Builders depoist - New builds / mortgages

GioGio

I have been told today off a mortgage broker that a lot of lenders are not offering 90 % mortagage when the builder has contributed 5%. I have been quoted 6.77%. Which is a lot more than when I decided to buy the property.. ...its taken 7 months to be built.

Can anyone point me in the direction of a lender who can do better than 6.77%????

Tiddler_2

Can you give a bit more info - salaries - purchase price - mortgage amount.
Type of deal you are looking for & length of intial rate.

Did you have a mortgage offer on the property, to allow you to exchange contracts?

Conrad

My latest snapshot is that the following accept builders deposits but you need to check as things have changed since I last updated my list;

Abbey
Bristol & West
N & P

RBS
Skipton
IF

Coventry
N Rock!!
SALT - a lender I like

Beware as the market is moving fast and new build property is toxic now a days

Leon_W

If it's a flat then you could be in trouble.

I've got a case currently where young FTBs put down a small deposit (and exchanged contracts) on a flat in Manchester last August. They were hoping for a 95% mortgage. As we all know, things are mighty different now and due to their circumstances the best I could get them was a 5YR fix with Coventry @6.35% with a 10% deposit. I still don't hold out much hope for them as I can see the flat being downvalued considerably and Coventry lowering the mortgage amount to reflect this.

In all, this leaves them in a pretty nasty position as contracts have been exchanged and the builder is in a position to sue them for the difference in any selling price if they back out !

GioGio

Thanks for the posts so far. £159K value. 2 bed flat. £16K depoist £8K builders contribution.

Its in Rochdale

Mortgage promise expired a good many months ago

Leon_W

Sounds like you are in the same boat as my clients, if not worse.

The problem I have had is finding a lender that will do a 10% deposit on a new build flat, believe me, there are not that many. The likes of Abbey and C&G have LTVs of 75% and 65% respectively !. Nationwide will just knock off any incentives and value the flat as second hand. It's like looking for a needle in a haystack.

Someone else may come up with a suggestion. I'd also be interested in other brokers thoughts.

Have you exchanged contracts ?

GioGio

yes have exchanged

Tiddler_2

Halifax is always a good starting point on new build at the moment.

They will definitely lend on the property subject to current valuation

They are currently offering better deals for going direct than through brokers.

check out the deals on their website www.halifax.co.uk. Though I would avoid 2 year deals as they are most expensive at the moment, if you think you will live there for more than 2 years that is!!

Leon_W

Hi Tiddler

Yes I had considered Halifax but for other reasons they could not do.

More importantly, the problem my clients have (and Gio) is that they have exchanged. Now, they probably were not that concerned 10 mnths ago when the deals were struck, but just a short while later it could be a nightmare for them both if they do not get a satisfactory mortgage offer. The builders can sue for the difference in the agreed purchase price and the eventual selling price of the flat which could be huge. I'm not sure how far they would push it as you can't get blood out of a stone but they could make life extremely difficult.

The lesson for anyone reading this thread is to NEVER exchange contracts until you have a cast iron mortgage offer in your hand. Unfortunately my clients came to me too late for this piece of important wisdom to be imparted.

Regards

Tiddler_2

Quite right Leon,

Myself and my colleague have been dealing in the New Build area for around 10 years (more my colleague, than me) and we work alongside 3/4 local builders including 1 national builder.

I would never recommend that anyone exchanges contracts without a mortgage offer and am extremely surprised and concerned that any conveyancer/solicitor would allow their client to do such a thing. Buying off plan has its risks especially if the builder cannot confirm when the property will be completed. Whilst Halifax have mortgage offers that last 12 months most other lenders offers only last for 6 months, and as we all know now, 6 months is a long time in the mortgage world!!

I'll have a look at other options available and post again as soon as I have some additional info.

FraudBuster

.............and the independent legal advice was to exchange contracts?


CAVEAT EMPTOR.