HSBC has changed its residential lending criteria for new-build buyers who part exchange their existing property with a developer.
From 1 October, the lender will treat a part-exchange arrangement as a financial incentive worth up to 2% of the new property’s purchase price.
The change affects the way HSBC assesses incentives when calculating the value of a property for mortgage purposes.
Under its criteria, total financial incentives of up to 5% of the property price, including the part exchange, can be accepted without affecting the property value.
Where the combined value of financial incentives exceeds 5%, the amount above that threshold must be deducted from the purchase price when calculating the loan-to-value ratio.
HSBC said the criteria change followed feedback on its residential lending policy for customers buying a new-build property while part exchanging their existing home with the developer.
