1st time buyers

wellingtonboot_2

Hi my daughter needs a bit of advice they are 1st time buyers and the builder has offered them 75% & 25% plus 5% deposit the 25% is interest free paid over 10 yrs or if you sell paid at the current value. Is this a good scheme or not any info will be most appreciated.
thanks

UK007BullDog

Seems to me that the property is overvalued and the developer is trying to find any way to bamboozle people with rebates, reductions, loans.

It might be good but we would need a bit more info.

Will she be living there for the next 10 years? No plans ever to move? get married, have kids, career.......

wellingtonboot_2

UK007BullDog wrote: »

Seems to me that the property is overvalued and the developer is trying to find any way to bamboozle people with rebates, reductions, loans.

It might be good but we would need a bit more info.

Will she be living there for the next 10 years? No plans ever to move? get married, have kids, career.......

Thankyou for your reply
I cant imagine her being there for 10yrs but certainly 3-5 yrs no plans to have children yet, albeit the apartment is only 1 bed. they both are still only 19&20. there is another builder that has offered a 10% deposit, stamp duty paid and legal fees paid, but they have said the 10% will be paid on completion. will that be a problem & will they be able to get a 90% mortgage with the builder supplying the 10% deposit.
Thanks

UK007BullDog

What are their incomes?
They are literally asking the bank to bankroll the whole thing, most ftb'ers need 25% deposit. They are so young have they got a good credit record?

I cannot see them getting a mortgage without more deposit.

Kez100

...and what if they split up?

wellingtonboot_2

There incomes combined are approx £34 - £35000 the apartment is 128995 for the 75/25 and 129995 for the 10% offer. they have never had credit but that i have been told that may not be a good thing.

wellingtonboot_2

never thought of that ......

UK007BullDog

They are so young if I was the parent I would ask them to live together for at least 3 years and build up a deposit and credit record. Then buy a property together.

wellingtonboot_2

Thank you very much for your help very much appreciated. I will have a chat with them both but you know wht youngsters are like....

Thanks again

BenL

New Build Apartments are also the 1st thing to be hit during periods of house price decrease.

Are there any buy to let people jumping out of the market or people that have bought vastly overprices new build apartments in your area?

Tiddler_2

I would agree with looking at renting as an introduction to living together. It is amazing how many couples split up, within a year of moving in together because they go from seeing each other for a few hours, 3 or 4 times a week, to spending every night together, and learning all about their bad habits.

It will be hard to try and save for a deposit whilst renting, but if they are serious about buying then they will find a way.

If they do decide to buy I would avoid 1 bedroom apartments. They have to look at what their target market will be when they come to sell the property.

With regard to the 75:25 schemes these are widely known as shared equity and do not necessarily mean the property is overpriced. Lots of councils insist that a certain number of properties on new developments are affordable housing

You don't pay for the other 25% over the 10 years, but after 10 years you have to buy the share at the going market rate.

With regard to the 10% deposit paid, most if not all lenders accept a maximum of 5% deposit paid by the builder, and whilst figures can be juggled around so that you still buy the property for the same price as if you were getting the 10% incentive, 95% mortgages are a lot more expensive than 90% mortgages (probably about 1% difference at the moment).

There is also the situation where valuers have been told to ignore incentives on new build flats and value them as if they were second hand properties.

Finally as stated before very few lenders will give a 95% mortgage on a new build apartment, due to over supply.

Lots for them to think about!!

whoops - nearly forgot - if they are worried about their credit score, they can get a mortgage promise done by the Halifax on the basis of a 95% mortgage, which won't affect their credit scores elsewhere. If it fails due not having any credit previously, then get a credit card with their banks, use it once and pay it off in full.