Halifax newbuild incentive limit?

conavar1903

Non cash incentives such as you are getting DO NOT count as cash incentives so you will be fine. You could even ask them to pay your stamp duty and as you are putting 10% down you would be fine.

truehand

If the purchase does not involve help to buy, with a 19% deposit, would Halifax accept the stamp duty contribution corresponding to more than 6% of the house price offered by the builder? Thank you.

Example: New build house price is £530K. Stamp duty is £32,400 (higher rate, as it's a second home) all of which is offered by developer. Would Halifax be OK with such an incentive if deposit is 19%? Is there an absolute maximum of 5% as some people claim?

kingstreet

truehand wrote: »

If the purchase does not involve help to buy, with a 19% deposit, would Halifax accept the stamp duty contribution corresponding to more than 6% of the house price offered by the builder? Thank you.

Example: New build house price is £530K. Stamp duty is £32,400 (higher rate, as it's a second home) all of which is offered by developer. Would Halifax be OK with such an incentive if deposit is 19%? Is there an absolute maximum of 5% as some people claim?

5% maximum.

truehand

I just called Halifax to learn more about this. After checking their internal documentation they told me it's possible in my case:

It depends both on the deposit you put in and the maximum you are allowed to borrow: "Total loan % + cash incentive % cannot be greater than YOUR MAXIMUM possible loan-to-value limit."

kingstreet

Good luck!

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.

You'll see anything over the 5% deducted from the valuation, just like a price reduction.

You spoken to the builder about this?

truehand

kingstreet wrote: »

Good luck!
You'll see anything over the 5% deducted from the valuation, just like a price reduction.
You spoken to the builder about this?
"Cash incentives in excess of this amount may result in a reduction in the maximum loan available."

The keyword is "may result", so it won't necessarily be applicable for all cases...

Thanks, yes the builder is aware, and my Financial Adviser / broker who had said it would not work initially has just told me it should work after doing some investigative work, so fingers crossed. I'll update you after getting the mortgage approved. It may help others, too.

kingstreet

Yes.

We do 400+ newbuild applications a year, many with Halifax.

It never occurred to any of us to even try to challenge the 5% limit.

truehand

Just to let you know, the mortgage was approved by Halifax, despite the incentive that is greater than 6.1% of the purchase price.

kingstreet

truehand wrote: »

Just to let you know, the mortgage was approved by Halifax, despite the incentive that is greater than 6.1% of the purchase price.

How did they deal with it? Did they reduce the purchase price/valuation by the excess?

truehand

They didn't reduce the purchase price. They noted and accepted the entire stamp duty as an incentive.