HSBC Announces Loan to Value (LTV) Reduction for New Build Properties Great news for anyone desperately trying to save a deposit for a new build house. HSBC is to increase it's LTV maximum from 75 to 85 per cent making things a great deal easier for the housing market in general and first time buyers in particular.

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HSBC Announces Loan to Value (LTV) Reduction for New Build Properties

April 30, 2012 at 2:33 AM

Mortgage Lenders would have us believe that they are getting ready to make it easier to get a mortgage on a new-build property. Frankly we will believe it when we see it and don’t hold out much hope that lending criteria will ever be loosened to what it once was.

The HSBC has announced would be reducing the amount of deposit required on a new build from 25% down to 15%, and although this is a big reduction finding even 15% is beyond most first time buyers these days.

The relaxation in lending criteria is because the Home Builders have cleaned up their act considerably in recent times. To be honest they were often their own worst enemy offering daft sweeteners to buyers that really fudged the true value of the property that was being sold. New fitted white goods and carpets etc. are not bricks and mortar and do not add real value to the property.

There has always been a price “premium” to new- build made but this has made them very susceptible to drops in house prices. Hopefully though as HSBC has taken this step other lenders will follow suit and quickly.

It’s always difficult if your mortgage offering is so much better than everyone else’s or your criteria so much more accommodating as you generally get inundated with a flood of new applications. This might sound great but it actually causes problems to the lender as their mortgage application processing staff cannot possibly cope when the number of mortgage applications goes up tenfold overnight.

Since 2008 the number of repossessions of new-builds was far greater than that of older properties but as the new build market has got its act together by fully disclosing all incentives and pricing houses far more realistically that repossession rate has fallen significantly. In fact it is now less than the industry average for normal properties.

This all bodes well for the New Build Market, and first time buyers in particular. 

Tags: First Time Buyers New Build Houses Loan to Value
Category: First Time Buyers

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