Refurbished = New Build when applying for a mortgage?

therage1988

My partner and I were right in the middle of trying to purchase a property when all this mess kicked off. We had an offer accepted, instructed mortgage advisers, solicitors, and put a mortgage application into Natwest. The mortgage advisers (L&C) and NatWest both have portals where you can track your application. It was on L&C's portal I stumbled upon the Mortgage Valuation. The value was under our agreed purchase price and we dug around a bit to see why. There was a box asking if it has been refurbished in the last 2 years and was ticked no. We knew work has been done to the property, such as a new kitchen, bathroom, converting from a 2 to 3 bed amongst other things. We queried this with the mortgage provider by email (no phone calls due to coronavirus and working from home) and didn't receive a callback. So we managed to call them today only to be told the email we sent had been replied to but sent to the mortgage adviser instead of us (annoying, I know, especially as it was replied to last week and we heard nothing from the adviser) the crux of the response was that due to the refurbishment I informed them of, the mortgage we had applied for was incorrect (95% first-time buyer) because the house would be classed as a "new build" and therefore they would only offer an 85% mortgage. This is because of the "New Build" status they would expect us to apply through the help to buy scheme, which we can't because the house isn't a new build?

We are really stuck now and have lost all confidence in L&C as we have had to find the valuation ourselves, query the valuation, and haven't really had the support we were expecting. Has anyone else experienced this "new build" status on an older building? What can we do now?

Also, we are really upset that the application got this far and have had the relevant hard credit searches on our credit files which are now pointless as that product did not suit our needs.

Please help  

Comms69

Help with what?

therage1988

Comms69 said:

Help with what?

Is this a normal thing? Has anyone experienced this before and can we actually get a mortgage for this house or are we going to be forced into either buying a new build or have to scrape a higher deposit if we want this house?

davidmcn

It's not something I would term "new build". NatWest may have its own definition for these purposes. The CML Handbook (in the section about incentives) refers to "any property that is yet to be occupied for the first time, or for the first time in its current form, for example, because of a renovation or conversion" which arguably could include this, though I would usually think it means more significant work e.g. a former commercial property which has been subdivided into flats.

Comms69

therage1988 said:

Comms69 said:

Help with what?

Is this a normal thing? Has anyone experienced this before and can we actually get a mortgage for this house or are we going to be forced into either buying a new build or have to scrape a higher deposit if we want this house?

I wouldnt say it's 'normal'. This lender has set this criteria, so you wont buy it with a Natwest loan.

You need to go to a broker really.

AdrianC

New builds have lower max LtVs because the sale price includes a premium for the shinyness, so there's going to be a greater likelihood of a hit on post-repo resale. They think this premium applies to your refurbished place, too.

therage1988

Thanks, everyone, has since come about that NatWest knew about the refurbished status and continued with our (incorrect) application anyway. According to our adviser, we now have grounds for a complaint as they have continued and added a hard search to our credit reports unnecessarily. This is turning out to be way more complicated than just the New Build status.

Thanks for all your comments, seems we have no choice but to look elsewhere unless the mortgage broker can convince Natwest otherwise

kingstreet

It is normal for refurbished property to be treated as newbuild by some lenders.
Halifax criteria, for example;-
"An initial occupancy/new build property is classed as any property being occupied and/or sold for the first time on the open market in its current state and includes converted and refurbished properties. These will fall into one of the following categories:
Refurbished property i.e. refurbishment of an existing residential property, typically a re-furbished property will be considered as initial occupancy where the vendor is a builder/developer and the property has been vacated to allow for the refurbishment to be undertaken."
It is not obvious from your post if this is the case, or not.
Did you make your broker aware of this prior to the application being submitted?
There are lenders who don't impose this rule and your broker should now be working on one of them for a new application, when possible. NatWest broker agreements in principle use hard searches, so these were done right at the outset before this became an issue so there is little point worrying about it. A couple of searches shouldn't be the end of the world.

therage1988

kingstreet said:

It is normal for refurbished property to be treated as newbuild by some lenders.
Halifax criteria, for example;-
"An initial occupancy/new build property is classed as any property being occupied and/or sold for the first time on the open market in its current state and includes converted and refurbished properties. These will fall into one of the following categories:
Refurbished property i.e. refurbishment of an existing residential property, typically a re-furbished property will be considered as initial occupancy where the vendor is a builder/developer and the property has been vacated to allow for the refurbishment to be undertaken."
It is not obvious from your post if this is the case, or not.
Did you make your broker aware of this prior to the application being submitted?
There are lenders who don't impose this rule and your broker should now be working on one of them for a new application, when possible. NatWest broker agreements in principle use hard searches, so these were done right at the outset before this became an issue so there is little point worrying about it. A couple of searches shouldn't be the end of the world.

I think that your description of the refurbished property does meet out circumstance, the current vendor does not live in the property, he bought it to "do up" and sell on.
We did make the broker aware and this was also passed on to the NatWest from the outset, the broker has confirmed this and has since gone back to NatWest querying why the application went ahead when this information was provided. We applied for a 95% mortgage, this refurbished/ new build status means NatWest won't offer a mortgage at 95% LTV.

kingstreet

Do you have a copy of the application? If not, ask for one. If you do, see page 6. I suspect NatWest wasn't aware this should be classed as refurbed/newbuild if the box "Has your property been significantly refurbished?" wasn't ticked.

therage1988

kingstreet said:

Do you have a copy of the application? If not, ask for one. If you do, see page 6. I suspect NatWest wasn't aware this should be classed as refurbed/newbuild if the box "Has your property been significantly refurbished?" wasn't ticked.

Thanks for this, we'll get on to this and see if the form was completed correctly by the broker. Fingers crossed they can come up with something else