New Build Property Becomes More Favourable to Lenders


New Build Property at The Retreat, SW18

Good news at last regarding UK Mortgage lenders’ attitudes to new build property.

HSBC, a big-name lender with around 15% of the mortgage market, has confirmed that they believe the perceived risk in the new build market has stabilised and receded.  HSBC has shown its confidence by increasing the loan to value criteria on new build residential property purchases from 75% to 85%.

At the start of the credit crunch, a fear was created that the price premium associated with new build property made them particularly prone to decreases in market value and potential negative equity.  Lenders were particularly nervous with new build property which sometimes had an unclear transaction path, with an original buyer selling the property on prior to completion.

All lenders now insist on  their being no assignable contracts in place and state that any incentives are fully disclosed in order to make the transaction completely transparent.

The recent launch of the Government backed NewBuy scheme which will see loans up to 95% of the value being approved has also injected much needed confidence into the new build market. This helps First time buyers get a foot on the ladder and hopefully promote requirements for new developments and much needed housing.

The predicted doom and gloom of the new build sector back in 2008-2009 did not materialise and the level of arrears, particularly in this market, have remained low.

Other lenders are expected to follow HSBC’s lead and take a much kinder approach to new build in the future.  It’s expected that lenders’ confidence in new build property will also be reflected in the buy-to-let mortgage market over the coming months.

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