79

Thanks kingstreet. I’ve done a bit more research and if I’ve interpreted it right, as long as I put in the 13k or 5% deposit the builders incentives (both cash and non cash) cannot exceed 5% of the purchase price (assuming it is valued for mortgage purposes at the same price). Therefore if my property equity pot (pot a) of money currently at 13k based on current price on market is reduced I could ask the builder to pay some fees which were due to come out of pot ‘b’ or my extras pot. This way I can reduce my house price to sell quicker and take the deficit from pot ‘b’ so I still have the 13k deposit. The builder would then pay stamp duty for example to make up what was taken from pot ‘b’. I have a DIP from Nationwide and their lending guide seems to allow this, again if I’ve read it right. Hope I haven’t confused you. Think I’ve confused myself lol.