Moving On Up …. With Griffiths Ings
By admin
Issued on behalf of Griffiths Ings
Continuing our first time buyer theme, this week we are going to look at some of the creative solutions that the new homes builders have introduced – increasingly over the last year or so – to help first time buyers purchase their new properties.
Traditionally, new homes builders have frequently offered to pay the 5% deposit on behalf of the buyers, with the buyers then having a 95% mortgage to fund the purchase of the property. Many first time buyers were able to get on the property ladder using such a builder gifted deposit.
We have recently seen further incentives offered, such as the builders agreeing to fund the stamp duty, make an allowance of up to £500 towards legal fees or offering free fitted carpets. In a tightening market we have seen even more creative solutions such as some builders offering the mortgage for 2 years or help pay with the utility bills.
While these incentives may make the properties very attractive to first time buyers, the buyer’s mortgage company must be happy with the level of the incentives. It is absolutely essential to have a very good mortgage adviser who is completely familiar which incentives the lenders will allow and which they will not.
We have recently seen some builders offering to fund 25% of the purchase price of the property, leaving the buyers to get a 75% mortgage. There are various schemes available and in some cases the builders’ money is secured as a second mortgage against the property, which would be repayable on sale or after 10 years. Often there is no interest payable on this mortgage but the builders will take 25% of any increase in value of the property instead of charging interest like a normal mortgage. We have seen various versions of this type of arrangement and now several builders are linking up with local Housing Associations – so the associations put up 30% of the value of the property and the buyers merely have to fund 70% of the price. Again, a good broker will know which mortgage lenders approve of these schemes.
We have also seen a trend for some builders to build far smaller and more affordable units and have seen some for sale in South Wales as low as £63,000.
Credit must be given to the new build Industry for working so hard to create ways for first time buyers to get onto the property ladder. In a tight housing market we may well see sellers of older properties offering similar incentives to entice buyers to buy their property.
