Tarted-up property? FTBs, forget it

Garry Hodges

I wish to highlight an issue in the mortgage world that needs to be addressed – it affects estate agents, property developers, vendors and most of all, buyers.

The issue involves newly refurbished properties. With new-build properties, lenders will require a larger deposit – 15 per cent or 20 per cent is the norm. Why does this rule also apply to newly refurbished properties?

I have just had to disappoint a first-time buyer couple. We had their mortgage agreed in principal with a 5 per cent deposit, they found a property and had an offer agreed. They were so excited and started to tell me it was the best semi-detached house on the street, everything was new, you could just move in and put the kettle on. They then stopped as they could see me holding my head in my hands and I did not seem to share their enthusiasm about their dream home.

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Had we proceeded with the application they would have lost the survey fee as the surveyor would have valued up the property but confirmed it was newly refurbished. Why does this property fall into ‘new-build’ criteria and we need a 20 per cent deposit? The house next door that no one has touched in the last 10 years would be fine with 5 per cent.

If the surveyor confirms it is good security, and it is not over priced, what is the risk to the potential lender?

The hardest part is breaking the news to the couple that their dream home is slipping away as it is simply in too nice a condition. This surely should change. I have had this a number of times and I wonder how many buyers lose money by falling into this trap if they do not go through an adviser.

Garry Hodges


Independent Mortgage Adviser,

Absolute Financial Advice,