Help! Face losing 20K deposit.

AndrewSmith

Bridging finance is not the way to go in your situation. You would only be able to borrow up to 75% of the current re-sale value of the property. With new build properties you will find that bridge finance companies will insist on not only a current valuation but also will get a 'second hand' valuation to establish it's re-sale value. It is this figure that they will base their lending decision on.

It would appear that buy to let may the the best way for you to approach this but it really depends what your overall intention for the property is. As Sarkin correctly points out you have to also bear in mind that many lenders are now only offering up to 75% for new build properties to protect themselves against developers over-inflating the cost of new homes in a somewhat declining market.

Let us know how you get on.

Andrew

dunstonh

New Build and apartments are the two things that lenders dont currently like. Traditionally they are the things which suffer the most in a property price decline. New build apartments are a double whammy due to oversupply in many areas and builders over inflating the purchase price. Lenders have been dropping the maximum loan to valuation significantly (75% not uncommon) so you really need to get to a broker to look at this.

silvercar

You could try asking the builders of your new place if they would take the old place in part exchange. Unlikely at this late stage but worth a try.

daverave7

jill2002 wrote: »

If you have to keep your existing property, you may need to raise some extra funds to use as a deposit on the new build flat. If you are taking your new mortgage with Abbey, the maximum LTV on this type of property is now 75%.

That would mean we would have to find an extra 10K! We are hoping to do this by applying for an Equity Release Loan on our existing property. Not sure if our current lenders will agree to this.

daverave7

sarkin wrote: »

This is going to be a tough one lots of lenders looking for 25% deposit on all property built within the last 12 months.

Have you spoken to a broker yet

No we haven't seen a broker yet. I'm new to this so can you recommend how we go about finding a reputable broker?

Conrad

There are a few pitfalls to be mindfull of. Number one is the fact many lenders wont lend on newbuilds.
2 - a down valuation is fairly likely on the new build.

3 - if you arrange a buy to let on the existing property, the B2L lender will want the rent to be higher than the new mortgage payment

4 - the new lender for the residential new build property may well also have thier won B2L affordability rules where they use specific calculations to determine whether the B2L mortgage is self funding or not. Some lenders though have no interest in the B2L loan so they can be handy lenders to use but your income will need to fit thier multiples.


This is a big job. I wouldnt take on such a body of work without an up front fee as there are so many pitfalls. By all means try a fee free broker but have in your mind if you were them and there was only a chace you would get paid from commision, how much time and effort would you dedicate?

AndrewSmith

Conrad wrote: »

This is a big job. I wouldnt take on such a body of work without an up front fee as there are so many pitfalls. By all means try a fee free broker but have in your mind if you were them and there was only a chace you would get paid from commision, how much time and effort would you dedicate?

I have to say I agree with you Conrad.

Dan_Collins_2

If you get a good fee free broker you should be ok. However I have to say that in this market I may have even charged a fee!

Commonsensesearcher

I'd go through that contract with the flat builder/developer with a fine toothcomb and look for a way out. There is a reason why lenders are not keen on lending on new build apartments and that is because the value is heading downwards. You might just find that even if you lose £20k on this it'll be a lot less than what you may lose further down the line...

daverave7

Commonsensesearcher wrote: »

I'd go through that contract with the flat builder/developer with a fine toothcomb and look for a way out. There is a reason why lenders are not keen on lending on new build apartments and that is because the value is heading downwards. You might just find that even if you lose £20k on this it'll be a lot less than what you may lose further down the line...

The same apartments (same spec, and site and same off plan cost of 200K) have been re-sold for £225 K recently. That's a 25K increase in 2 years. So based on that value, If I pull out I would lose 45K. I think that would be foolish. Even if the value does drop, I don't think it will drop more than 45K... but I'm sure others may disagree!