Halifax increase New Build loan to values

Halifax increase options for new build borrowers

Contact A Mortgage NowHalifax issued a press release today stating they are increasing maximum loan to value on New Build houses to 90%

What does this mean for you as a Borrower?

If you are applying for a mortgage as a first time home buyer with a low deposit you will often be asked if you are buying a New Build property. (A new build in Mortgage Lender parlance is a property that has not been lived in before, typically sold direct to the applicant by the Builder or Developer.)

Why is it important to you and your Mortgage Broker if the property is ‘New Build’?

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Lenders have differing attitudes to lending on New Build properties as opposed to older homes, particularly in respect of deposit size. Lenders will ask for a higher deposit on a ‘New Build’ than on an equivalent deal with a ‘pre-occupied property’. This caution stems from the practice of Developers selling new properties at a premium price which cannot always be realised in the event of a swift resale. Lenders will look to reduce their risk by asking the client to invest a little more cash into the deal.

Why are Halifax taking this action now?

Firstly, this may be an indication that Colleys (the surveying arm of HBOS) believe that prices on New Build properties are becoming a little more realistic.

It may also be in preparation to benefit from the Government’s New Build Indemnity Scheme programme which is also advantageous to the Lender.

More about New Build Properties and Mortgage Lending

Use an Independent Mortgage Broker when purchasing a New Build property as complications with Mortgage Lending will be encountered – for example:

Flats – maximum loan to value on New Build flats can be lower than on houses, meaning you need a higher deposit

Builder’s Incentives – Incentives provided by the Builder such as deposits and stamp duty paid are not always acceptable to Lenders.

Exposure – Lenders will limit the amount of exposure they have on a particular development or apartment building, and this can sometimes exclude Lenders for the Borrower.

If you need a Mortgage on a new Build Property – contact us now.

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