Don't know whether to go through with purchase or not!!

davids3511 · 1 October 2007 at 11:25AM

Hi All

Last april we commited to purchasing a new build on a large new estate near us, it will be ready by the end of november. The offer was a 5% deposit paid and we put £1000 down to reserve the plot. It is easily the best plot in that particular release with the largest garden and an attached garrage which the others do not have.

We were using a mortgage broker local to us but felt we should have no problems. We though we were going self cert route as we could not prove our income with 3 years of accounts but we are genuinely earning the money we need to cover the mortgage. However, the application our mortgage adviser put through was not self cert and they (HBOS) requested 3 years of accounts, something I had already told the MA we could not provide so it fell through.

We switched to another MA and they said we should go SC but would need to put up 10% with the builders 5%. With all the uncertainty and needing to come up with another 13k we decided to pull out. When we told the builders, they came back with an offer of another 2.5%. Now, this is getting interesting because we could come up with £6500 to go with their £6500 to make the extra 5%.

My problem is that I wonder how far they would be prepared to go for us not to pull out. Anybody got any advise on how to maximise the discount offered by the builder and any strategies for this. We were totally prepared to pull out but with their new offer, we are not so sure now.

Thanks

Pat

dannyboycey · 1 October 2007 at 1:37PM

You have the upper hand. Bearing in mind what is happening to the housing market at the mo.

Richard_Webster · 1 October 2007 at 1:48PM

Remember that all this deposit paid by builders stuff is really a price reduction so any sensible lender will work out the value on the price less the so called paid deposit and then apply their loan to value ratios.

Your solicitor will have to tell the lender about any any "deposit paid" deal so your broker cannot pretend it isn't there. For the solicitor not to tell the lender is being an accessory to mortgage fraud so understandably solicitors will not get involved with that!

Doozergirl · 1 October 2007 at 3:19PM

Many mortgage lenders will not allow more than 5% deposit paid by a builder because they know that it is a form of discount, not an actual deposit paid.

I'd be looking for a larger, genuine discount and to be putting down as much in the form of deposit as possible.

EDIT: The house is up for sale at £260,000 and they offered you £13,000 deposit paid? What a joke. Who in their right mind pays £260,000 for a house. Of course it's not worth that amount. You will be stuck with a house worth £250,000, if that, for a few years to come!

Get that house down to £230,000 with no deposit rubbish.

Conrad · 1 October 2007 at 3:41PM

Some builders here are giving £20,000+ discounts as nothing is selling. Even the muppet B2Lers are abstaining, well most of them, the odd happy clappy nutjob is still 'investing', but most are taking a wait n see attitude in the hope they might bag a bargain in 6 months time.

SquatNow · 1 October 2007 at 8:18PM

Many builders can be bargained down by astronomical amounts now.

Cashback, deposits paid, legal fees, stamp duty, carpet, curtians, fittings.

I some cases you can be looking at close to 40% of the "price" being handed back to the buyer in kickbacks.

In fact for some time builders have been offering huge "cashback" kickbacks to BTLers. Stump up £15k deposit for a £150k house, and the builder pays all your buying costs and gives you £30k cashback... which you use as the deposit on the NEXT *2* houses you buy.

It's basically FRAUD on massive scale. Builders and Estate Agents *LOVE* it as it holds house prices up... the listed sale price will be £150k, but if the builder has essentially sold it for £120.

The builders sell their houses, the morgage arrangers get their commision, the banks get their fees, and in the end the debt gets sold on to a pension company who probably never get their money back as the BTLer get saddled with massive negative equity and files for bankrupcy.

devils_advocate · 1 October 2007 at 8:43PM

I know the article refers to new build flats, but I suspect new build houses are next.

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/10/01/nproperty101.xml

SquatNow · 1 October 2007 at 8:50PM

Yes of course they are. Properies belonging to "motivated sellers" will be the ones that lead the crash. House builders with a pile of new houses they have just spent a masses of money building and cant sell, are about as "motivated" as you get.

The best bit is these big homebuilders bought shed loads of brownfield development land about 10 months ago and have been in a race to see who can build their houses and dump them on the market first. The last one to finish goes bankrupt.

You see, all the big land speculators sold their "landbanks" 10 months ago at the same time, making hundreds of millions in the progress. By holding that land out of use for the last 10 years they've created a shortage and pushed up land prices. Then when prices peaked, they sold up. Now all that land has been released for development, you get what you've got in most cities... Leeds being a good example: 1000's of "executive" new-build flats hitting the market at the same time.

Why do you think the share price of companies like Persimon and Barrats has been tanking for the last 5 weeks?

santashelper_2 · 2 October 2007 at 11:46AM

isnt everyone overlooking the obvious many immigrants are coming to live here global warming is reducing the size of the uk i.e. overpopulation many people looking for somewhere to live therefore supply and demand always pushes up house prices irrelevant of what people can afford as new strategies will be put in place to enable this if need be and profit is to be made by the government after all why are they buying as many half ownership properties as they can if they dont believe this is the case

BobProperty · 2 October 2007 at 2:58PM

santashelper wrote: »

isnt everyone overlooking the obvious many immigrants are coming to live here global warming is reducing the size of the uk i.e. overpopulation many people looking for somewhere to live therefore supply and demand always pushes up house prices irrelevant of what people can afford as new strategies will be put in place to enable this if need be and profit is to be made by the government after all why are they buying as many half ownership properties as they can if they dont believe this is the case

When I see posts like the above it make me question why I bother continuing to contribute to this forum.
Yeah the place is full of Poles working in agriculture on minimum wages buying up the West End of London. But don't worry, global warming and the Thames rising hundreds of metres will force them and everyone else onto the high ground and prices will go through the stratosphere. But then the government will step in and stop it by introducing 1/64th ownership arrangements so you can buy your £37m studio apartment in 1/64th fractions and rent the rest while claiming HB.
At least you can make out what SquatNow is trying to say most of the time.

santashelper_2 · 2 October 2007 at 4:25PM

BobProperty wrote: »

When I see posts like the above it make me question why I bother continuing to contribute to this forum.
Yeah the place is full of Poles working in agriculture on minimum wages buying up the West End of London. But don't worry, global warming and the Thames rising hundreds of metres will force them and everyone else onto the high ground and prices will go through the stratosphere. But then the government will step in and stop it by introducing 1/64th ownership arrangements so you can buy your £37m studio apartment in 1/64th fractions and rent the rest while claiming HB.
At least you can make out what SquatNow is trying to say most of the time.

do you have inside information that this is the case then.

Don't know whether to go through with purchase or not!!

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