Good Mortgage Advice

Sponsored by Private Wealth Mortgages

The sale of newly built homes has been hard hit in the current climate with lenders restricting their offerings with particular emphasis in this arena.  Developers are having to work hard at marketing to prospective buyers and even when a property is sold ‘subject to contract’ when the mortgage applications are submitted, there are certain obstacles that need to be overcome for the sale to go through.

Buyers need to be aware that many valuers are down valuing newly built property at the moment.  They continually look for comparables that have been sold in previous months and one lender in particular has instructed their surveyors to value the properties based on a ‘second time sale’ as they are concerned that if they had to resell the property, without the benefits that a developer is offering eg:  5% deposit paid, then the sale price they would achieve would be lower than the price the developer is selling at.  Lending will be based on the figure the mortgage surveyor values the property at – not necessarily the figure the purchaser is paying and this can affect the amount of mortgage offered.

Stamp duty being paid, and other benefits need to be declared at the outset and it is vital that the mortgage broker/lender is aware of exactly what funds are being provided by the buyer.  A 10% deposit being paid by the developer does not mean that a 90% mortgage could be achieved and lending at this level is restricted currently and only offered by a few select lenders.  Mortgage lenders usually only accept a maximum of 5% deposit being taken into account when calculating what a client can borrow.

There are restrictions on the maximum loan against the value of the property!  For example, a lender may only offer 65% as a maximum on an investment purchase if the property is a newly built flat.  Maintenance and service charges are taken into account when assessing affordability so this information needs to be checked as well as the terms of the lease, if the property is not freehold.

Although a newly built home and the benefits it offers are attractive, good advice is essential to avoid a buyer paying out for fees to lenders and valuers being lost if the proper information is not provided and agreed at the beginning of the transaction.

If you need further mortgage advice please contact us on www.privatewealthmortgages.co.uk