Mortgage delayed because of incentives from builder

vikashkumar23

Hi,
We have been offered some incentives from our builder for our new home. The incentives is a cash type which they said we can use it for solicitor fee.
But our mortgage lenders are not accepting that cash incentives and they wish to reject giving mortgage to us.
Have any one experienced simillar issue ? Why the lender not happy about us getting incentive from builder ? Whats their problem ?

mortgagetakingages

vikashkumar23 said:

Hi,
We have been offered some incentives from our builder for our new home. The incentives is a cash type which they said we can use it for solicitor fee.
But our mortgage lenders are not accepting that cash incentives and they wish to reject giving mortgage to us.
Have any one experienced simillar issue ? Why the lender not happy about us getting incentive from builder ? Whats their problem ?

What's the % of the incentive against overall price?

vikashkumar23

We are getting 3.5K for easy move, upgraded kitchen, flooring, and tiles in second bathroom. The person who did valuation said they can't accept the 3.5K ? I dont understand why they can't what's their problem if builder offer 3.5k for easy move ?

mortgagetakingages

vikashkumar23 said:

We are getting 3.5K for easy move, upgraded kitchen, flooring, and tiles in second bathroom. The person who did valuation said they can't accept the 3.5K ? I dont understand why they can't what's their problem if builder offer 3.5k for easy move ?

Still don't know the % of that against risk purchase

vikashkumar23

property total value is 350K. I can say 5K incentive. So 1.5% approx

mortgagetakingages

OK so that is OK from the help to buy requirements but your mortgage provider may not allow that amount.  The valuer shouldn't make this decision though. They should just tell the mortgage provider.

vikashkumar23

We are going with 20% help to buy, That 3.5K is "contribution towards the moving cost" which is mentioned in the reservation agreement. So our loan is 250k as we are putting some deposit as well. 
Today from the loan lender they sent a valuator to  our new property and our builder called us and mentioned that the valuator told them the loan lender will not accept this 3.5k contribution. 
My question is why the loan lender will not accept that money which builder are giving us. ? More over we dont get it in any form of a cash. We sold a property so the builder will pay the estate agent fee and solicitor fee which is 3.5k from the contribution towards the moving cost. That's it. 
What's wrong in it? also builder mentioned that it is a scheme in a document which we submitted while applying for loan. When loan provider can't accept that contribution then why did they sent some one for valuation ?

Thrugelmir

Who are you applying to for a mortgage? 
Lender is risking the money. They set the terms. Incentives simply inflate the selling price. 

vikashkumar23

Mortgage with santander. But 25% of deposit is paid. 20% help to buy, 5% by us.

PSJ2020

We are also getting some incentives, but as a contribution (2%) towards the upgrades. We are also getting £1k towards the solicitor fee. We didn't have any mortgage problem with the incentives. Got a different issue
PSJ 

mortgagetakingages

vikashkumar23 said:

We are going with 20% help to buy, That 3.5K is "contribution towards the moving cost" which is mentioned in the reservation agreement. So our loan is 250k as we are putting some deposit as well. 
Today from the loan lender they sent a valuator to  our new property and our builder called us and mentioned that the valuator told them the loan lender will not accept this 3.5k contribution. 
My question is why the loan lender will not accept that money which builder are giving us. ? More over we dont get it in any form of a cash. We sold a property so the builder will pay the estate agent fee and solicitor fee which is 3.5k from the contribution towards the moving cost. That's it. 
What's wrong in it? also builder mentioned that it is a scheme in a document which we submitted while applying for loan. When loan provider can't accept that contribution then why did they sent some one for valuation ?

It is not a question of what is wrong with it. Some lenders see it as you are using the mortgage to over pay and then get the cash to pay fees meaning the property value is actually 3.5k less. 

Many lenders accept 5% to align with Help to Buy but it sounds like the surveyor doesn't think your lender will agree to that amount. Best thing is to speak to your lender.