Developer Incentives over 5%

davisaj22

Hi
I could do with some help!
Firstly, I realise that 1) I can't apply for a mortgage with the LTV required right now and 2) We haven't got a crystal ball and we don't know whats going to happen in the next few months.

However, I unexpectedly accepted an offer on my house on Friday, which had been on the market since January, from a family who viewed it before lockdown.

It was the asking price after some negotiation.

We have offered on a new build. Clearly these are not selling and it didn't take much negotiation to agree a deposit contribution of 5% from them. In addition, they will pay the entire stamp duty. The house price is £515,000 and so their deposit plus stamp duty come to about 8% of its value. We have an additional deposit which in percentage terms will be about 12% in equity from our sale.

Today I have had a quick look at lenders myself (I realise we need a broker), but it seems that any contribution from the builder in excess of 5% is going to be a real problem in securing a mortgage. For example, YBS told me they would only accept one or the other - stamp duty or the 5%.

Any thoughts on this?

Appreciate your help!

Thrugelmir

Excess incentives will be viewed as simply inflating the selling price of the property. The further challenge you may face is the surveyors opinion when valuing the property for mortgage purposes. . 

kingstreet

Typically, a lender will take 5% as the builder cash incentive and the other 3% off the valuation so you will effectively get it as a reduction in the price, rather than as a cash incentive.