Mortgage lenders only allow up to 5% cash incentives for new builds - is this true?

Blank11

Hi, I was browsing online and I read a post and comment that mortgage lenders only allow up to 5% cash incentives for new builds. I am a bit shocked because I always hear and read stories of people getting deposit contribution, legal fees and stamp duty paid which equate to over 5% of the house price. 

Is it all lenders or certain that has a maximum percentage?

housebuyer143

Yes, most mortgage lenders restrict it to 5%. Legal fees and stamp duty etc don't count toward this 5% though.

Blank11

housebuyer143 said:

Yes, most mortgage lenders restrict it to 5%. Legal fees and stamp duty etc don't count toward this 5% though.

Okay I thought it included legal fees and stamp duty. Would this 5% financial incentive be only for deposit and mortgage contribution? 

kingstreet

All cash incentives count towards the 5% limit. Halifax criteria;-

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. The loan amount plus any incentives plus any product fee being added cannot exceed 95%.

Non-cash items such as carpets and white goods don't.

Blank11

kingstreet said:

All cash incentives count towards the 5% limit. Halifax criteria;-

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. The loan amount plus any incentives plus any product fee being added cannot exceed 95%.

Non-cash items such as carpets and white goods don't.

I wonder if different mortgage providers will have different criteria’s to what they include. 

dimbo61

If a buyer offers a 10% cash incentive  then the property is overpriced in the Lenders viewpoint.
So if you can get a 5% incentive  and stamp duty paid, help with legal costs, carpets, flooring, garden and fencing that all helps 

kingstreet

Blank11 said:

kingstreet said:

All cash incentives count towards the 5% limit. Halifax criteria;-

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. The loan amount plus any incentives plus any product fee being added cannot exceed 95%.

Non-cash items such as carpets and white goods don't.

I wonder if different mortgage providers will have different criteria’s to what they include. 

There's not a great variance.

Nkay19

kingstreet said:

All cash incentives count towards the 5% limit. Halifax criteria;-

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. The loan amount plus any incentives plus any product fee being added cannot exceed 95%.

Non-cash items such as carpets and white goods don't.

Hi, I'm applied mortgage with Halifax, we are putting in 5% deposit, the builder giving us 3% of house price for stamp duty. does Halifax reduce that 3% from the total mortgage LTV? which mean do we need to pay 8% deposit, so the total value of LTV doesn't exceed 95%?