Do Halifax accept developer deposit contribution?

SeagullFTB

Hi,

I currently have a mortgage with Halifax, but Im looking to upsize to a house. My household income is c£74k. From my research, Halifax typically allow 4.5x (£333k) but increase this to 5x (£370k) if it's 85%LTV or lower. 

The new build house I've looking at is £420k and I have roughly £40k deposit. This leaves me a little short, but the developer will contribute £21k (5%). So I have two questions:

1. Will Halifax accept the developer contribution?

2. Do they consider as part of the deposit in their calculations? So if I had £42k myself, they'd calculate it on a deposit of £63k (15%) and therefore increase the lending calculation to 5x income. 

amnblog

The deposit limit is separate from the affordability calculation.

With Halifax, on a new build house, your mortgage plus the value of any builder's incentive (including deposit) cannot exceed £378,000 on a £420,000 purchase.

You should speak to a broker or the lender but it appears from what you have said here you are likely to be close on deposit, but short on overall affordability.

SeagullFTB

amnblog said:

You should speak to a broker or the lender but it appears from what you have said here you are likely to be close on deposit, but short on overall affordability.

Thank you.

Could I ask why I'd be short on overall affordability? When I use the Halifac calculator online, it says:

"We could lend you up to £333,000", when I put in a £420k house with £42k deposit.

When I increase the deposit to £63k (15% including developet contribution), it revises to say "We could lend you up to £370,000". This would obviously then be enough.

It seems to increase the lending limit from 4.5x to 5x, because the LTV drops to 85%. But I don't know how accurate these calculators are, especially when part of the deposit is from the vendor.

amnblog

I have not seen the full figures so you could be correct speak to a broker or the lender