Will new builds prevent you from selling your home
Lenders are loosening their criteria on buying a new build home
As has been previously reported, the government have introduced a 95% LTV scheme that helps first time buyers to attain a new build property with a very small deposit. Basically the government have set up a deal with the lenders where the lender will, behind the scenes, be lending a 75% mortgage but the government will make up the 20% difference with the house buyer putting up the remaining 5%. Effectively it’s an equity loan from the government, they will own 20% of your home and when it’s sold the government will receive any increase in value.
HSBC launch a new Buy My House product
Different to the government scheme whereby you will be forced to being a equity slave to the government who will own a portion of your property. HSBC have now announced a straight mortgage deal of 85% LTV for purchasing a new build home. It appears that this criteria doesn’t just apply to first time buyers, it’s across the industry.
The Previous high LTV that was required when buying a new development property was due to lenders seeing that some developments were white elephants and also due to the premium price that is often attached to a new home, lenders would view this as an even greater opportunity for price falls. It now appears that the lenders have changed their opinion and are probably further relaxed by recent housing data showing some stability and proving that in most areas house prices have stopped falling.
New builds aren’t great if you wish to sell your house fast
In our opinion if you are to invest in property for a number of reasons new builds aren’t a great investment. Firstly, they are not individual looking property’s and when you do eventually try to to sell quickly you may find it difficult when there are a number of homes that look exactly the same as yours, on the same development at the same time. Also, new build homes are a dime a dozen they are can keep on building them and increasing the supply. On the other hand compare this to a city property where they can’t increase the supply, plus there is even more demand to live in a city, these two factors mean that prices are likely to increase.
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