MikeR

As the titles says really, l have seen a house and the morgage on offer is as follows,

you pay for 75% first and the builder holds of on charging for the remaining 25% for up to 10 years, you are not allowed to sell the house for the first 3 years and if you do decide to sell after that then the builder gets 3 independent valuations on the property and they charge the remaining 25% value at what it is worth on that day. So if the property rises in value then you pay more than if it stayed the same value.

Has anybody got any experience of these types of morgages? in my veiw they have not lowered the cost of the house they have simply defered the payment in the hope that it rises in value and they get the same kind of money as per pre economic crash.

The trouble is it makes an unaffordable house affordable because you only apply for a morgage for 75% of the true cost, but you have to go through there morgages advisors and the companys that offer the morgage are Abbey National and Nationwide.

Yours veiws are much appericiated.

Mike

MikeR

Bump for the day time crew


Mike

Chip

iTrader: (3)

No experience of it myself, but I would imagine the mortgage company will class lending you 75% against 75% of the house as a 100% LTV obviously

So for a 80% LTV mortgage, you would need a deposit of 15% of the value of the house, and a loan for 60% of the value, to make up the 75% initial investment.

MikeR

As it stands we have been asked to put a deposit against the 75% hypothetically as if the 75% is the only morgage you are getting then the last 25% comes to get you later,

Should there be any hidden things l should look out for?

Cheers

Mike

Chip

iTrader: (3)

It all sounds pretty straightforward to me mate, they are just lending against some property still after all, so their investment is secured as normal, I doubt they care that the builder owns a share too as it really doesnt effect them.

One thing to be aware of though of course, is that in ten years you might find that the extra 25% value of the house on top of what you already owe is more mutliples of your wage than anyone is prepared to lend you (especially if house prices go up and/pr your wages go down) especially if you go interest only so still owe the full initial value of your loan.

MikeR

Thats the one variable i dont think anybody can 100% predict, l will be going full repayment but am waiting to hear weather or not l can over pay, if this is possible it is fine because l will own it fairly soon, being that it is only avaliable from 2 lenders i think that will restrict the interest value alittle,

Cheers

Mike

Chip

iTrader: (3)

Hope it all goes well, let us know how you get on as Im sure lots of people on here will be interested as I suspect this sort of deal will become more common in the next few years as builders struggle to find buyers for new build houses.

MikeR

Is it fairly common to offer less than the asking price on a new build? i have been told it is not unheard of but it seems strange to do that on a new build, your not likerly to go into a garage and offer alot less for a new car are you in reality?

Maybe its just me

Mike

dojj

iTrader: (3)

so if you put some figures into this, let's se how it works out

house is Ł100k
your mortgage is then Ł75k
in 10 years time, the house is now worth, for example, Ł150k, so in 10 years, the builder has made Ł12.5k
you need to now find a mortgage for the outstanding owed amount plus the Ł37.5k, and if you still owe Ł50k on the mortgage that would mean Ł87.5k or around 60% of the total value

so it seems like you'd be onto a winner here

Chip

iTrader: (3)

Ive bought a couple of newbuild places and got money off by haggling in both cases.

Likewise no one in my family has ever paid full price for a new car either!

So yes, definately worth a haggle.

If they wont actually knock money off they will always at least throw in some carpets or landscape the garden for you or whatever.

If you dont ask though, you will of course get nothing!

MikeR

The house comes with all fixtures and fittings and carpets l beleive as standard,

Dojji thats pretty much it,

It is this house but has been made into a 5 bedroom. Now we dont need 5 bedrooms but the smaller houses have no dinning room and the bedrooms are a little small, so with 5 bedrooms we can have a gym in one room etc

http://www.bloorhomes.com/developmen...dgate_stamford

Mike

dojj

iTrader: (3)

300k buys a whole lot of house oop north don't it

the only thing that makes me wary is your opening line where you say:

"the builder holds of on charging for the remaining 25% for up to 10 years"

what's to stop them from asking for their money in 5 years?
or 6 months down the line?
is it agreed beforehand?

Chip

iTrader: (3)

Nice house, although not got a lot of character as per most modern houses (including my own, so not having a dig, just an observation)

MikeR

It is agreed before hand that you can not sell for 3 years and you have up to 10 years to pay the remaining back via a morgage or out right, that percentage is based on 3 independent valuations of the property and you pay the average.

Mike

MikeR

That is a very valid observation Chip, we looked at some older houses but to get anything of a similar size you need to spend alot more money around here, and also with out a doubt the morgage offer makes it intiching to buy something like this.


Mike

Chip

iTrader: (3)

Same problem I had, every older place that I found which I liked, had some major flaw or was too expensive, then I found my current place which was on a reasonable plot etc, and although I didnt fall in love with it particuarly, there was nothing about it that I particuarly DIDNT like, if that makes sense?

MikeR

That makes perfect sense, for what we would like i an character house we will need to wait a few years or until the next property fall,

Mike