First Time Buyers advice needed!!

hansonbop

We are looking for some advice on the best mortgage to get.

We are first time buyers.

We have seen a new house that is on the market for £129,950. We currently have a 5% deposit. After speaking to the developer we were told that for 132,000 they would pay 5% deposit and stamp duty. In theory this gives 10% deposit?

I earn 23000 a year with a 2k bonus approx. I will be getting a pay rise this year that will put me on 25000 plus the bonus. My partner earns 20k a year also. We currently have 10k saved.

Any advice would be greatly appreciated.

Thanks

Lavendyr

In theory it might give you 10% deposit, but I believe that most mortgage lenders will want to know where your deposit comes from, and if they find that 5% comes from the seller in this manner they might well discount it - it's a bit of a dodgy deal.

Personally in this market (of course depending on the situation & comparable prices in the area) I'd not consider for one moment offering *over* asking price just to get a higher deposit paid for me, I'd be haggling downwards of the £129950 figure.

Ian_Griffiths_Halifax

If it's a new build don't offer them anything near the £129950. They aren't selling just now.

There are loads of threads on here of people in the same circumstances and you should get a feeling for the market after reading a few.

I'd offer them nearer £100k, £110k if you really want it.

Getting a mortgage shouldn't be a problem at all, based on your incomes and the fact that you have a 5% deposit.

Incisor

hansonbop wrote: »

... We have seen a new house that is on the market for £129,950. We currently have a 5% deposit. After speaking to the developer we were told that for 132,000 they would pay 5% deposit and stamp duty. In theory this gives 10% deposit?

In other words, they have told you they will sell it to you for £132000 * 0.95 = £125,400, and they will also pay a further £132000 * 0.01 = £1320 as stamp duty.

So they should also accept £124080, at which price there is no stamp duty, which saves you £1320 at no loss to them. I would be looking at making an offer based on this knowledge of what they will sell it for, and forget about the difference between 5% or 10% deposit, unless it really is better for your mortgage.

Incisor

Lavendyr wrote: »

... Personally in this market (of course depending on the situation & comparable prices in the area) I'd not consider for one moment offering *over* asking price just to get a higher deposit paid for me, I'd be haggling downwards of the £129950 figure.

Me too. One of the reasons for builders offering to pay the deposit is that the sale gets recorded at the higher value, both in the statistics and in the Land Registry, which means in turn that they have 'objective evidence' of the value of the properties.

hansonbop

Thanks for advice.

We were concerned that we would not get a 95% mortgage in the current environment?

Incisor

hansonbop wrote: »

... We were concerned that we would not get a 95% mortgage in the current environment?

Possible. But in the current climate, not giving you a 95% mortgage could be to your advantage long term.

planemad

Incisor wrote: »

Me too. One of the reasons for builders offering to pay the deposit is that the sale gets recorded at the higher value, both in the statistics and in the Land Registry, which means in turn that they have 'objective evidence' of the value of the properties.

Absolutely Correct!

jammie*dodger

We just managed to get the property we wanted for £249,000. The asking price from the developer was £265,000. Now the stamp duty jumps again at £250 so this worked out at well over £20k of the price.

haggle, what have you got to lose? Also who is the developer. Some are more desperate than others and some are better at snagging than others.

Rob.

hansonbop

The developer is bryant homes

Tiddler_2

Just a few things to be aware of from a mortgage perspective.

95% mortgages are generally alot more expensive than 90% mortgages - especially if the lender also charges a HLC. (as an example Halifax are offering a 5 year fixed rate at 7.39% on a 95% mortgage with a HLC of £1812, compared with 6.54% at 90% with no HLC based on a £125k pp)

Some mortgage lenders are moving away from New Build properties because of the uncertainty of the pricing of the properties. Abbey for example will only lend 85% of the value, as will RBS.

It is certainly the case that the New Build market is quite slow at the moment, hence Persimmon & Barratts decision this week to stop building for the time being, and builders are still keen to move their stock so you can offer silly prices if you are prepared to walk away if you don't get the deal you want.