Carpets and cash incentives.

Compromisee

Hi guys,


Just need some help on this one because I've been speaking to someone from Halifax and I just don't think the information he's told me sounds right.


So we went to see a new build today and we were looking at 2 houses overall with 2 different builders. We preferred one house but decided one on based on the fact that they offered to fit carpets everywhere for us.



When putting the application through, Halifax have told us that the carpets count as a cash incentive and because of difference it will make to the LTV we need to either put £2k more in as a deposit or reject the offer.


This can't be right!? it's not exactly a cash incentive. They charge you £2k to put the carpets in but it doesn't cost them £2k like it would if they were to knock that off the price of the property.


Apparently as well I can't ask them to reduce the value of the house by £2k and fit carpets because that would count as a £4k cash incentive. It all sounds a bit rediculous, is this guy right or just a bit of a plum?

ACG

We do not do many new builds but from memory I think if the incentives are more than a certain amount of the purchase price (possibly 10%?) then it can cause a problem.

There is a broker on here who is FARRRR more experienced in new builds than any other broker I know, hopefully he will be along soon enough to give you a proper answer.

amnblog

Halifax are comfortable with cash incentives like this as long as they total no more than 5% of the purchase price or valuation.

Your Halifax contact needs further training.

Compromisee

amnblog wrote: »

Halifax are comfortable with cash incentives like this as long as they total no more than 5% of the purchase price or valuation.

Your Halifax contact needs further training.

What they were saying as because it was help to buy then we don't get the full 5% it was 1% which is about £1,500. Is that right?

amnblog

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.